Village Automotive Group experts look into the future
People who drive along Rte. 228 in Norwell regularly can’t help but notice how Porsche and Audi of Norwell are moving into posh new digs after a year of construction.
The project shows that automotive business 1) still is very much about real estate and location and 2) traditional dealerships, instead of being phased-out by the internet, are thriving.
But those aren’t the only trends that Village Automotive Group’s founder and president Ray Ciccolo and general manager Dan Leahy are seeing. The two men sat down for a question and answer session on how the car business is changing. Here’s what they had to say.
Q&A with Village Auto Group founder Ray Ciccolo (RC) and GM Dan Leahy (DL)
Q: When the country and the auto industry were in a major recession, you said it would be the auto industry that lead the recovery. That has happened. How do you see things today?
RC: Something new is happening in the automotive business. Many of the manufacturers now have excess capacity in North America, and they’re going to begin exporting to the rest of the world. It’s going to cost less to build here and ship to Europe. I say North America because a lot of the plants are in Mexico. Volvo is the last manufacturer that I’m aware of to build a factory in North America. They break ground on Sept. 25 in South Carolina.
Q: How do you react to the growth of technology in cars?
RC: It can be overwhelming for someone of my generation. But we all know it’s coming. Slowly, I see a lot of older folks getting used to it. So many people tell me they’re driving a 10-year-old car with 125,000 miles that still runs like a top. But, more and more, they’re realizing that it doesn’t have the safety systems, the backup camera, and the new navigation systems. Years ago, technological growth wasn’t so dramatic. Things just upgraded slowly. Now it moves fast. Once you’ve experienced things like auto braking and pedestrian avoidance, you don’t want to do without them.
Q: Volvo dealers waited a long time for new product. Now you have the XC90. What’s your reaction to it?
RC: It’s completely sold out. We’ve had cars in the past where demand exceeded supply, but nothing like this. Every XC90 that’s coming in has been sold.
Q: You were a major Saab dealer and have maintained a Saab service business. How is that working?
RC: We’re still the largest Saab service department that I know of in the United States. We get more hits on our Saab website than on any of our other sites. I’m sending out a note to everyone in our Saab database, reminding them that we buy used Saabs. The bulk of our old Charles River Saab team still is with us.
DL: We took in a 2009 Saab 9-5 with low mileage in January and almost immediately sold it online to a Western Mass. resident. Then we ran into a major problem with paperwork. We offered to buy the car back because of the delay. The customer said, “No way.’’ He finally took delivery in June and later wrote back to us that it was “well worth the wait.’’
RC: A lot of those customers have converted to Volvo and Audi. We had concerns at first, but those are the brands they’ve sought.
Q: What about the service side of the business?
RC: When you and I were young, we had gas stations in every neighborhood. The change has been subtle, but now they’ve converted to Cumberland Farms. We rarely see them as competitors because they don’t have the people, the technology, and equipment to repair today’s cars. Eventually, it has to be the dealer and trained master techs who fix today’s cars.
Q: What industry trends are you watching?
RC: I’m happy to see two of our brands coming out with new trucks, Nissan’s Titan and Honda’s Ridgeline. A couple of my granddaughters are starting to look forward to getting their licenses. And what do you think they want to drive? Ford F-150 pickups.
RC: For car colors, here in New England we’re the reverse of the rest of the country. In the US, white is the No. 1 color with black No. 2. Here, black is No. 1 and white is No. 2, with gray and silver right behind.
DL: Tell me about it. My Audi managers order black, white, and silver. The one red convertible stands out like a pimple on the floor.
RC: Another trend is seeing luxury cars with supercharged and turbocharged four-cylinder engines. They’re getting the same performance and much better fuel economy.
Q: Speaking of fuel economy, where are we headed?
RC: We have high-speed electric chargers outside at all of our dealerships and you’re seeing more and more hybrids. But now it looks like we’re in for a long spell of cheap gas. Twenty years ago, they were saying we’d be running out by now, but you keep reading about huge new discoveries. Will people want hybrids when they can get 35 miles per gallon in a luxury vehicle?
DL: Clean, efficient diesel has been slow to take hold, but the new diesel vehicles are amazing. I’m getting in the mid- to upper-30s (miles per gallon) in an Audi A8-L.
Q: How has the internet affected sales?
RC: Not too many years ago, for every five people who came into a showroom, you sold one car. The closing ratio was 20 percent. Now the pendulum has swung the other way. For every 10 who come in, you sell six cars. The ratio is better than 50 percent. The customers are buyers. They’ve done their homework and calculations. They’re sophisticated. They’ll come in and ask for a car by its inventory stock number.
DL: The customer used to visit just shy of seven dealerships before buying. Now they visit 1.7. They’ve spent the rest of their time online. If you spend enough time around young people you know everything can be done on a smartphone. They know who has the car they want … or think they want. Sometimes they still come in for one car and wind up driving out in something different.
Q: How does customer feedback work?
RC: It used to be Dealer Rater and Yelp that people checked; now Google seems to have become the leader. Customers understand they can adversely affect your business with a negative review, whether it’s true or not. If someone posts a legitimate complaint, we contact them immediately. And it’s always important to be able to challenge something that’s unfair. But it’s the way of the world. When we travel with my daughter, she’s online ahead of time checking reviews for every hotel, restaurant, and attraction.
Q: What about the changing demographics of the customer?
RC: The business reflects our country. I seem to have an employee from every nation imaginable at my Newton store (Honda Village). At the front counter, we put up a flag to represent each language we speak on that day. It’s amazing how many Spanish, Portuguese, and Russian-speaking customers we see.
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