The world has changed drastically since Mark Ward and Randall Bryson from BDO’s Automotive team attended the 2020 National Automobile Dealers Association (NADA) conference in Las Vegas in February 2020. Since then, the Australian state and federal governments have announced a range of stimulus measures to assist individuals and organisations impacted by COVID-19.
For automotive Dealers, the stimulus measures have provided some breathing space, allowing many to turn one eye back to business fundamentals. This renewed focus is critical, as prior to the pandemic the industry was facing significant structural change, in part reflected by a prolonged period of declining volumes and profitability. For this reason, now is the appropriate time to share some key insights from the NADA conference.
The 2020 exhibition was hosted in Las Vegas in February. This event is the largest Dealer convention in the world, with over 25,000 people attending from over 53 different countries and covers a range of topics, including-
- After sales
- Human resources
- Legal and regulatory
- Marketing (including digital marketing)
- New and used vehicle operations.
At the time of the convention, there were less than a handful of COVID-19 cases in the US and certain high-ranking government officials were telling the US people that this was a China issue, which puts into context the positive mood of the convention at the time. US Dealers were celebrating a strong market result for 2019 and forecasting much the same for the foreseeable future. Dealership values were also on the increase again and the hysteria around the impact of mobility services and autonomous vehicles seemed much more certain and less disruptive.
The key challenges and opportunities for the sector in the US is with regards to increasing their aftersales offering and retention (only 35% of vehicles services by dealerships). Similar to Australia, US Dealers have experienced gross margin erosion on new vehicles. While this has been somewhat offset by OEM KPI bonuses, US Dealers acknowledge the impact on gross margin in pursuit of OEM incentives that don’t always promote sensible dealership operational decisions.
The 2020 NADA Report explores insights from the conference and outlines recent changes that may impact your dealership.
To obtain a copy please contact Mark Ward or Randall Bryson from BDO Automotive or downloaded at https://www.bdo.com.au/en-au/insights/automotive
This article was written by Randall Bryson, Partner, BDO Automotive