John Stephens

John Stephens, Executive Vice President, EFG Companies

John Stephens
Executive Vice President
EFG Companies

How is the manufacturer/dealer relationship faring?

The manufacturers have gotten into a cycle of building more vehicles than dealers can sell. Dealers simply don’t have the space to take new units, especially when they are still trying to move new units produced in 2018. They also don’t want the brand damage that accompanies heavy discounts. Now, consumers are programmed to wait for better incentives, and the manufacturers are producing vehicles at ever higher prices and trying to stay away from letting the market adjust those prices to what is reasonable until they absolutely have to in order to make room for the next round of vehicles. This forces manufacturers to offer deep incentives just to clear dealership lots. This push and pull between manufacturers, dealers and consumers will only continue until manufacturers right-size their inventory to what they are capable of selling in a reasonable amount of time. What dealers want is for manufacturers to take equal risk and to stand behind that they are selling to the dealer. Basically, if the dealer takes additional inventory, the manufacturer would work with the dealer to move the units to both the manufacturer and the dealer would win. Right now, dealers don’t feel like they have manufacturer support.

Is compliance still top-of-mind?

The short answer is, “Yes.” Compliance issues haven’t made as many headlines this year because of the significant amount of investment dealers placed in bringing their operations into compliance over the last few years. It’s still top of mind, however it’s no longer a hot-button in the industry. Going forward, we can expect dealers to focus more on fraud prevention, including identity fraud and protecting private consumer data.