I had the honor and privilege of spending time this week with Thomas “Mack” McLarty, a highly successful third-generation dealer from Arkansas who has also had a remarkable political career, including his service as chief of staff for former President Bill Clinton.
I was curious to get McLarty’s perspective on the differences between running a dealership and the White House.
In business, McLarty says decision-making might be considered easier because it’s often focused on issues and topics that fall in your realm of expertise—your business. If you can, your decisions follow your own timeline, giving you opportunity for careful, deliberate consideration of the factors at hand.
Government’s different. You face a wide-range of issues and topics on which your own expertise may be thin. Plus, you often need to make decisions quickly, or you risk allowing the media to set the narrative, and influence the scope of the decision itself. In this environment, McLarty says, input from knowledgeable advisors is not only critical, it’s essential to ensure sound decision-making.
It was a telling observation that struck me as extremely relevant for dealers in the current era of imminent disruption and uncertainty about the future of the car business. Change is coming fast, and dealers would be well-served, I think, to look beyond automotive retailing and their own expertise to map their future relevance and viability.
The conversation reminded me of a wise saying: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
I also gleaned a few nuggets from conversations on exhibit floor. Here they are:
“The future is frictionless.” Brian Benstock, vice president of Paragon Honda, New York, offered this take-away from his NADA workshop. It highlighted how he’s making every customer engagement, whether in sales or service, easier and more convenient. The strategy combines technology and tools to help Benstock and his team serve their customers in the more digitally enabled manner they now prefer. He attributes the two-year effort to helping him double retail sales.
Buy or sell? It’s a question on the minds of many dealers as they ponder the pace of technology-driven disruption and ongoing margin compression. I tend to agree with some of the buy/sell experts I talked to: It’s probably time for every dealer to determine whether they want to grow their business or be among those who sell their stores. If you look ahead at sales and profit projections, two things seem clear today. First, those who achieve greater operational efficiency and scale will likely have the greatest competitive advantage as margins continue to decline. Second, franchise valuations aren’t likely to get much better in the years ahead than they are today.
Service inefficiency. vAuto’s booth on the NADA exhibit floor sits next to the Xtime booth. The traffic there has been indicative of an understanding among some dealers that the time has arrived to do a better job providing a service experience that helps them retain a larger share of customers for a longer stretch of their vehicle ownership cycle. As the headline on Automotive News editor Jim Treece’s NADA Daily column puts it, “Sales are sexy but service is key to profits.”
I’m excited to see what the final day of this year’s NADA convention will bring. I’ll share more here tomorrow.