How Auto Dealer Pa. David Kelleher Adapts His Business to the Changing Market
The year promises to be very busy for car dealers and equipment manufacturers. Today on Inside Automotive, we are pleased to welcome back Dave Kelleher, President of Auto David Group to share his perspective on the state of automotive today and his thoughts on Stellantis Direct Sales.
Recently, Stellantis has shown interest in pursuing a direct sales model that worries many of its franchise dealers. Kelleher is one of the resellers.
“I think the leaders of this industry on the OEM side, who have these thoughts, are pretty far off base,” Kelleher says.
He goes on to explain that he’s not just concerned about himself and his business, he’s also concerned about OEMs getting in over their heads. At the other end of the spectrum is Tom Doll, CEO of Subaru of America. Kelleher explains that Tom Doll is highly respected by the Subaru dealer network. Doll understands that if her partners make money, they will become better partners for Subaru.
Electric vehicle makers, including Tesla, thrive on a direct sales model. However, Kelleher points out that Tesla is not trying to maintain a 12-14% market share. The company aims to maintain less than 1%. Stellantis, on the other hand, wants a bigger market share. However, Stellantis and other OEMs underestimate the entrepreneurial weight of car dealerships. OEMs need car dealerships to make sales as efficient as possible.
In fact, Kelleher thinks OEMs should take a step back and focus on building a relationship of trust with their dealer partners. He also believes OEMs shouldn’t interfere with how dealers set their prices. Even though Kelleher himself doesn’t sell cars above MSRP, he doesn’t think it’s up to OEMs to get involved.
However, Kelleher doesn’t see consumers pushing back on prices in today’s market despite MSRP increases. One of Kelleher’s biggest concerns, he adds, is that OEMs will start to overproduce, leading to equity issues, devalued vehicles and negative residuals.
However, car dealerships excel in adapting their business to current market conditions. This is exactly what Kelleher does. It plans to build a large fixed operations center off the dealership’s site to improve the service experience and grow its used car business.
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