PUSHING PAST THE STATUS QUO:  Efficiency Translates to Profits in Your Wholesale & Retail Operations

Stephane Ferri, Divisional Vice President, Autotrader & KBB

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The Car Business Has Endured RADICAL CHANGE

S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

GLOBAL ECONOMIC CRISIS  

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S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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2015 WITH

17.5M  NEW VEHICLES SOLD  

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Source: Bureau of Economic Analysis (BEA)

1980 1985 1990 1995 2000 2005 2010 2015

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18

16

14

12

10

8

6

4

2

0

A Cyclical Market : What Goes Up Must Come Down

Light Total - not seasonally adjusted

Source: Bureau of Economic Analysis (BEA)

U . S . L I G H T V E H I C L E S A L E S

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Margins are contracting

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales-weighted average for KMX *, AN, PAG, SAH, GPI, ABG, and LAD

( P U B L I C L Y - T R A D E D D E A L E R S H I P G R O U P S )

Source: Company filings *KMX shifted forward one month to correspond with calendar quarter

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alternative ownership

ride sharing

car sharing

New Transportation Models

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Infuse Speed and Efficiency in the Wholesale & Retail Vehicle Life Cycle  

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The Wholesale Process Hasn’t Changed

W H O L E S A L E O P E R A T I O N S

( D E A L E R )

INVENTORY IDENTIFICATION

TRANSPORTATION/LOGISTICS

ACQUISITION

DETAIL & RECON

FLOOR PLANNING

MERCHANDISING

INSPECTION

INVENTORY MANAGEMENT

6-8

10+

PER YEAR

INVENTORY TURN

DAYS TO MARKET

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are satisfied with your current wholesale process

52% ONLY

Source: Manheim Vehicle Solutions Study

S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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manage all wholesale activities internally

OPPORTUNITY FOR PROCESS ALTERNATIVES  

Source: Manheim Vehicle Solutions Study

72%

S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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It’s Time for Radical Change to YOUR PROCESS

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S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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Improve Your Process, Become More Profitable

12-16x

3

PER YEAR

INVENTORY TURN

DAYS TO MARKET

W H O L E S A L E O P E R A T I O N S

( D E A L E R )

INVENTORY IDENTIFICATION

TRANSPORTATION/LOGISTICS

ACQUISITION

DETAIL & RECON

FLOOR PLANNING

MERCHANDISING

INSPECTION

INVENTORY MANAGEMENT

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Educational Sessions Available

Wholesale Educational Session 6 Ways to Speed Up Your Wholesale Operations

WHOLESALE

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1/2 the equation…

But that’s only

S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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R E T A I L P R O C E S S ( C O N S U M E R )

AWARENESS

PRICING

RESEARCH/SHOPPING

CUSTOMER HANDLING

TEST DRIVE

FINANCE

TRADE-IN

PARTS & SERVICE CRM/LOYALTY

The Process Hasn’t Changed Much

9.4 CARS

IN A LIFETIME

17 4002

Improving the experience can shorten the replacement cycle & encourage dealership visits

72% would visit

dealerships more often

if the process improved

53% would buy a

car more often if the

process improved

Source: Autotrader Car Buyer of the Future Study

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12 INCREASE OWNERSHIP

R E T A I L P R O C E S S ( C O N S U M E R )

AWARENESS

PRICING

RESEARCH/SHOPPING

CUSTOMER HANDLING

TEST DRIVE

FINANCE

TRADE-IN

PARTS & SERVICE CRM/LOYALTY

9.4 CARS

IN A LIFETIME

CARS

IN A LIFETIME

The Process Hasn’t Changed Much

Source:  AutoTrader.com  Site  Sta1s1cs  

AUTOMOTIVE 3 PHASES  OF  

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Inventory Discovery

Price & Model Comparison Matching

Buyers & Sellers

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30%

17%

17%

21%

11%

4%

Knew the exact vehicle that you wanted

Knew the vehicle make that you wanted

Knew body style but not the make/model

Didn’t know specific car but knew class

Didn’t know specific car but knew features

Didn’t know what vehicle you wanted

I N I T I A L M A K E / M O D E L P U R C H A S E I N T E N T

70% don’t know what they want to buy initially

KNEW SOMETHING

KNEW NOTHING

KNEW EXACT

Source: 2016 Car Buyer Journey Study

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purchased the vehicle they intended to buy

Source: 2016 Car Buyer Journey Study

71%

S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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REFLECT BUY SELECT EXPLORE DREAM

T H R O U G H O U T T H E S H O P P I N G P R O C E S S

Influencing consumers

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Consumers feel more positive about buying a house and remodeling their home than they do about buying a car

Source: 2015 MAGID

S T R A T E G I E S T H A T W I L L G I V E Y O U A C O M P E T I T I V E E D G E

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3RD PARTY SOLUTIONS PAY PER CLICK

Balanced Digital Diet

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Educational Sessions Available

Customer Handling Educational Session How To Deliver an Outstanding Customer Handling Experience

RETAIL

Trade –In and Pricing Educational Session Maximize Operational Profit and Consumer Confidence. Buy and Sell with KBB

Digital Marketing Educational Session Digital Marketing Strategy and Landscape 2016: Think Bigger About Advertising

Digital Marketing Educational Session Content Rules: How to Create a Complete SEO Content Strategy

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Sec*on  divider  

THE  CHALLENGE  Human Capital

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Source: Company filings, DrivingSales 2015

8.0%

9.0%

10.0%

11.0%

12.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales-weighted average for KMX *, AN, PAG, SAH, GPI, ABG, and LAD. *KMX shifted forward one month to correspond with calendar quarter

a year for the Industry $60 Billion

EQUATES TO of your gross profit margin on average goes to payroll

( P U B L I C L Y - T R A D E D D E A L E R S H I P G R O U P S )

Margins have Contracted

70%  

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TO

Total Dealership Employee Turnover Annually

36% 39%

Source: NADA Dealership Workforce Study 2015

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3 Year Retention Rates Declining

50% 47%

72% Sales turnover

33% Only mark salespeople reach 3-year

Source: NADA Dealership Workforce Study 2015

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Employee Educational Session “People: Your Only Sustainable Difference”

PEOPLE Educational Sessions Available

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Key Takeaways

Is it time to radically change to your process? Could infusing speed and efficiency into your wholesale & retail vehicle life cycle is a key strategy to maximizing your profit potential? Your people have a direct impact on your profitability

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PUSHING PAST THE STATUS QUO: Efficiency Translates to Profits in Your Wholesale & Retail Operations

Stephane Ferri, Divisional Vice President, Autotrader & KBB

Q&A