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Surman Embraces Digitalization at Automotive Dealerships

By Alejandro Enríquez | Tue, 03/23/2021 - 18:02

Q: What lessons did Surman learn in 2020?

A: We were fortunate to understand at the beginning of the pandemic that this crisis would be critical for the industry. Like all crises, we also knew that there would be positive and negative sides to it. That said, we decided to embrace the former. Surman is a group of more than 100 car dealerships that has grown rapidly. During the first months of the pandemic, we focused on integrating our processes. We recognized that it was a very good time to reorganize the company internally because there were very few sales. The first important step we took was to refurbish our dealerships. We provided maintenance to all our ramps and systems. 

We also used this time of uncertainty to work on our organizational culture evolution. When people are in their comfort zone and when they feel they have mastered all the issues in the industry, it is difficult for them to accept change. When the pandemic started and nobody knew what was going to happen, dealerships closed, production stopped and people went home. We felt it was the right time to make radical changes.

We created a leadership program called “Surmanizate 3.0.” This program lasted four months and its goal was for our team to understand and embrace the change we were going through, mainly in the digital sense. We already had several technological projects in the pipeline to integrate all our systems and to illustrate information in a structured way, with insights and metrics. The main objective of this new program was to make all our leaders lose their fear of digitalization and to make them understand that it is not only about achieving sales targets but also optimizing everything that comes after. We used to define our budget based on each dealership's track record. Now, budgets are planned based on the potential of each dealership. Thanks to these changes, we are now a stronger and more coordinated group. 

Q: What were the main challenges Surman faced in terms of digitalization?

A: The first thing that is necessary to start this transition is to reduce the resistance to change. I  believe that platforms like Kavak or Mercado Libre can´t replace a car dealership; they add value to the chain. After selling a car, there are many elements that require human interaction and that is where dealerships still have room for improvement.

A big change introduced by the pandemic is that people no longer see digital as a second showroom or support tool. That change in mindset helped us to get more people to embrace this transformation. We also learned how to take advantage of all the data that we already had in our platform but that was just sitting there. Now, for example, we build personalized marketing strategies with this information.

Q: What role will aftersales service companies play in Surman's strategy?

A: Their role will be vital. We are building our aftersales strategy with some of them. A few years ago, I attended NADA Dealer Academy to understand all the indicators and variables that are taken into account in the US automotive sector. I also had the opportunity to manage certain dealerships in that country and I realized that it is a totally different business than in Mexico. In the US, the business is not in selling cars but everything that follows. I think Mexico is moving toward that but at a slower pace. Insurance, extended warranties and even sanitization will be important elements in maintaining business profitability.

Q: What is Surman's outlook for EV and hybrid vehicle sales?

A: Sooner or later, we will all have to ride that wave. If you look at the industry worldwide, Mexico is a strategic player because of the industry that is already established here, as well as the country’s geographical position. However, Mexico is not the largest consumer of vehicles in the world. Our market is almost the same size as California´s market.

The country still has room for growth and EVs will be part of that. Saying we do not believe in EVs would be like saying we do not believe in cellphones. We will probably do things differently than other countries. First, we will start to see more hybrid and electric vehicles on the streets and then the private sector and the government will start to invest in more charging infrastructure. The downside of this transition will be its impact on the aftermarket, as these cars will need fewer and less frequent replacements, so we need to adapt our business.

Q: How has Surman strengthened its fraud prevention strategies as it goes digital?

A: New technological mechanisms such as new credit process will help prevent fraud. Today, we still do basic checks, making sure to ask for a personal ID and checking that the contract matches the signature. Today, so much information is already available and can be gathered for analysis that it will make it more difficult for fraud to occur.

Q: What are Surman's expectations for 2021?

A: We seek a professional, personal and spiritual balance for our staff. We still have a lot to learn and accept. We are living in an unhinged world and the pandemic forced us all to pause and find a middle ground. Regarding our corporate development, we expect this year to be challenging, as well. We will still see the full effects of the production shutdowns that occurred in 2020. For several brands, we do not have enough inventory and there is already more demand than supply in some cases.

 

Surman is an automotive dealer group with over 100 showrooms in nine states in Mexico. The company offers more than 46 vehicle brands through its physical and digital shops.

Photo by:   Surman
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst