Chris Collins on why car manufacturers selling direct to consumers, like Tesla and Ford, won't kill traditional dealers. Service and parts departments are where dealers make real money and stay competitive, so that's where they should focus.
I, I believe that what, what is going to happen with the manufacturers going direct to consumer is you're going to have a hybrid. And the thing that we already know is that companies like Tesla have an unfair advantage against the dealers because they don't have flooring. They're direct to consumer.
They, they just have an unfair advantage in, in many ways they can move faster. They're not like, if you think about a dealer, you're sort of at the mercy of the manufacturer, where when you're Tesla and you're direct to consumer, you're controlling the input and the output. You're not a franchisee in the middle hoping that Ford doesn't roll off 40.
Right.
Or you're hoping that the products are good and that there, there's a demand for them in the marketplace. All of that. Now, if you're sitting in the boardroom with the manufacturers, they're saying the dealers are outdated, they need to upgrade their facilities, they need to train their people more, they need to invest this and that. It's an interesting dynamic in that sense. What will happen, I think, is every manufacturer will have a different path. I think if you own a BMW dealership, your experience is going to be different than if you own a Ford dealership. It's going to be different across the board. They won't all handle it the same. And, you know, Tesla was the first one kind of through the wall in the sense that they, they got bloody. But now the manufacturers have more control than they've ever had before. Just the idea of Ford going direct to consumer with 4D sent the dealers into a tailspin.
Right, yeah, that's a really good point.
And in a sense, they never really.
They never gained any leverage on Ford. They just kind of were like, oh, okay, not right now. Okay, like. But didn't. It didn't appear to me that anybody was really challenging it or trying to get ahead of it in the sense that, you know, the National Auto Dealers association isn't in any way doing anything that we can see from the outside. That's a strong lobby towards protecting the dealer body.
The manufacturers are asking a lot of dealers to invest a lot of money in facilities.
If I own a dealership right now, and you're asking me to invest 20 million in a facility, are you doing.
That as you announce that you're creating another company? It's super interesting, isn't it?
But, yeah.
There's no expense spared on these redos. Who.
Christian, let me ask you this question. I know we talk a lot about mythology and Being psychic?
Yes.
Do you feel like you're psychic?
No.
No. Damn it. I was hoping you felt like you were psychic, but I'll try. Do you pretend for a minute that you're psychic like you have, like a crystal ball in all of this chaos?
Who's safe? Who's safe?
Let me summon summons the psychic way. What is it? The energy. I'm reading the energy of the room.
Who in all of this chaos is safe?
Service departments.
Yeah, service and parts. I am psychic because the electric cars break. They need, like we're talking. They need tires. They need everything. And so there will be a lot of dealers that their identity is attached to moving metal over the curb. But there'll be a lot of opportunity in service. Yeah, we're not going anywhere.
I'd get really good at those conversions of the new engine packs and all that stuff. There's so much opportunity. I think it's going to be fun.
So my advice to everybody is don't pay attention to the noise. Just work on your business. Work on having the best service and parts department you possibly can, creating a great customer experience, getting rid of the constraints.
Getting your profitability in line like a real business. Exactly. Run it like a real business. Because even if they go direct to consumer, they can't service it. And they. None of the manufacturers have the ability to roll out shops across the country.
That's right.
They won't. They need us. And so, in a sense, we are the leverage in the marketplace. Let's be the best we can be. Let's think about our business in a way that we are getting ahead of this as far as the customer experience goes, as far as profitability and really genuinely protecting the dealership against the loss of new car sales. Because our fixed absorption is so high, that's our job. We got to get better at what we do, and we got to take it seriously.
Yeah, there's no. There's no mailing it in on this. It's not just going to happen like we've for a long time. We were just attached to the sales department.
We aren't going anywhere.
Nope.
They need us more than ever. More in the driver's seat. You guys get a fun Friday. Thanks so much for watching this clip of Service Driver Revolution. We're uploading new stuff every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training. Head over to offers.chriscollinsinc.com that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video.
