Nancy Phillips Associates - Blog , Auto Industry News

8 Key Points You Need to Know from the 2021 NADC Conference

Wed, 10 Nov 2021 13:46:51 -0500

We recently returned from the National Association of Dealer Counsel Convention (NADC) in Chicago. The keynote presentation by highly-acclaimed franchise law firm of Bass Sox Mercer, titled ‘Will Dealers Remain Relevant’ was a sobering message.

While it is difficult to focus on future plans when the present is so extraordinarily lucrative, the perspective of many in-the-know automotive attorneys is that it is critically important to consider the direction of our industry in order to secure your long-term goals BEFORE the pendulum swings.

Our Top 8 Takeaways from NADC:

1. ONLINE SALES AND DISTRIBUTION: It will only take one state to change laws regarding direct ordering and sales of vehicles to the consumer to result in a monumental change in direction for the rest of the country.

2. ELECTRIC VEHICLE REVOLUTION: The OEMs are working on the inclusion of direct-to consumer ordering and distribution as part of their proposed new Electric Vehicle Participation Agreements. These agreements are intended to be mandatory and will apply to all Dealers that sell electric vehicles.

3. SHRINKING MARGINS: For many reasons, the OEMs will continue to shrink the built-in profit margins between themselves and their Dealers.

4. GLORIFIED DELIVERY CENTERS: A long term strategy of converting dealerships to glorified delivery centers would remove the middleman and a wide moat of expenses for OEMs. The elimination of margins by substituting the payment to Dealers of flat delivery fees would accelerate that process.

5. THE POLITICS OF URBAN SCIENCE: Urban Science research allegedly shows that consumers wish to change the dealership model in order to deal directly with the party who manufacturers their vehicles. This research is often cited as the foundation for the justification for radical OEM direct initiatives.

6. VOLUNTARY INCENTIVE PROGRAMS: Increased utilization of Sales Incentive Programs in order to exercise control over certain market areas and Dealers and, in some cases, to support the re-alignment of market areas.

7. DATA CONTROL: The gradual takeover of customer data by OEMs and their increasing control of Dealer websites and other customer communications is seen by franchise counsel as part of a planned strategy to minimize Dealer independence and is a precursor of things to come.

8. VEHICLE OPTION PACKAGES: Certain OEMs have plans in the works to take in-house the upgrading of vehicle option packages so that they can deal directly with customers after the vehicle is purchased. This is being viewed as the beginning of a new initiative to ship basic vehicles to Dealers allowing the franchisor to control the customer experience post sale, thereby circumventing Dealers.

Industry Perspectives:

Sentiment and perspectives on our industry run the gamut from Optimistic to Concerned to Sobering:

Causes for Dealer Optimism:

· Very high profitability

· Lower expenses

· Increased online sales and cheaper digital marketing

· Low interest rates

· Higher dealership values

Causes for Dealer Concern:

· Inventory shortage

· Politics and the economy

· Mounting retail price pressure

· Expense of electrification

· Higher taxes

· Facility upgrade requirements

Sobering Perspective:

· The 8 key takeaways listed above reveal a new future that some Dealers will decide to adapt to while others may choose to exit.

BOTTOM LINE for Dealers:

It’s more important than ever to proactively prepare for your future, so when the current bubble inevitably bursts you will be well-positioned for what’s next.

How Our Team Can Help:

Benefits of Selling Your Dealership Now Rather Than Later

Thu, 28 Oct 2021 13:46:56 -0400

6 factors that are effecting today's buy/sell market

None of us know for sure the trajectory of our industry and our country in this most unpredictable of times. Between political upheaval, catastrophic events, vehicle inventory shortages and economic instability, the current profitability of the auto industry may not be sustainable.

Dealership Values are higher than ever. Prices for dealerships have never been higher and that is not going to be sustainable. Prices being paid for dealerships increased rapidly over the period of several months. While they are still quite high, when they begin to fall the change will be rapid.

Strong Qualified Buyers. Financially strong buyers are looking for good dealerships to acquire, however the list of those capable of purchasing at today’s high prices is short. For any given dealership, there are only a few ideal candidates. You need to be available when the right buyer wants you.

Consolidation is eating up independent and small cluster dealerships at a rapid rate. There comes a time when enough of the dealerships surrounding you may have been added to other groups, making your own inconsequential and far less valuable.

Taxes will surely increase. The earlier you sell the better your chances are of beating out the tax man.

Electric Vehicles and the Online Threat. OEMs believe the consumer prefers online sales and may be inclined to make online sales and direct distribution part of every Dealer’s new EV Participation Plan. Every Dealer will need to comply with EV requirements which will be quite costly, particularly for Dealers in smaller more rural areas where the benefits from the investment may be difficult to recoup.

Questionable Future. Rolling the dice on politics is a dangerous game. No one expects a reversion to incentivizing businesses through lower taxes and less regulation in the current administration. In fact the move towards socialism has been faster than any one, republican or democrat, could imagine. The move away, when it comes, will be slow, arduous and painful - and may not come in your lifetime.

The Phillips Report - 2020 Dealership Values in Greater New England

Tue, 12 Jan 2021 13:06:48 -0500

Nancy Phillips Associates has assisted Buyers and Sellers throughout Greater New England for over 30 years.

The Phillips Report represents Individual Dealers, Regional Dealers and National Dealer Groups throughout Greater New England which includes New England and Upper New York State.

Download Report

Returning to a new normal after COVID-19

Thu, 19 Mar 2020 17:25:48 -0400

We understand that the rapidly evolving COVID-19 situation poses unique challenges for everyone. Despite these difficult times we will all emerge and there will be many buying and selling opportunities that result.

Although our physical office is temporarily closed in accordance with COVID-19 guidelines, Nancy Phillips Associates continues to support our dealers. We are available to discuss any questions or concerns you may have about the future of your dealership and provide guidance regarding your best options as you move forward during this challenging time.

All of our conversations are always absolutely confidential.

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