Dealership Evolution: Client Focus & Multi-Brand Representation

The presentation of J. Arturo Zapata revolved around how established vehicle dealerships in Mexico evolved from representing one single automotive brand to becoming houses for various OEMs. With over 1,600 car and truck dealerships in Mexico, generating over 105,000 direct jobs and representing 42 brands, they are a non-negligible aspect of the automotive sector.

For Zapata, the future of distributors sees them having to form clusters, as individual distributors will have a very tough time. Furthermore, becoming a multi-brand distributor provides a cushion for a distributor, should one brand undergo a downturn or enter a negative time in its cycle. Mexican distributors are also suffering from the fact that Mexicans buy just over 1 million vehicles a year, as opposed to its full potential of 2.5 million.
But, despite this stagnant period, the expectations of customers have evolved. “Customers now expect far more from their vehicle and their distributor alike. The concept of service appointments are now seen as outdated, customers now expect to wait while their car is being serviced, the concept of having to leave and come back is difficult to accept but many repair shops in Mexico still insist on this outdated style,” says Zapata.

The problem that dealers now face is that their margins have been reduced as well, making it all the more important for them to understand what their customers expect and to represent multiple brands. It is also important for staff to evolve along with the distributors they work for. Staff cannot just understand the vehicles, they must comprehend and react to customer trends, IT, and online sales, among other areas.

Zapata then listed the challenges and opportunities that would face distributors over the next five years. Customer satisfaction ranked high on both these sections and Zapata encouraged distributors to hold specific meetings to understand how to best anticipate and match customer expectations. The imports of used vehicles will also continue to put pressure on distributors and reduce their sales. Zapata lambasted those in the Mexican automotive industry that said nothing could be done to stop the imports of “chocolate cars”, saying that the industry should pressure the government to ensure that all imported vehicles comply with regulations, permits and expected emissions levels. Only in this way, said Zapata, can the government find the political will to curb these imports. If this is done, growth will return to the distributors across the board.

Distributors must understand the urgent need for them to modernize, through rigorous application of software such as SAP, by applying sophistication operations and processes, and by providing individualized services. Finally, Zapata warned that the time for face-to-face interaction is beginning to fade. Increasingly, distributors interface with clients through the Internet and through apps but that many Mexican companies refused to take this step. He stated in no uncertain terms that customers shopped for cars online, and were now far better educated than before, even knowing more about a certain vehicle than distribution staff. “The old way of doing business, of simply selling a car to an unknowing client, is over. These changes will allow the wiser distributors to anticipate the needs of their clients and survive,” explained Zapata.