Welcome to the 2016 National Automotive Dealers Association

Welcome to the 2016
National Automotive
Dealers Association
(NADA) Review
Edition 1
March/April 2016
Contents
Introduction
1
The State of the US Retail Automotive Market
2
Key Performance Indicators for Automotive Retailers around
the World
2
The US Retail Automotive Market - Snapshot
3
Tried-and-True: Best Practices from NADA 20 Groups
4
Guided dealership tour – AutoNation Nissan, Las Vegas
8
Firm details
10
1
Introduction
The 2016 National Automotive Dealers
Association (NADA) conference was
hosted in Las Vegas from 31 March to
3 April 2016.
This annual event continues to be the largest retail
automotive convention in the world with over 25,000
people attending from over 50 different countries.
The theme of the conference was “Connect” – How to
connect with your customers, your staff and with business
partners.
Showcased around the exposition were the workshops
that continue to provide ‘best practice’ with 64 new
workshop topics, 120 workshop sessions and 25 dealer/
manufacturer franchise meetings, which were held in
2016.
Highlighted in this edition are key takeaways from the
conference, and learnings from two of the sessions,
Tried-and-True: Best Practices from NADA 20 Groups and a
Guided Dealership Tour of AutoNation Nissan, Las Vegas.
Excitement is already building for the 2017 NADA
conference, which will be held next year in New Orleans
from 29 January to 31 January.
John Gavljak
Partner – Automotive
2
The State of the US Retail Automotive
Market
In 2015, the US achieved a record number of car and light truck sales of 17.4 million units, which was almost 6% higher
than 2014.
As noted by NADA chief economist, “The industry growth, combined with low gas prices and interest rates, spurred
millennials - especially those starting families to replace ageing vehicles”. The average age of US cars on the road is now
11.5 years.
In 2016, car sales are looking to reach 17.7 million units before levelling off to approximately 17.2 million units in 2017.
Key Performance Indicators for
Automotive Retailers around the
World
The Pitcher Partners’ Automotive Team recently released our 2016 Key Performance Indicators for Australian automotive
retailers (non-luxury and luxury editions).
Off the back of our study tour to NADA, below are some international benchmark comparisons.
Key Ratio
Australia
US
UK
Net profit % of sales
3 – 3.5%
4%
3%
Fixed absorption
55% minimum
100%
80%
Used to new retail ratio
0.4 to 1
1.25 to 1
1.5 to 1
Used vehicle inventory
65 – 70
30
45
New vehicle inventory
55 – 60
45 – 60
-*
Labour hours per retail RO
2.0
2.0 – 2.5
2.5
Service gross profit as % of sales
66 – 68%
68%
-*
Parts to labour ratio
0.60
1.1
-*
Parts gross profit %
23 – 25%
38%
22%
*Data not made publicly available.
Source: Pitcher Partners, NADA, ASE
As we can see across mature markets for automotive retailers, similar results have been achieved. However, in the area of
used vehicles it appears that Australia has room for significant improvement.
DEALERSHIPS
$862,722,000,000
CALIFORNIA TEXAS
...per dealership
Highest dollar sales
for all dealerships
$96,189,000,000
Highest dollar
sales per dealership
$74,209,000
$52,143,971
The US Retail Automotive
Market - Snapshot
AVERAGE SELLING PRICE
OF USED VEHICLES SOLD
(by new-vehicle dealerships)
Domestic
Import
2,867,653 655,522
+
NEW-CAR INVENTORY
3,523,175
NEW-VEHICLE
DAYS’ SUPPLY
65
Domestic
55
Import
TOTAL NEW VEHICLES SOLD
AVERAGE SELLING PRICE
OF NEW VEHICLES SOLD
AVERAGE NEW VEHICLES
SOLD PER DEALERSHIP
Dec
MONTH WITH MOST
NEW-VEHICLE SALES
FROM 1 JULY 2017
Increase in
number of
new
vehicles
sold
1,632,172
units
SOLD
$19,397 $33,419 $1,050
5.74%
from 2014 to 2015
17,380,500
Source: NADA
3
$16,545
TOTAL NEW-CAR
TOTAL DEALERSHIP
SALES
4
Tried-and-True: Best Practices from
NADA 20 Groups
Butch Hollister, Dealership Management Consultant from the NADA 20
Group, conducted a session at the 2016 NADA conference on the best ideas
and practices from the top performing automotive retailers with key tips for
every automotive retailer - regardless of franchise, market or sales volume. His
insights are as follows.
Get involved
The starting point for a Dealer Principal or Manager is to
“Get involved”. Paying attention to the little things can be
the difference between an automotive dealer’s success or
failure. The little things were summarised as;
Walk in a different door every day
Best practices and tips
EXPENSE CUTS / SAVINGS
Have managers take ownership of their respective profit
and loss statements, and let them implement cost saving
recommendations. At the next managers meeting, ensure
the following two points are prepared and discussed:
Get to know all people in all departments
List the top five expenses they have cut
Manage by walking around (MBWA)
List total dollars saved by the cut
Start every day with a good attitude
Offer reward and recognition to staff for their efforts – i.e.
best cut earns one month of the savings as a bonus.
TECHNICIAN TUESDAY
Ask questions
Take a genuine interest in your employees,
talk about things other than work
Get to work: show your employees you are
not afraid to work
Big sales and new advertising ideas are generally just
quick, short term fixes. Slower, steady growth of your
automotive dealership is sometimes harder, but is
typically more sustainable.
Conduct a monthly luncheon
Entice fixed operations staff
Review goals – award achievement and
set new goals, both management and
technicians
Suggestion box review – employee and
customer
5
GROW AS A COMPANY
SERVICE AND PARTS 3:30PM TIME OUT
Ensure right parts are available for following
days’ business
Today it is more important than ever to explicitly define
your dealerships’ core values in order to develop your
culture, brand and business strategies.
The recommended core values that dealerships should
follow include:
Ensure workload and technician time
availability for following day
Teamwork – The good of the team comes
before the personal comfort or agenda of any
individual team member
Knowing what is in the shop that is not going
to be finished as promised
Performance – Hitting expectations and
delivering on commitments
CELEBRATE YOUR STAFF
$3.8bn $3.8bn
Billion worldwide revenueBillion
2015 (USD)
worldwide revenue 2015 (USD)
Use electronic and traditional
media
to celebrate:
110
110
Partners
Character – Always do what is right, not what
is easy, cheap or convenient
Partners
When you hire a new staff member
$3.8bn
1,200+ 1,200+
National staff
National staff
Change – Initiate change, fun, spontaneity
and creativity in the workplace
Billion worldwide revenue 2015 (USD)
When your staff are promoted
110
Independent member of Independent
the Baker
member of the Baker
Tilly International global Tilly
network
International global network
Partners
Concentrate on their personal and social
1,200+
Urgency – Serve one another and our guests
quickly
circles, clubs, schools and churches
National staff
Detail – Attention to detail means we will
become brilliant with the basics and getting
the little things done right the first time
INCREASE SALES THROUGH PERSONAL
Independent member of the Baker
Tilly International global network
NETWORKING
ON SOCIAL MEDIA
List a sales person’s social media contact details to help
form friendships with their customers:
Coach – Coach, train and mentor team
members to help them reach their personal
potential
On their business cards
ConnectConnect
Company website personal information
 
with us with us 
pitcher.com.au
Connect
with us

pitcher.com.au
linkedin.com/company/pitcher-partners
linkedin.com/company/pitcher-partners
It is incumbent on the company to train staff on
appropriate use of social media and to monitor.






pitcher.com.au
linkedin.com/company/pitcher-partners
facebook.com/PitcherPartnersPage
facebook.com/PitcherPartnersPage
twitter.com/pitcherpartner
twitter.com/pitcherpartner
youtube.com/pitcherpartner youtube.com/pitcherpartner



facebook.com/PitcherPartnersPage
twitter.com/pitcherpartner
youtube.com/pitcherpartner
Personal growth – Team members are
expected to work as hard on themselves as
they do on their job
Grace – Provide each other and everyone we
serve unmerited favour regardless of situation
Community – To give back because we can,
because we care and because we believe that
everyone doing a little can accomplish a lot
6
Tried-and-True: Best Practices from
NADA 20 Groups (cont.)
END OF MONTH CHECKLIST FOR THREE-DAY CLOSE
Day 1
Day 3
Prepare and post commission payroll accrual
All accounts payable invoices must be turned
into the office by noon
New and used vehicle physical inventory
turned in by 5:00pm
Check expenses posted for month and accrue
for those not posted
Print reports for management to review
Reconcile with schedules
Trial balance
Day 2
All car deals turned into the office by noon
GL history for expense accounts
Expense trend analysis
F&I logs turned into the office by noon
All repair orders and parts tickets turned into
the office by noon
Reconcile work in process inventory, sublet
inventory
Balance inventories: petrol, oil and grease
Reconcile car deal accounts: contracts in
transit, down payments and lien payoffs for
trade-ins
Balance car sales/invoices and wholesales
Reconcile the new and used schedule
balances with the car folders
7
Extra Credits – The Pyramid Bonus Scheme
•
The pyramid is a bonus scheme, which has been tested throughout many dealerships in the US.
•
From gross to ageing and anything else you can or want to emphasise.
01
02
Identify the
challenge – in this
case, the dealership
has an issue with
aged used vehicle
inventory
Step 1: If a salesperson sells the 10th oldest used
vehicle, they move into the apex of the pyramid.
Step 2: When a subsequent older vehicle is sold,
for instance the 9th oldest vehicle, it replaces
the vehicle in the apex of the pyramid and the
previous vehicle is downgraded to the 2nd block.
Step 3: Now let’s say the 8th oldest vehicle is sold,
it goes to the apex of the pyramid, the 9th oldest
vehicle is downgraded to the 2nd block and the
10th oldest used vehicle now moves to the 3rd
block, and so on.
For a vehicle in the apex of the pyramid, the
salesperson receives a bonus of $500.
On the 1st day of
the month list your
aged inventory
This can be used to calculate ‘bonus’ gross profit
per vehicle, ageing or anything else you want
to focus on. Importantly, you do not pay any
‘bonuses’ until all the blocks are filled.
1. Oldest
Conclusion
2.
The Tried-and-True: Best Practices from NADA 20
Groups is one of the best attended sessions of the
conference. Many of the ideas are not new, but
as a minimum they are a reminder of good ideas
that can improve your business.
3.
10. Newer
8
9
10
Grey = step 1
Orange = step 2
0
ea
10
Light green = step 3
00
$3
9 10
Key:
0
$5
Set a bonus scheme
(based on the
pyramid)
50
$1
ea
03
Bonus scheme example
a
5e
$7
8
Guided dealership tour – AutoNation
Nissan, Las Vegas
AutoNation is America’s largest automotive retailer. It is a listed company and
is a component of the S&P 500 Index. AutoNation owns and operates over 340
new vehicle franchises in 15 US states and has sold over 10 million vehicles.
Driven to be the Best
Operational excellence and a
focus on the customer shape
AutoNation’s driven to be the
best vision
Customer Focus
Information and e-Technology
Productivity
Experience
Brand
Scale
Operational Excellence
As part of the AutoNation group of dealerships the following customer focused values are marketed:
$
AutoNation pricing
Worry free pre-owned vehicles
Customers will see a low price, upfront, on
every car, truck, and sport utility, saving them
time and money.
Every pre-owned car AutoNation sells is Recall
Free and comes with a Worry-Free folder that
includes a money-back guarantee, limited
warranty, even a CARFAXTM Vehicle History
Report.
Money-back guarantee
Manufacturer certified
AutoNation back their pre-owned vehicles
with a no questions asked, 3 day, 150-mile
money-back guarantee.
Many pre-owned vehicles come with a
manufacturer backed limited warranty.
Mega selection
AutoNation certified
With over 100,000 vehicles from coast to
coast, chances are AutoNation have the exact
vehicle customers are looking for.
Pre-owned vehicles with a 125-point
mechanical inspection and a Worry-Free
folder.
We’ll buy your car
AutoNation provide a Guaranteed Trade-In
Offer honoured for 7 days or 500 miles at any
of their locations.
No-hassle financing
AutoNation offer a wide range of finance
and lease programs with a menu that clearly
presents all the options and prices.
$
Special value vehicles
These vehicles are generally a little older and
have higher mileage, but most are priced
under $9,995.
125-Point inspection
Pre-Owned cars and trucks that have been
checked and inspected in 125 different places.
Source: AutoNation
9
Service and Parts
Financing
Touring the dealership with the Dealer Principal, a couple
of things struck us:
We then walked the new and used car lot and spoke about
‘financing’. Personal credit scores are important in the US.
It is the lender who determines the rate largely based on
the customers’ credit score, which is a number assigned
by credit bureaus based on the customers’ debt levels, and
how good they have been at paying bills on time, etc. The
maximum score is 900 but credit scores of 720 and above
get the best loan rates.
The Dealer Principal
didn’t start the tour in
the new car showroom,
instead it was the service
department explaining
that there is a ‘walk
around’ each vehicle with
a potential customer
‘Don’t commit if you
cannot deliver’ – it is
important that any
commitments made to
customers are met, that is,
do not promise a vehicle
will be ready if they know
they cannot meet that
commitment
Tyres are used as a
retention tool
Technicians order
parts from the bay (via
computer)
The 180 point preventative
maintenance inspection
checklist is used to assist in
an upsell
They aim for $150 upsell
per RO
5 day reconditioning goal
for used vehicles
Used vehicles
Used or pre-owned vehicles are ‘market priced’ with full
transparency. They build the value up-front by having in
each vehicle:
• Kelley blue book value (red book value)
• RO outlining the level of reconditioning performed
• RO outlining the cost of 125 point safety inspection
• Price to market check.
Used vehicles in general are negotiated in a price range
of $250 from the window price. At AutoNation they are
focused on ‘dynamic’ pricing with dealers continually
updating their pricing in a minimum 5 day cycle and
referencing this pricing to the internet.
New vehicles
• The new car show room had a round table system –
looked like a ‘café’
• 11% conversion rate for internet enquiries, AutoNation
benchmark is 10%
What really struck me was that the guided tour by the
Dealer Principal took us through the dealership by profit
centres - service, parts, finance, used and then new vehicle
department.
In our next edition, we will cover the following
topics:
• #50 Dumb: 30 Social Media Mistakes Dealers
Make
• Learn to Leverage the Power of Group
Operations
• Create a Blueprint: Thrive in Today’s Digital
World
• The New Internet Dealership
• Conquering Customer Retention Forever
• Beyond BDC – The Business Development
Dealership
10
About Pitcher Partners
Pitcher Partners is an accounting, auditing and
business advisory firm providing personal service
and quality advice to high wealth individuals, small
to medium public companies, large proprietary
companies, local government and privately owned
businesses.
Pitcher Partners is a
national association of
independent firms.
Liability limited by a scheme
approved under Professional
Standards Legislation.
An association of firms located in Melbourne, Sydney, Perth, Adelaide,
Brisbane and Newcastle, Pitcher Partners is purpose-built for the middle
market. We have a strong reputation for providing personal service and
quality commercial advice to our clients across a broad range of industries.
On 1 November 2015 Moore Stephens Sydney and Pitcher Partners Sydney merged to become a new Pitcher Partners
Sydney practice. The combined expertise and resources means that clients will benefit from greater infrastructure
support both locally and nationally through the Pitcher Partners association.
Our commercial services
to dynamic businesses
Financial essentials
• Accounting and Business
Advisory Services
• Audit, Risk Management
and Assurance
• Internal Audit
• Recovery, Turnarounds
and Insolvency
• Tax advice and Compliance
Planning and growth
• Business Consulting
and Commercial Advice
• Business Performance Improvement
• Business Structuring
• Corporate Finance
• Corporate Governance
• International Business Advisory
• Investment Advisory Services
• Succession Planning
• Superannuation Services
• Tax Consulting
• Technology and IT Consulting
• Valuations
Our private wealth services
•
•
•
•
•
•
•
Estate Planning
Family Office Management
Investment Advisory Services
Philanthropy Services
Succession Planning
Superannuation Strategies
Tax Advice and Compliance
Industry specialisations
•
•
•
•
•
•
•
•
•
•
•
Automotive
Retail
Professional services
Health and aged care
Manufacturing
Not for profit
Property and construction
Government and the public sector
Agriculture
Food and beverage
Hospitality
$3.8bn
Worldwide revenue 2015 (USD)
141
Countries
28,000+
Partners and staff globally
100+
Partners nationwide
1,200+
People nationally
Sydney
240+
Total Sydney staff
26
Sydney partners
MELBOURNE
John Brazzale | Managing Partner
+61 3 8610 5000
partners@pitcher.com.au
ADEL AIDE
Tom Verco | Principal
+61 8 8179 2800
partners@pitcher-sa.com.au
11
Firm
locations
Pitcher Partners has the
resources and depth of
expertise of a major firm,
but with a smaller firm
feel. We give our clients the
highest level of personal
service and attention.
That’s the difference.
SYDNEY
Rob Southwell | Managing Partner
+61 2 9221 2099
sydneypartners@pitcher.com.au
BRISBANE
Ross Walker | Managing Partner
+61 7 3222 8444
partners@pitcherpartners.com.au
PERTH
Bryan Hughes | Managing Partner
+61 8 9322 2022
partners@pitcher-wa.com.au
NEWCASTLE
Michael Minter | Managing Partner
+61 2 4911 2000
newcastle@pitcher.com.au
Pitcher Partners is a national association of independent firms.
Liability limited by a scheme approved under Professional Standards Legislation.
12
Our global
reach
Baker Tilly International is one of the world’s leading
networks of independently owned and managed
accountancy and business advisory firms united by a
commitment to provide exceptional client service.
Every day, 27,000 people in 133 countries share experiences and expertise to
help privately held businesses and public interest entities meet challenges
and proactively respond to opportunities. International capability and global
consistency of service are central to the way we work.
28
North America
Firms
36
Middle East and
African Firms
Global
Experts across a wide range of
industry and business sectors,
each Baker Tilly International
member firm combines high
quality services and in-depth
local knowledge.
154 independent firms come
together across four geographic
areas. Sharing knowledge
and resources, our business
approach brings together the
power of the global network to
deliver exceptional results to
clients globally.
15
Latin America
Firms
13
Key
62
European Firms
24
Asia Pacific Firms
Local
Pitcher Partners is an independent member of
Baker Tilly International. Our strong relationship
with other Baker Tilly International member firms,
particularly in Asia Pacific, has allowed us to open
many doors across borders for our clients.
Get in
touch...
John Gavljak
Partner – Automotive
+61 2 8236 7759
john.gavljak@pitcher.com.au
John Taouil
Manager – Automotive
+61 2 8236 7739
john.taouil@pitcher.com.au
MELBOURNE
+61 3 8610 5000
partners@pitcher.com.au
ADEL AIDE
+61 8 8179 2800
partners@pitcher-sa.com.au
SYDNEY
+61 2 9221 2099
sydneypartners@pitcher.com.au
BRISBANE
+61 7 3222 8444
partners@pitcherpartners.com.au
PERTH
PITCHER.COM.AU
+61 8 9322 2022
partners@pitcher-wa.com.au
NEWCASTLE
+61 2 4911 2000
newcastle@pitcher.com.au
Pitcher Partners is an association of
independent firms. Liability limited
by a scheme approved under
Professional Standards Legislation.
NADA Report 2016 Series 1_050516