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Why Automotive Dealers Remain Critical to Traditional OEMs

Speed And Motion In Tunnel

During this holiday season of thanks and introspection, I find myself reflecting on things that I cherish the most in my career. The automotive industry is at a great inflection point where consumer preferences dictate that there must be changes in how the industry operates. First off, Digital First and researching, shopping, and doing more online is not a fad or something that is going away. Consumers also want to do more commerce online as they are used to buying things online at home and with much fewer in-store visits. EV-only manufacturers sell their vehicles direct to consumers and for traditional OEMs, some of the process of buying vehicles can be shifted online, such as configuring vehicles, placing orders, and reserving vehicles through online deposits. Even though some of the buying process takes place at dealerships, this shift is well underway.

It leads many to question the role of dealers in the future state of the automotive industry. Some folks predict that dealers will eventually be a thing of the past. I don’t share this view of the automotive industry. While I believe consumer-generated preferences and increased personalization will create changes, I see a large play for the dealers with the traditional OEMs. My perspective comes from the value that I see Dealers can play in education, service, and as trusted advisors to the OEMs consumers. I think the most significant changes are in three basic areas. More of the buying process must take place online with D2C, dealers must make substantial changes to get ready for EV, and lastly, the shift dealers must transition from the sales associate to the consumer. These are three big shifts that are important for the lasting growth of dealers, but really the automotive industry as a whole.

For the last 12 years, I have had the unique privilege and honor of serving automotive dealers. I got to understand them and how they run their businesses. I have worked with dealers all over the United States and Canada and found them to be great businesspeople with strong roots in their local communities. These folks are much more than dealerships; they are the lifeblood of local communities for their OEMs. During Covid, when we had lockdowns, so many of my dealer friends provided alternate ways of service for vehicles, and they worked tirelessly to make in-store visits safe with expensive and exhaustive cleaning techniques.

I also see how much dealerships support their communities, with undying support for police, fire, and education. They provide meals for their communities and always seek opportunities to strengthen their local communities. They support schools, churches, and all kinds of shelters as they see themselves as part of the community family. They also provide that brand extension to OEMs in these communities. Every dealer I met embraces their local roots and treats their community as an extension of their own family. The solutions that they generate are creative and bring the community together. They are engaged in the local sports teams and are the leaders in sponsorship and event marketing.

The localness of dealers extends the OEM’s brand into the communities. This local extension is critical to the OEMs brand and can help with the customer journey and lifetime value of customers. I realize there must be a significant evolution in the consumer experience at dealerships, and we need to redefine their role. But at this point, the partnership seems to be as valuable and important as ever in the automotive industry.

I have also had a great mentor, Jim O’Connor, who spent his 42 years at Ford Motor Company as an advocate for dealers. Jim always appreciated and valued the strategic relationship that Ford dealers provided to Ford Motor Company. He was able to represent dealers at the highest level of Ford Motor Company, and it was a great partnership. He and I still routinely visit dealerships when we are together just to say hello and get a great read on the consumer. I love how everything fits together and works together so seamlessly. If managed well, dealerships can be a sustainable competitive advantage in the world of EV and Connected Vehicles.

Buying a new vehicle remains a brick-and-mortar transaction, an actual physical exchange of paperwork for keys. The sales environment is changing, however, as dealerships face up to the internet’s new reality. Today’s consumers, millennials in particular, demand transparency, simplicity, speed, and trust. Consumer expectations are being shaped by retail experiences, primarily online. And while I think change is the one constant, I see the dealers at the apex of that change and consumer experience. I expect that for OEMs, this local connection continues to extend and achieve wildly successful results.

I am honored to watch automotive dealers’ great work and see them evolve to greater heights. I think all great relationships need to evolve and stay current with the changing consumer preferences. However, this connection and synergy changes dealers have a huge role to play with the traditional OEMs and their consumers. At the end of the day, change happens one transaction and one community at a time.

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Keith Tomatore

A long-time senior executive in the auto industry who has held the position of SVP, Retail Marketing at Global Team Blue (GTB, a WPP Company) on the Ford Retail Business. In this role, Keith worked with the Ford Dealer Associations across the country to help them with their Precision Marketing and digital efforts. Also, he served as CEO of iFrog Marketing Solutions, which focused on Automotive advertising solutions for Tier 2 and Tier 3.

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