Dealer Trust Results, Gen Z plus F&I

Paul J Daly: 0:12

Good morning. It is the second of five Fridays. Yes, five, five, Friday and five Saturday March. I have Jordan Cox in the studio today with me we're talking about dealer trust and Gen Z, and a surprise rivian. Whatever else comes up. Is that a new guitar behind you

‍Jordan Cox: 0:32

know, it's the same one. I wish it was new

Paul J Daly: 0:37

to one. Yeah, the green ones.

Jordan Cox: 0:39

Now the top of the two ones my favorite. That was it.

Paul J Daly: 0:42

That's why it's right in the middle. That's favorite, favorite child,

Jordan Cox: 0:44

right next to the longboard.

Paul J Daly: 0:46

Hey, oh my gosh. Yeah. Got it. Got it. Oh, well, look, we are just Kyle and I were on the ground at dealerships and industry partners of the last few days, Kyle's flight got we were both supposed to get in like Well, after midnight last night, I got home and he was like, he texted me that they were moving him from one plane to another plane. So that's never good when that's happening. Two hours after your flight was supposed to have arrived home so he's not quite in the saddle yet. Georgia. Georgia has always bright eyed, bushy tailed, ready to go.

Jordan Cox: 1:16

Anything for Paul on the morning show, right? Yeah,

Paul J Daly: 1:19

that's right. I always say, oh, a couple things that talked about obviously got a soda con coming in 67 days, coming in hot. The early bird discounts are ending soon. So like real soon, like, less than a week. So if you're gonna get your tickets, get them now save some money come to the best event you've ever been to on May 15 and 16th. And we'll just call it it. Call it a quarter. What do you say? There you go. We're gonna have a lots of things coming up. Well, can breakfast, Maryland auto dealer association is hosting their annual meeting in conjunction with the Soto concert. A lot of great dealers, industry partners, dealer Association, we have probably like four to six dealer Association. Presidents representing we I can't go through all the things right now. But we do have we'll get Dara who is everywhere on the internet right now. Author of unreasonable hospitality, and he's our keynote speaker. So come meet him in person and be the coolest person you know of. How's that? How's that for the vibe? There you go. We're gonna be firing up the effective podcast stage. It's just going to be a whole thing. And we do have a couple more announcements could probably gonna come and come at you next week. But we're running short on time today, just because of all the flights and the shenanigans. Because it's Friday. We have things to do. So let's get into some stories. And we'll just talk through these. Try to bring you a little insight even so the KPA dealership trust survey sheds light on significant trust gap in the automotive sector, with a majority of consumers skeptical about dealership honesty and pricing and practices. So this was actually a survey conducted by Harris Poll survey 2000 adults in January of 2024. This year, over 30% of respondents had a negative experience while 75% had a negative perception. That makes sense. It does. On the experience side 34% say they felt pressured for add ons. So we're talking to f&i. We have an f&i story next about millennials 30% agreed on the price only to find hidden fees in the paperwork. 28% felt the salesperson was trying to trick them, and 29% left and went to another dealership. On the perception side 86% concerned about hidden fees 76% Don't trust dealerships to be honest with pricing. 84% say price transparency is lacking in most dealerships. 84% said that reviews they read are important with 93% of Gen Z, Gen Z buyers saying they use reviews and that negative reviews significantly impact their experience and their perception of dealers. So Jordan, I know we have a lot of good operators, but sounds like we have some work to do.

Jordan Cox: 3:56

I would say so like real quick on this. The one thing that comes to my mind is there's so many people that are looking to buy vehicles right now. And because we know that sentiment is so negative on that side of it, especially with automotive retail, that when there's a store that can perfect that and really get that referral process going. That's really where there's some some money and some referral opportunities to be made. You know,

Paul J Daly: 4:18

the negative sentiment and negative perception This ties in with the cars rule. And we know that the cars role is kind of on hold right now. So everyone's kind of it's really dropped off the face of the earth when it comes to conversations. But the reality is the sentiment is still there. And I know there's big conversations, lots of ways ways to do business, some one price negotiation free, but the bottom line is this know that that part of the experience customers are hyper sensitive to it add ons at the end, feeling like they had one conversation on the floor. And then another conversation in the f&i office. Yeah. And so just very, very sensitive on that part. And speaking of people being sensitive in the f&i office these days stories really do run together. This is another story from automotive news today Gen Z. So they're now ages 20 to 25. Yeah, Gen Z are 25. That's crazy. Yeah. And they make up now 18% of the US of the US according to a COC study that they presented at the 2024 NADA show. And it's looking like they have a unique appetite when it comes to f&i, the process, the products. And the key to unlocking the good stuff isn't all digital as you might think. So despite being digital natives, Gen Z buyers prefer the blend of online and in person experience is something that we've been talking about a lot when we talk to people on the street anecdotally, they always say they like coming into the store. So according to the presentation by Cox's Tracy, Fred, he said there are people who will spend time online to do research, then come into the dealership. So rather than waiting till the very end of the sale, to pitch financing, which is very common practice, move it to the front. So you're talking about the deal holistically. We got some input from David Lawrence, Director of Finance and development of LaFontaine Ford of birch run in Michigan, who was also by the way, ranked number one for millennial employees or by millennial employees in the best dealerships workforce. So they have a little street cred on this one. Basically, they said that the Gen Z doesn't just want to frivolously spend, they're much more cost conscious than their millennial millennial counterparts. And he said, transparency and dealing with Gen Z buyers is is paramount. They're frugal. They want to know what the full cost is. And they want to talk numbers. This is interesting. They want to talk numbers before they test drive. How about

Jordan Cox: 6:36

that interesting, which really flips the entire process on its head, doesn't it? Isn't it really

Paul J Daly: 6:41

And who was it? We were talking just the consumer journey is dead? Right? Yeah. Well, the consumer the path the purchase, it's like the consumers the architect, now, they're saying like, no, no, no, I don't want to do this. Drive it get in the ether. Talk one number go in the f&i end up adding adding adding, they don't like the surprises, they like the planning. So, you know, I think I think some dealers are more capable than others are making this pivot quickly. And then some, it's gonna be real hard. Yeah,

Jordan Cox: 7:06

well, I forget who said it, but they said it best is we look at it as like a selling process for us. But really, we need to have a better buying process for the customer. And when we can really let them buy the way they want to buy, especially with knowing this information for the next generation, that's going to make a huge difference, process wise, which then turns into better closing rates and just better efficiency at the store as a whole.

Paul J Daly: 7:29

You know, when you were when you were in the stores, and you were marketing to I mean, millennials Gen Z years, did you have any like special trajectory when you made content or that grew part of the process architecture, how you spoke, how you talk to them, the meet and greets and all that. So

Jordan Cox: 7:46

like a few things come to my mind, especially back when I was selling to because I sold for seven years before that. I was always super upfront and super transparent about what was covered what and what wasn't because we were just a used or used import lot. Yes, it was luxury side of it. It was I guess we do carry Volkswagen, Audi, Mercedes, BMW, all the European imports, but like being really upfront about that, and having that conversation about what is covered and what isn't, before we even go on a test ride made a huge difference. And I'm talking like warranty wise, because sometimes you would have a, you know, BMW would do a four year 40,000 mile warranty. And then that's also for their powertrain so that I'm sorry for your 48,000 mile warranty. And that's for their powertrain too. So now let's say you get a 50,000 mile vehicle, it's just at a lease, and you need to you need an extended warranty on it for coverage. That's that was super important, especially for the right people. So that's why I was changed Burbidge in that process.

Paul J Daly: 8:40

Understood. So my son is a millennial, he's 17 I kind of I always pay attention and observe what he does and how he buys it. And I will say it's like NZ now not millennial Gen Z Gen Z. Oh, when I say millennial, thank you. Yeah, Gen Z. And and I'll tell you what, like, very, very thoughtful about how he purchases things. Yeah. You know, how he researches things? How they there is definitely a sensitivity to like surprise, which is there's just surprise built into the f&i process. Sure, right. And there is there's like this build up and like, oh, well, you know, like trying to build value and then show the price. It's tough because when you build value and then show the price, I think Gen Z years have a tendency to feel like they're being they're being had.

Jordan Cox: 9:22

Yeah, and so they're being sold to instead of anything else.

Paul J Daly: 9:25

I know. I mean, that's all we have time for today. But I think the bottom line is pay attention to the human element because how someone's perceiving something is their reality whether or not it's been our process or not. So hey, weekends, a great time to pay attention to these things, adjust where necessary and sell some cars, everybody

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