By Oren Tasini, Esquire – Haile, Shaw & Pfaffenberger, P.A.
The coming of autonomous vehicles is presaged by the technology that already exists in automobiles. This technology is growing daily and the race is on to see who will own the “tablets” that vehicles will become. Manufacturers are aware of the threat technology poses. Why else would GM have invested $500 million in Lyft, or Toyota and Uber have signed an agreement to cooperate on mobility services? But the challenge to be first is a difficult one. When competing with Google and Apple, you better bring your “A” game.
Meanwhile, my wife’s car requires a different 4-digit code to sync her Bluetooth than mine does. There are too many calls and time wasted, as a dealer fields calls from customers trying to decipher the inscrutable nature of blue tooth and NAV systems. The experience needs to be seamless, so it just happens, and customers say “wow”, and moves on to enjoying the tech and their car.
Dealers need technology that will create that “wow” customer experience. It can create additional revenue streams for dealers, sold completely independently from the vehicles. Dealers shouldn’t wait around to see if the factories will invest in, or provide, the “wow.”
The changes are already being felt. The example of PCs is instructive as to the first to market principle. Apple did this with the iPhone, creating a product that everyone wanted and still wants. Once third-party-owned software dominates the automotive space, the manufacturer will be weakened. Third parties may license their software to manufacturers, or sell it directly to dealers as add ones.
Dealers still have a hard time seeing this as a good investment. If you ask a dealer what his most important asset is, he or she will often mention the “people” first. Next, the dealer will mention the brand. Perhaps the dealer will mention the real estate and then grumble about the monthly expense of rent, maintenance and factory image upgrade costs.
Inventory — the actual vehicles — is seldom mentioned. It is just steel, glass and rubber, burning money each minute it sits on the hot asphalt. As with any business, the faster inventory turns the more money to the bottom line.
However, technology is an opportunity to sell more cars by speeding up the sales process, which is infinitely too long. By the time a customer arrives at the dealership, she has made the buying decision. The only question is how long will it take.
Dealerships should be able to initiate another conversation with a customer: Would you like to sign up for a “service” that makes your car a WiFi spot and syncs it to your phone and tablet and home? How about a software that will remind you of appointments as you drive and deliver texts to others automatically if you reschedule a meeting, or, based on driving time due to traffic, you are going to be late? Software that senses you are close to home and turns the garage light on?
Dealers may be slow to invest in such software-based services because there are a dizzying number of vendors out there. And technology is changing so quickly, it is hard to know what the latest and greatest is. Indeed, I have clients looking at a wide range of solutions, including the use of iPads and software though the entire sales process, with CRM integration, but they can’t make a decision because it doesn’t feel the products offered an end-to-end solution. Meanwhile, I have read that dealers using tablets are getting better CSI scores.
I will admit I am an early adopter. I bought one of the first Betamax players because it was much “better” than VHS. I have spent way too much money and time paying for technology that quickly becomes obsolete. I no longer do. Dealers wanting to avoid this expensive trap may be paralyzed by indecision.
Truth be told, if the manufacturers are not the owners and providers of technology, this may benefit dealers. The factory will be in a weaker position to demand image upgrades, CSI compliance, or the imposition of stair step incentives because it does not control the most important asset in its product – the technology.
What Microsoft did with software is instructive. It made personal computers a hunk of circuit boards which were worthless without Microsoft products. It forced manufacturers of PCs to engage in a race to the bottom, competing on price alone.
Dealers are in a bind. They do not want to fight the last “war”, investing money and the precious time of their employees in outmoded technology that is quickly out of date, or worse, fails to provide the promised solution. Nor can they wait to see who will provide the best technology and then invest in a proven solution. Faced with this choice, dealers will spend less, in unproven stop gap solutions. Facing constant change, it is the only prudent choice, but not necessarily the best choice.
Oren Tasini is a partner at law firm Haile, Shaw & Pfaffenberger, P.A. in North Palm Beach, Fla. He can be reached at (561) 627-8100 or otasini@haileshaw.com.