I’ve covered the auto industry for a long time, but mostly from the factory, automaker, supplier or Wall Street perspective. Before I got to Automotive News, I probably wrote more about the consumer experience than the dealer experience. That all made sense when I was writing for general interest newspapers or a financial wire service.
But I’ve always admired the entrepreneurial spirit of auto dealers, and I’m glad to have more exposure to them since I joined Automotive News almost four and a half years ago.
I remember David Hult, CEO of Asbury Automotive, before the pandemic talked about buying a used car from Carvana, just to learn what the experience was like and gauge how it stacked up against trying to do the same on his brand’s site. Compared to hiring a consultant whom you may or may not fully trust, the return on investment of that experience has to be off the chart.
So it’s through the lens of that example that I look at other public dealers willingly exposing themselves to the agency model of auto retail, which is just about the opposite of America’s franchise system.
For non-retail readers, the agency model involves the automaker owning the inventory and setting the price for new vehicles, while assuring some level of payment — presumably profitable — to the dealer, whose duty is to ensure a good customer experience, particularly upon delivery.
After automaker abuse of retailers in the industry’s early, Wild West years, dealers worked their state legislatures to ensure they didn’t get overpowered by their manufacturer partners again. In the US, dealers buy vehicles from the factory — literally as soon as they roll off the assembly line — and sell them for the best price they can, much like a grocery or furniture store, except with perhaps more geographic protection and with the complex , three-party relationship between consumers and manufacturers via warranties, recalls and other activities.