The International Dealer Association Working Group covered two important agendas at the recent NADA Convention & Expo.
Direct sales between OEMs and fleet buyers, and the threat of changing finance and insurance policy were top of the agenda at the International Dealer Association Working Group (IDAWG) meeting in January.
The IDAWG currently includes six international Dealer associations representing members from the USA, Brazil, Australia, China, India and Canada.
A long time in the making, and with substantial contribution from AADA, the working group has recently taken off, and its purpose is to facilitate the sharing of ideas and experiences between Associations.
Whilst auto industry operating conditions vary from continent to continent, associations are nevertheless waging similar battles and facing common challenges – presenting an excellent opportunity for group discussion and potential troubleshooting.
And this is exactly what took place at the recent NADA Convention & Expo in San Francisco, when key members from each Association came together to cover two important agendas.
The first was the selling of vehicles directly between manufacturers and fleet buyers.
This is already taking place in countries such as Germany and France, and is creating an unfair advantage for OEMs, according to the Working Group.
AADA CEO Patrick Tessier, who was at the meeting, concurs:
‘By completely bypassing the dealership franchise system, OEMs are creating an unfair operating environment for the Dealers with whom they should be aiming to collaborate with’ he said.
Concerns were also raised about how direct-OEM-selling could potentially distort new-car supply and demand. Fleet buyers selling six-month-old vehicles to dealerships, already brimming with stock, was just one of the considerations raised. It was agreed that markets could be at risk of over-supply if direct-selling goes unchecked.
Also on the agenda was the threat to dealership finance and insurance departments through structural changes to policy.
This is something that has loomed over many automotive industries, including in the U.S. and back home in Australia.
In previous editions of Automotive Dealer, we’ve reported on how enquiries, and any resulting changes to the structure of dealership finance arrangements could have a disastrous impact on dealership businesses.
It is widely misunderstood by those outside of the retail automotive industry just how important the F&I department is to dealership income. Whilst profit on new cars continues to dwindle, the commissions and margins on F&I sales are becoming even more crucial to bottom line results.
The reality is that for many Dealers, F&I is the lifeblood of their operations and key to their long-term viability.
This is echoed by Tessier who draws on some startling industry statistics to reinforce the point: ‘In some markets F&I makes up more than 90% of the Dealer’s bottom line… whilst in Australia a recent report by Deloitte has uncovered a staggering 25% of dealership businesses are merely breaking-even or operating at a loss.’
As part of the IDAWG discussions, it was agreed that protecting dealership F&I arrangements is critical, and the various ways associations are planning to do this were shared.
In exciting news for Australian Dealers, the next IDAWG meeting is scheduled to take place at our very own AADA National Dealer Convention this year in August. The completely reimagined Melbourne event is expected to attract significant global attention, and the inclusion of key stakeholders from our fellow international associations is indeed, a great honour.