Four Reasons for Auto-Dealer Optimism
It’s easy to get caught up in news about declining vehicle deliveries, but Brian Allan of Galpin Motors stays positive.
Brian Allan of Galpin Motors, which includes the world’s top-selling Ford dealership, offers reasons he’s optimistic about the auto-retailing business despite softening sales.
He says it’s easy to get caught up in news about declining vehicle deliveries. (A seasonally adjusted annual sales rate of 16 million units in August finished well below the 16.5 million-unit SAAR expected for the month, according to WardsAuto data. It was the lowest SAAR since February of 2014.)
But Allan, group director-business development at Galpin, No.52 on the WardsAuto Megadealer 100, points to positives that keep him up. He cites these four:
Fuel economy has improved 100% since 1975. It now averages 27 mpg 10.5 (L/100 km), he says. “And gasoline, adjusted for inflation, is at an all-time low.”
The average vehicle on the road today is about 11 years old, meaning owners of the oldies inevitably will return to the market soon. Allan says a $3,000 repair bill on a vehicle valued at $3,000 is an inducement to buy a replacement. “In many cases it costs less to drive a new car with a monthly payment than to drive an old car with no payments.”
Although the average vehicle transaction price is about $34,000 today, new vehicles rarely have been more affordable, with income and inflation adjustments factored in. In 1995, it took 29 weeks of an average household income to cover the cost of a vehicle purchase; today, it is 24 weeks, he says.
Retailers are using new technology to serve and engage with customers. It’s a heightened way of doing business and staying in touch. That includes the emerging use of artificial intelligence. “AI will fill a gap, and dealers are in the best position to leverage it,” Allan says. “It’s fun being alive during the transition.”
He notes a study indicates consumers ironically trust information from a computer more than from a fellow human being. And, given the choice of receiving human assistance while shopping online, more than 77% of Millennials cite that as a last-resort option.
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