Garry Bartecki You know what they say…..
I hope you had a splendid holiday week! There certainly were plenty of football games to watch.
Besides a wicked hockey schedule related to my grandson’s two players, which is tough to handle when you have two players on different teams, it was a fun weekend and a relaxing Christmas week.
I spent a lot of time thinking about all the issues I mentioned in last month’s column and how they will impact the markets I follow, including lift truck dealers, construction equipment dealers, equipment rental operations, and contractors and/or customers who use the types of equipment noted. It certainly keeps me off the streets.
I go through many, many, many emails a day related to topics of interest. I also use YouTube to find issues related to my topics of interest. Doing so last week, I noticed comments about the auto industry that were a bit disturbing because they tied in with one of the email reports titled THE AUTO INDUSTRY WILL NEVER BE THE SAME. When I combined the two information sources, I was forced to concentrate on how this data could relate to the lift truck industry. Thus, the title for this month’s column because what happens in the auto industry will eventually work its way into your dealer operations.
The Auto Industry comments were in a report from the Bleeding Edge, for which Jeff Brown provided the content. It is a great tech financial and investment publication that I follow religiously.
My other sources for this month came from YouTube, from programs that cover the cost and value of new and used vehicles.
A summary of Jeff Brown’s comments is as follows:
- The U.S. auto manufacturers felt a need to become more of a tech company to increase their share values, like how Tesla is valued.
- To become more “technical,” they invested BILLIONS of dollars with little to show for it.
- Google and Tesla will provide autonomous driving software in 20 cities in 2025.
- Any car company without offering autonomous technology, like Tesla, will face financial issues and falling share prices.
- Car companies could license autonomous technology from Google or a major competitor, Tesla.
- It’s not a pretty picture for U.S. manufacturers and their dealers. Great for Tesla!
The YouTube contribution summary is as follows:
- Dealers have a lot of inventory to clear out to allow the 25 models to ship.
- Customers are not buying the high-priced models.
- The EV models are not selling as expected.
- CarMax is selling cars for lower prices than last year and making more money.
- CarMax is paying dealers less than they were last year.
- Dealers lowering trade-in values on used vehicles.
- The quality of foreign vehicles over the last 10 years has improved.
- There are many foreign models that can deliver 300,000 miles following a normal maintenance program.
- After initial depreciation, you can purchase a high-quality foreign model and still get 250,000 miles out of it.
- Why buy new, overpriced vehicles when you can purchase high-end models for much less money?
- Both dealers and OEMs are in trouble, more so for some brands than others.
So, the big issues to ponder are:
- How do the brands you sell compare tech-wise against competitors?
- Can you deliver your product along with tech value-added products, such as warehouse systems and manufacturing processes?
- Can you be competitive with price and produce more profit than in the previous year?
- Can you use your trade-ins and transform them into a refurbished unit?
- Are you providing a maintenance program that will stretch out the unit’s useful life?
There is no doubt customers will catch on to what is going on in the market. Their job, just like yours, is to stay a step ahead of them regarding technology, productivity, and efficiency. In short, more for less.
OEMs will find themselves in the same situation regarding inventory and new models. However, they do not have a CarMax to sell units to or have dealers sell units to who can, in turn, sell to other dealers or end users.
The way I see it now is that the most tech-advanced lift trucks will take market share. In terms of dealers, the most advanced tech dealers will take market share. If you happen to be a dealer who represents a high-tech brand and delivers high-tech information and services, you should be improving market share in 25 and beyond,
Another piece of information I picked up is that CEOs and CFOs plan to invest substantial time and money into systems and AI to make them efficient and easy to do business with. These events are happening much faster than anticipated. OEMs and dealers should work together to take advantage of these new opportunities.
About the Columnist:
Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993. E-mail [email protected] to contact Garry.
