GMs Letter to Dealers Re:Resale, Service/Parts Growth, CPG Companies Testing the Waters

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There’s a lot to cover this morning as we dive into a letter from GM to its dealers penalizing resale of hot models. We also talk about the major current and projected growth of the service and parts departments, as well as the moves CPG companies are making to feel out the consumer mentality on value and luxury in the personal care products they are purchasing.

  • GM Dealers receive notice about post-sale guidelines for customers
    • When vehicles are quickly resold, particularly by unauthorized dealers or other resellers that do not adhere to GM's standards, the customer experience suffers and GM's brands are damaged. As a result, on certain high demand enthusiast products, we are limiting the transferability of certain warranties and barring the seller from placing future sold orders or reservations for certain high demand models (as identified by GM) if the vehicle is resold within the first 12 months of ownership.
    • Currently, the products impacted by these changes include the following: 23MY Cadillac Escalade-V, Chevrolet Corvette Z06, and GMC HUMMER EV (SUT and SUV). Certain warranties will not be transferable if the original owner resells the vehicle within one year of delivery.
    • Main issue: Warranty will be voided on sale or transfer of vehicle.
    • Take Away: As the mediator between OEM and customer, dealers MUST educate and lead with empathy when communicating these new guidelines.
  • Service & parts growth happening due to vehicle age creeping up
    • According to digital marketing agency Hedges & Company the average age of cars in the US will reach 12.3 years in 2023
    • Houston based Group 1 has seen service and parts sales hit an 14.5% increase over last year on a same-store basis, the largest percentage increase of the publicly traded new-car groups and an 8.4% increase over 2019 pre-pandemic numbers
    • The group is shifting parts and service schedules back to the 4 day work week model they deployed pre-pandemic citing the ability to add more shifts, increase work per bay, make operating hours more convenient for consumers, and increase employee satisfaction
    • Take away: Dealers have most control and opportunity in service, a lot of these best practices don’t require capital injections but process and mindset shifts
  • CPG companies take blended approach of smaller sizes and premium upgrades
    • Many CPG brands like Unilever, P&G, Pepsi, Hellmans and more are doing what they can to predict what shopping behaviors will be if there is truly a downturn
      • Proctor and Gamble reported that consumers are using up products they have stockpiled over the recession and not restocking
      • Dove soap has introduced smaller sizes of its products and is leaning in on popular search terms like “bar soap” adding “More Moisturizing Than Bar Soap” to the name of its “Dove Beauty Bar Sensitive Skin”
    • In down times, as shoppers make decisions against luxuries like going to the salon, they will often make purchases of more premium self care products and simple pleasures like lipstick and chocolate

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