I was in the East China city of Suzhou in eastern China last week for the annual meeting of the China Automotive Dealers Association. Though China’s passenger car industry, and thus its dealership network, is relatively young, I was struck by how similar Chinese dealers’ concerns are to U.S. dealers’ concerns.
China’s dealers are also facing severe new car margin compression and slowing sales. They are looking to used car sales, and seemingly to a lesser extent, expanding fixed ops income, to boost the bottom line.
I didn’t hear that much talk (though perhaps I just missed it as this was all in Chinese and I was pretty jet-lagged so my brain wasn’t thinking in Chinese very well yet…) about how dealers will adapt to the changing retail environment with the expansion of car sharing, ride hailing, and other alternatives to full ownership of a vehicle.
That is surprising as Chinese consumers are tied to their digital devices to a degree U.S. consumers aren’t (yes, they are though I know that’s hard to believe), and China’s car retail environment will likely move to alternative forms of ownership faster than the U.S will.
I am a member of the CADA Experts Committee, and as such I gave a short presentation on AutoNation’s moves over the last few years to diversify its income streams and begin to give its dealers a foothold in the car-sharing/ride-hailing sector.
AutoNation hopes that kind of forward-looking business planning will keep it relevant in a changing world. Our first column this week takes on the topic of dealers’ need for business planning. As it is written by Dan Schneider of Rawls Group, which focuses on succession planning, you won’t be surprised to find out that the first element he recommends dealers have in place as they begin to plan for the future is the right kind of work force. Read his column to find out more.
Also this week we have the first column from a company that is a new contributor, though the column’s author has written for us before. Duncan Douglas looks at the value of having a property fully assessed before entering into or exiting a lease agreement. Doing a LECA can save you a lot of headaches, he says.
See some of you here in LA at the auto show next week, I hope.
Meanwhile, check out this week’s Transaction News.