Pub. 58 2017-2018 Issue 1

40 moves undertaken by inventive small rural dealers. We saw apparel stores (“If my customers are cowboys I can sell them cowboy hats as well as pickup trucks”), RV service bays, ATV dealerships, BHPH 18 lots, separate parts stores, AMM body shops (on site or off), AMM service shops, and more. OEMs may not like this activity, but they cannot argue that a dealer who cannot earn a living selling their cars, should not try other lines of business in order to restore his livelihood. And finally, building on our earlier points, we think a change in attitude among OEMs is needed, as regards small rural stores: from indifference because they are small, to appreciation because they are special. In the current environment, OEM burdens on small rural stores act to erase the very characteristics that make these stores strongly competitive in their market areas. Lower-cost facility guidelines would reassure frugal rural customers that the dealer is not exploiting them. Looser facility guidelines would let stores adapt to rural communities’ proud sense of local pride, whether that means Western décor in Wyoming or Little League trophy cases anywhere. Sales volume incentive programs that reflect small-store realities would restore the trust levels so important to local communities. 19 Flexibility in requirements less visible to the customer can reduce costs and so allow dealers to invest in things the customer can see: thus OEMs should be more open to shared service or used-car facilities, even if they remain insistent on separated new-car showrooms. And finally, an OEM should reconsider lifting barriers to the local dealer owning a rival brand’s store as well (to the extent it imposes such barriers), as in many cases the alternative is to have no representation in the market at all! In summary, therefore, our view is that the small rural dealer does face a different environment than largermetro stores, that the challenges he or she faces are therefore alsodifferent, and so the steps dealers—and their factories—should take, on the road aheadto2025, involvecreativeandflexible strategies forgrowing scale, for diversifying income streams, and for preserving the characteristics of these stores that make them such strong competitive assets for the (mostly) domestic OEMs they are partnered with. All of these steps will be much easier to take if OEMs will adjust their policies to become more supportive of the small rural store. 18 Buy Here Pay Here (where the dealership carries the financing on the vehicles it sells). 19 At low unit sales volumes, even small disruptions in supply or demand (late arrival of a car carrier, start of a local county fair, etc.) cause gyrations in a small store’s ability to hit sales targets, which a larger store can easily average out and shake off. And in smaller communities where “everyone knows everyone else,” the resulting fluctuations in the local dealer’s best-offer prices (caused by aggressive “stair step” incentive programs) can erode the trust that that dealer depends on. In a large metro area the customer upset by this behavior can move on to the next same-brand dealer; in a rural area with fewer same-brand dealers, he may very likely switch brands.  DEALERSHIP OF TOMORROW — CONTINUED FROM PAGE 39  DEALERSHIP OF TOMORROW — CONTINUED IN NEXT ISSUE