Cliff Banks
Cliff Banks has been involved with the automotive industry for nearly 20 years and has covered the industry for Ward's for nine years. He is an award-winning...more
The Lawrence Marshall dealerships in Hempstead, TX, shut down late last week, the latest high-profile victim of the ongoing credit crisis.
It’s another indication the retail model is changing in this country. The day of big inventories on dealership lots is coming to an end. In its heyday, the Marshall stores were mainstays on the Ward’s Dealer 500 ranking, often selling as many as 9,000 new vehicles a year. It sold Chevrolet, Cadillac, Ford, Hyundai, Chrysler, Dodge and Jeep brands from one large complex.
The group carried large inventories and marketed itself as the store that “clobbers big city prices.” It made up with volume what it sacrificed in gross profit. When Marshall closed, it had thousands of vehicles on its lot.
Floor plan lenders, though, now are frowning upon the practice of dealerships carrying large inventories. As sales collapsed, dealerships such as Marshall, find themselves losing money with no way to generate cash. The lenders are calling in the markers, putting numerous dealerships out of business.
Dealers such as Bill Heard, Denny Hecker in Minneapolis and Lawrence Marshall - -there will be others — who depended on volume will have a tough time surviving the current economic crisis.
Canadian-based Trader Corp., the vertical media business of Yellow Pages Income Fund, pays $35 million for a 20% equity stake in Dealer.com this week, with the option to increase its share over time.
Dealer.com will begin deploying its website services to Trader’s network of nearly 4,000 Canadian dealerships in second-quarter of 2009.
The applications will be offered under Trader’s AutoTrader brand, which has no relationship to the U.S.-based AutoTrader.com.
The solutions will include a French-language component.
Dealer.com announced last summer it was building websites and providing online search marketing for Chrysler LLC’s 3,300 dealers, taking the Internet firm’s dealership-customer base to about 8,000 dealers.
Dealix, a division of the Cobalt Group, has re-launched its Usedcars.com website, giving consumers multiple ways to search for a vehicle, whether they are looking for a deal or a specific model.
The new website continues to charge dealers only when interested shoppers contact them by phone or email.
ne of the more intriguing stories coming out of the NADA convention is Open Dealer Exchange, a the joint venture between mortal enemies ADP and Reynolds and Reynolds.
Publicly, neither ADP or Reynolds will state the obvious — Open Dealer Exchange is designed to go after DealerTrack’s core business of loan originations. The move is in retaliation for DealerTrack buying DMS vendor Arkona last spring.
Privately though, Reynolds Chairman and CEO Bob Brockman has told people that it is an attack on DealerTrack.
ODE says it takes the loan origination to a new level integrating the entire process into the dealer-management system, allowing the dealer to embed the credit application throughout the various steps in the sales process.
This will be a fun battle to watch…. stay tuned.
You can read more about Open Dealer Exchange here.
It’s true, some dealers are worried about selling too many vehicles. Today’s automotive retail world is one in which the normal rules might have to be tossed out the window.
Many ealers find themselves forced to spend more to generate each vehicle sale and pay higher interest rates on hard-to-get floorplan financing. One dealer even complains that he’s selling himself into bankruptcy.
One of the more surprising stories coming out of the NADA convention in New Orleans is the near-dismantling of JM Solutions. One industry executive calls it “stunning.”
First, it sold its flagship product, AAX, an inventory-management solution, to DealerTrack. There’s been no official announcement regarding what DealerTrack paid for AAX but sources confidently place the price tag at $32.5 million.
The sale happened so quickly, AAX was still in the JM booth during the NADA convention.
JM Solutions also is looking to sell its CRM tool DealerUps. Meanwhile, folks at DME Automotive say they’re not sure what their future holds.
JM Solutions, a division of JM Family Enterprises Inc., made a big splash in 2005 buying several companies with the intention of tying together several front end solutions. Read more here.
Unfortunately, the strategy didn’t work. Company President Scott Barrett retired following the AAX sale and reportedly is planning on devoting more time to his church.
On paper, JM Solutions was a good idea and it had good people trying to execute the strategy. Sometimes, things just don’t work out.
Ward’s Dealer Business Editorial Director Cliff Banks shares his views on emerging trends and technologies that promise to help dealers sell more vehicles.
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