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Why Do Family-Owned Auto Dealerships Attend the NADA Show?

Posted by Brandes Elitch | Wed, Mar 06, 2019 @ 07:45 AM
Family-owned Auto DealershipsThe annual NADA Show by the National Automobile Dealers Association is so big that it is impossible for one person to see all of it or attend all the sessions. How big? Well, the exhibit space is 504,000 square feet in three buildings. There were 22,000 attendees walking the floor. There were fully 120 individual sessions and 60 workshops. I attended the recent NADA Show at Moscone Center in San Francisco to meet specific exhibitors, so I certainly did not see everything in all three buildings. Here are a few things that I found interesting while walking the floor.

Whenever you attend a show this big, you always have to wonder: who is the target audience?

Who Is the Target Audience at the NADA Show?

The hundreds and hundreds of offerings will not appeal to every person walking the floor. We tend to forget the importance of family-owned auto dealerships, but they are very important. However, some changes are happening there.

family-owned auto dealershipsNADA reports that the number of “singular” showrooms has gone from 7,514 to just 4,904 between 2008 and 2018. That’s a 35 percent decline. During that period, the number of dealers with 10 or more stores increased 62 percent. While the number of multi-store owners is still low — only 177 individuals own dealership chains with 10 or more stores — it is a trend. And the trend is more than obvious over the last decade: franchises with at least six stores have increased, while those operating fewer than six stores have decreased.

Challenges of Family-Owned Auto Dealerships

Multi-store owners have certain economies of scale such as advertising for instance. Then there are the new sales channels that chains can afford to hire managers for — mobility, subscription services, internet sales, rental-based ownership alternatives, electric vehicles, or autonomous taxi services.

A small store could not afford to have a subject matter expert on these.

A development I have noticed here in our local market (Santa Rosa, Calif.) is the “mandatory storefront improvements” that the manufacturers demand as part of the dealer franchise agreement. Completely rebuilding your existing building to satisfy purely architectural and esthetic requirements laid down by the manufacturer — when the current store works just fine — can be an insurmountable barrier for a small store.

I will say that the new architecture on Santa Rosa’s “Auto Row” looks pretty impressive, but I wonder how much family-owned auto dealershipseach dealer had to mark up their units to recoup that investment (which has to be in the millions of dollars for each store).

Then, there is the thorny issue of estate planning for a family owned business. Data prepared by the Family Business Institute shows that only about a third of all family-owned auto dealerships will successfully transition to the second generation. By the third generation, sadly, that number is only 12 percent. Since about half of all stores in the automotive retail industry are second or third generation owners, that is something to think about.

Niche Marketing at Family-Owned Auto Dealerships

I have always had good experiences with family-run stores.

I live in the small town of Healdsburg, Calif. A couple of years ago, I visited our local Buick dealer, Silveira Buick GMC. It is a small store, but located right on the main street where I suspect it has been for decades. They don’t have a lot of cars on their lot, but they have another larger lot across town that is always full of work trucks. My hunch is that they are the leading supplier of work trucks for the whole county. It would be interesting to find out how they carved that niche out for themselves because there are likely other similar stories for family-owned dealerships which have been around for decades.

Incidentally, focusing on trucks was a smart move for them.

family-owned auto dealerships

Today, American consumers want pickup trucks, sport utility vehicles, and crossovers. They want height in the driver’s seat — a command of the road. The average new pickup sells for $47,000. Consumers feel okay about that because gas prices have recovered to their mid-2000 point, but they were around $4 a gallon back in 2011 – 2014.

Family-Owned Auto Dealerships Attend the NADA Show for Inspiration

Dealers like Silveira Buick GMC go to the NADA Show to get their creative juices flowing about how to carve a niche for themselves in their local market. And NADA helps, with seminars and training. Here are some examples of some presentations at the show:

  • Align Your Digital Image with Your Dealership’s Image
  • Control Your New-Car Inventory and Expenses
  • Increase Used-Vehicle Sales: From Acquisition to Increased Turn Rates
  • The Dynamics of a Family-Owned Dealership
  • family-owned auto dealershipsPreparing Today for Tomorrow’s Auto Retail Evolution
  • Five Secret Attributes of Great Dealerships
  • How to Fix the Top 10 Broken Processes in Your Dealership
  • Occupational Fraud in Modern Dealerships
  • The Best Ideas from NADA 20 Groups
  • Top 5 Ideas and Processes to Maintain and Retain Your Service Customers
  • Washington Update: Top Issues for Dealers
  • Tools for Dealership Buy/Sell Analysis
  • Stopping Parts Obsolescence
  • Construct Powerful Pay Plans That Drive Profitability
  • What’s New in the Labor, Employment, and Wage and Hour World?
  • The Three Biggest Mistakes When Dealers Increase Their Budgets

These are just a few of the many, many sessions at the show. You can see that just attending one session that addresses your biggest issue could be a critical event. Yes, dealers have their “Twenty Groups,” but these seminars are focused on one issue and cover it in depth.

Accepting Payments at Auto Dealerships

Certainly, one of the biggest concerns for all dealers, large and small, is managing expenses, and one of the most vexing and important is the cost of taking payments. Enter CrossCheck’s Auto Industry Remote Deposit Capture Solution (C.A.R.S.).

We show family-owned auto dealerships how to deflect payments from prestige rewards credit cards, which can carry a fee of as much as four percent (twice the dealer’s profit margin). When the consumer tenders a rewards card to pay for a car, or for parts or service, just tell them that you cannot accept a credit card for a high dollar transaction (say anything over $200) and you will need them to write a check. This reduces your cost of payment family-owned auto dealershipsprocessing from around three percent to less than one percent – a big deal for a dealership.

We can even guarantee payments before sending out parts to repair shops and body shops with our Check on Delivery (COD) program, so you can deliver parts, pick up a check, and not worry about it bouncing!

We also provide another important service: we do the banking for the dealer — via electronic check processing — so they don’t have to take checks to the bank or use an armored courier. This is a big savings of expenses, time and workflow — all critical to a dealership.

CARS also includes the Multiple Check premium, a powerful future deposit function giving consumers a little extra time to complete down payments.

For large chains or family-owned auto dealerships, CrossCheck provides an important contribution to the bottom line.

Learn more about C.A.R.S. by downloading our free guide.

auto dealer cars

Topics: National Automobile Dealers Association (NADA), Brandes Elitch, Auto Dealerships

Written by Brandes Elitch

Brandes Elitch is Director of Partner Acquisition for CrossCheck Inc. A certified cash manager and accredited ACH professional, he garnered a Master of Business Administration from New York University and a Juris Doctor from Santa Clara University.