Three Industry Thought Leaders: Key Changes in the Automotive Industry Part Two

(Ed note: this article first appeared in July 2023. As of mid-September it, and the accompanying video, has received the most views of all content on the Dealer Marketing Magazine website).

In Part One, Steenman engaged Hollenbeck, Phillips and Conley on Key Changes in the Retail Automotive Landscape.

In Part Two, the focus shifts to understanding the state of marketing, the rapid growth of streaming and role of video, and how to better service Dealerships.

The Participants:

• Ed Steenman runs a full-service boutique digital advertising agency that’s created highly successful digital and traditional marketing campaigns for Tier 3 dealerships.
• Nathan Hollenbeck is the Vice President of Marketing for Del Grande Dealer Group. They serve customers with 17 brands and 19 dealerships in the highly competitive Northern California market.
• Matthew Phillips is the CEO of Car Pros Automotive Group which operates seven dealerships (mainly Kia and Hyundai) throughout Washington State and California including Car Pros Kia Glendale which is the number one Kia dealership in the U.S. doing 5,600 new Kia’s a month.
• Mike Conley heads the marketing team at Sunset Automotive Family. Sunset is a long-time leader in the Seattle market with Ford, Chevrolet, Kia and Mitsubishi stores. Sunset Chevrolet is Washington State’s #1 volume Chevrolet dealer month after month…year after year for the past 15 years. With over 40 years of experience in the automotive advertising business Mike has been a consistent thought leader in the area of dealership advertising, sales training, and culture development.
• Steenman: Tell me about the state of marketing and dealerships at the present time. Are dealers largely going back to their previous spend levels and tactics that they used Pre Covid? Or do you feel like there’s been some fundamental shifts and changes.
• Hollenbeck: I know for us in particular, seeing where the market was going, we decided in Q3 of last year to really dial back on spend due to far less co-op dollars but also because we were going to (find a) more efficient way of managing the digital dollars. It was dual fold; we knew we were going to gain a lot of efficiencies by being agnostic to media and publisher -just fixating on our first party audiences and really like dialing that in.
• Phillips: I think it depends a lot on the dealership. We never stopped advertising, (although) we did shift some of our weight. We put a bit more into Used, our store in Glendale is the number one Kia CPO dealership in the country. But we’ve always believed that consistency with advertising is the key. On the other hand, I know a lot of dealerships did cut back on their advertising, and I think they’re really going to have to reevaluate their marketing commitments if they want to be competitive going forward.
• Conley: (Dealers) spent less money during Covid because they had less money to spend. If they developed their ad budget based on $500 per unit delivered- and you’re delivering half the units – the spend was half as much. We didn’t prescribe to that – we kept real aggressive. But what you saw disappear was any reference to saving anybody money. Now that there’s more new cars on the lot, dealers seem to have forgotten the lesson learned for the last two and a half years – that price didn’t make any difference to the customer. If you listen to your recorded phone calls or review your text messages or email responses, it’s usually the sales people that are bringing up price and creating the price objection before anybody does. They’re going back to trying to win that race to the bottom.
• Hollenbeck: We’ve added additional stores over the last year, but if you were to look at just the same stores we owned in 2019 versus today – with the Co-op dollar losses over the last two years- we really had to cut back on the new car advertising side of things. I started to pair that number up with our net cost per sale after co-op as a percentage of our total PDR and started trying to keep that under 5%, and that seems to be a good metric for us. Last September, we started to really draw things back to like $325 a car before co-op. Now that we’re starting to see things ramp back up, we’ll be in a better position to ramp up that spend.
• Conley: We never changed. We stayed the course. I’m not five hundred a car or anything like that – I’m a nine to one ratio. For every dollar I spend, the stores need to generate $9. It’s like 5 or 6%. Our tactics haven’t changed- our marketing approach- we’ve never, we don’t advertise cars. We promote Sunset and our value props like warranty protection for life, oil changes for life, and you just get more at Sunset — people do like that. That’s our entire model. If you’re a dealer that’s going to try to win on a price basis – that’s your strategy to be the cheapest place to buy a car – you’re probably shifting your spend from digital or traditional electronic media and moving more towards third party lead providers that default to the price. They’re lower funnel leads, so you’d think conversion would be higher, but in my experience, third party lead provider leads are probably the lowest converting. You spend a lot of money on the lead. And congratulations if you sold a car, because you didn’t make anything on it.
• Steenman: One thing that happened in the pandemic, a society-wide thing, was the rapid growth of streaming, and that’s an area that I’m focusing this particular interview on. Customers are making even more decisions prior to ever setting foot in the dealership, and video is playing a larger role than pre-pandemic. So- has that changed for you, or what are your thoughts on that?

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https://www.dealermarketing.com/articles/key-changes-in-the-automotive-industry-part-two/