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Kyle Mountsier: 0:00This is In The Dirt with ASOTU.Paul Daly: 0:04
We're here with another Canadian friend of ours. Jeff Williams, absolute results, you kind of new to the Brian Pasch ecosystem here year round. But why don't you tell the people what who you are and what you do for a moment. And then we're gonna get into some moments really interesting things that you're doing. Regarding agency, the agency model.
Jeff Williams: 0:25
Well, you know, what I just I traveled the world, literally, with my company, and I consult to do training and got some technology products, but do a lot of work in Europe, North America, Asia Pacific and just passionate about the business. I mean, I love the business that changed my life 28 years ago, right. And so to be able to see, where's the future going? And how do we help dealers be more effective today, but with the future in mind, right?
Paul Daly: 0:46
Yeah. And so you, you travel, you said, I travel a lot? You spend a lot of time in Europe, Australia, Asia, you're a member of some boards, and some organizations, I can't remember it. Was it? Was it Switzerland, Sweden? Oh, yeah.
Jeff Williams: 1:00
Yeah, one of the one of the larger automotive groups in Europe, I'm on a retail the future panel, and I advise them on that. And so we have conversations about what is what does retail look like? What does the ecosystem around automotive retail look like? Not just two, three years, but 5 10 15 years down the road.
Paul Daly: 1:15
And and that, in essence, gives us a little bit of a look over the horizon, because they're far more advanced, when it comes to their adoption of renewable energy. You know, they're moving into EVs even faster than we are they are Yeah, and there's actually some agency model things going on there. And conversations that are happening there that aren't necessarily a one to one to what's going to happen here. But they can definitely inform us. So you just talked about this. So give us a summary about what you presented?
Jeff Williams: 1:44
Oh, my goodness, well, what we have to do is, is when we understand that retail, the automotive retail and and where it's going, we have to look at the bigger picture of the whole automotive industry and how it's changing and how automobile companies are really becoming software companies. I mean, that's the Holy Grail, they're chasing, right? It's one thing to sell a car to a customer, but how would you get monthly recurring income from that customer, whether it's the data you get from that car, and you're partnerships with Google, like some OEMs have, or whether it's subscription services, as you get into EVs and autonomous vehicles like, Paul, what would you pay if you could drive into a shopping mall, literally get out at the entrance of the mall, and your car would go find a spot and park on its own? And then when you come out, you'd click something in your phone and come find you. But why would you pay for that?
Paul Daly: 2:25
Well, I can tell you what I pay if I decide to valet because I have a lot of kids. Right? Yeah. So every time and that's only if it's available. There you go. If you have kids, I don't know what the number would be. But I would definitely pay more. Yeah,
Jeff Williams: 2:38
absolutely. Without a doubt lately, so as car companies become software companies, it comes down to customer experience again,
Paul Daly: 2:44
so tell us about Yeah. And so tell us about there's a lot of kind of conversation, some panic, around agency model, a lot of like fight or flight mentality kicking in? How do you think that the US market should be approaching agency model learning from, you know, what's going on? And like, what is what is your perspective on it, because you spend a lot of time thinking about it. And I think there's a void of information there. So that creates a lot of anxiety.
Jeff Williams: 3:10
I mean, at the end of the day, with the agency model, the OEM is selling direct to the consumer, facilitated by the dealer when it comes to new cars, right? So the OEM is owning that relationship. Now the dealer still makes a solid commission, and varies by OEM on the new vehicle sales, they can still broke with a finance deal and sell after after service products as well. So you've got that they still take the trade and sell their used cars like normal, but it's that new car relationship that's facilitated. So the OEM owns the inventory. So it's a lot less risk for the deal. It's a totally different look on the p&l. It really is, it really has, but then they, the OEM says, but we need a better quality of customer experience, whether it's on those digital digital opportunities that come in the showroom experience, those are mandating a lot more of that experience. So there's consistency. Because OEMs today, they're betting their company on this new generation of product, they're betting the company, it's your cue Li and bet row in the
Kyle Mountsier: 4:01
same amount of money. And when you when you look at like the total investment and, and recovering that investment over a three to five year timeline, like that's, that's something that typically startup gather, I mean, startups are and investors looking at startups are willing to go, you know, hey, we can handle the risk, we're not risk averse, we're gonna be lean into some loss, right? But the shareholders and the stockholders for these legacy OEMs are constantly looking at margins, profit per quarter, you know, net revenue up and down. And so to go and throw all your chips in on something that you're not really sure if it's better or like, yeah, that's why there's
a dual strategy happening. Look what Ford is
Jeff Williams: 4:39
and that's what that's With earnings, and we doing by splitting their company with model E, right? And then were talking about this a while back, right? That's what the Ford blue, because the biggest challenge the biggest risk to an market trades on. Right wholesaling vehicles. That's OEM with agency model, the biggest risk is cash flow, cash what shows up. There's no line. That's like depreciation, flow, because you're selling to the customer. I mean, right now you roll 100,000 units off your factory production line, do you inventory depreciation, right? Like there isn't a dealer's p&l. get paid, right dealer? You get your money? Yeah, That's so that's right. And so they get paid in the agency. Well, they get paid when the consumer buys, which is why you're seeing the agency strategy or agent e agency s strategies coming in on EVs, because they're like startups, right? They're growing their market share from zero to hundreds to 1000s to 10s of 1000s, hopefully, hundreds of 1000s. So I might hate to give your opinions out and predictions out there. But with the internal combustion engines, where you got factories optimized on mass production, right, and the cashflow associated with that, I think you're gonna see that franchise model continue on the ice engine vehicles. But as specialty lines and EV lines get launched by legacy OEMs, there's gonna be a different playbook, and they're gonna be a different, maybe even dealer agreement. Right, what you're seeing right now.
Paul Daly: 5:56
So what you're what you're saying is that you do see a future where a split model is likely going to stick because of the different ways money's flowing. And people are used to assuming profit,
Jeff Williams: 6:09
the I assume. So that's what I see right now. You know, the other piece that's, that's a real thorn in the side of OEMs right now, is for you to have a real quality customer experience. You have to have hassle free pricing, you have to have one price, you just have to right. The minute the customer goes, you know, I loved how they treat me at this dealership, but I can see 500 bucks over there. And they go over there to see if I remember and get an inferior experience. You've destroyed customer experience. Yeah, but the way the franchise laws are set up in this country, it's it's illegal to mandate one price, right? It's against your console for less. Yep. Right. Right. Right. And so the really one of the only ways is to have an agency type of agreement to have that one price. So there's a lot of complex components to it. So it seems like a hybrid version seems to be happening now. Right now, with the legacy brands. Yeah, right. And so it's,
Kyle Mountsier: 7:00
what are one or two, like real quick, practical steps that dealers should or things that they should be doing? What questions they should be asking themselves right now, to plan for this? I mean, whether it'd be one month, three months, three years, or five years ahead? What What should dealers be asking themselves? Is it lean to consumer experience? Is it finding new revenue streams? Where where's the, where's the like, practical tactical things that a dealer should be looking at right now?
Jeff Williams: 7:26
Well, number one, stop worrying about owning the customer. Can I because there's always I own the customer, you when the customer
Paul Daly: 7:34
is gonna stop it. A customer doesn't want to be owned?
Jeff Williams: 7:36
No, no, but own the customer experience. Own the customer experience, so you know what, when it comes to digital experience, my team has it nailed, right? When it comes to shop experience, here's exactly what we do. We've got it nailed. When it comes to the ownership experience, here's exactly what we do. We've got it nailed.
Kyle Mountsier: 7:52
That translates into, oh, owning the customer. So you know what's funny? Like, it's almost even just and I'm gonna lean into my, my personal opinion here. It's, it's, you can own the customer. But you own the customer attention, not just the customer data, and I think everyone's fighting over customer data. And what we need to be fighting over is who like, oh, no, oh, no, you don't have to worry about customers, rather, because they only come to me, right? Like that's
Jeff Williams: 8:21
right. That is so true. And you know, I think the biggest risk now to the legacy OEMs is as they try to figure this out. All right, is whether it's an agency former bringing EVs to market and keeping the ice engines pumping and grow and keeping the cash flow rolling. As they tried to figure it out. They've got to learn to collaborate with their dealers. Otherwise, what's going to happen to dealers and OEMs are going to get stuck. And they're going to spend so much mental energy and illegal energy and dollars arguing and in fighting over it. And you're gonna have all these 26 New OEMs are just going to come
Kyle Mountsier: 8:52
and vinfast is going to IPO and just eat your lunch.
Jeff Williams: 8:55
Just 26 of them. Yeah, forget about myth, facets, you know, you're just gonna see that I'm already the market cap of Tesla's more than everyone else combined, you know, yeah. So they gotta work together. Yeah. Because if they just, if they just fight each other, they're gonna miss the real battle, which isn't each other. Right? Right. It's all these new competitors coming to market? Absolutely.
Paul Daly: 9:13
It's like we need to save like World War Two, we need to save Europe. Right? Like, that's really that's how we're going to win this thing.
Jeff Williams: 9:20
And you know, if a dealer wants to be Indus really be indispensable to your OEM. Yeah, right. How do you be indispensable own the customer experience, right? Make sure your brand elevates their brand
Paul Daly: 9:32
that's a great way to put it. If your individual brand elevates their brand guess what they're gonna listen. They're not going to mandate as much as they're going to listen.
Jeff Williams: 9:40
But you've got to make some changes for that to happen. I mean, you know, pick pick the the Eevee out there you know, and I know there's a weight of two months to two years for all of them just about it seems whether it's an ID three whether it's an E Tron, whether it's the lyric whether it's a Hummer, whether it's the lightning or the Maki, you're waiting, yeah, so But when a customer, the OEMs are betting their company on In these new generations, those products, right, so the customer reaches out to a dealership, and what do they hear? Oh, man, get on the list? How much are you gonna pay for it? I don't have any of those. They're not coming for for 18 more months. What just happened to the investment of the OEM? This is why is massive
Kyle Mountsier: 10:19
bet that they just placed as, as almost a startup. And these crazy investment was leading our thinking, that small dealership over there is is my investment boom?
Jeff Williams: 10:31
Well, what is the problem with that is that the person answering that lead or answering that call or talking to that customer, they are still paid like a Roman gladiator we will be killing 30. Right? So we have to start investing in people to invest in quality customer experience, right? We just have to do that if you do not change the compensation model, You'll never change the behavior. Right? And that's why I was excited to be here at MRC. And just talk to the number of dealers and groups, how many are doing innovative things with paid plans and compensation plans. It's really encouraging to hear there is right means I value you i value when you come to work and I give you expectations or what I expect from you. But I'm investing in you, right you not just what you are going to do for me, right, which is which is a different mindset. But it really is a paradigm shift to mindset that has to happen.
Paul Daly: 11:18
It really is. Well Jeff, it is a pleasure to introduce you to the ASOTU audience for the first time. Nice and looking forward to hearing more about what you're what you're learning discovering and what you see over the horizon. Thank you so much.
Jeff Williams: 11:29
It's a pleasure. See you again soon.
Kyle Mountsier: 11:32
Thank you for listening to In The Dirt with ASOTU. We love the automotive industry and the people who make it run day in and day out. We would love to connect with you more through our daily dose of fun, a free email that you can sign up for at asotu.com That's a s o t u.com. We put our heart and soul into it every day. Thanks again for listening. Join us next time for more Conversations In The Dirt with ASOTU