Steve Greenfield is the Founder and Chief Executive Officer of Automotive Ventures, a company that provides entrepreneurs, businesses, and investors in the automotive industry with industry-specific information, early-stage venture financing, strategic consultancy, and extensive contacts. Steve has more than 20 years of experience in the automotive technology space, and He is also the Author of the new book "The Future of Automotive Retail."

In this show episode, Steve discusses the changing agency paradigm and offers a sneak peek at some things that are changing our industry quickly.

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What we discuss in this episode:

In this new sales model, dealers take on the role of "agents" who represent the OEM, facilitating sales that are conducted directly between the OEM and the customer. With dealers acting as intermediaries, the dealership takes on the role of an "experience center" that provides value through in-person contacts, technology, sales consultation, test drives, and car handover.

Although adopting an agency model has obvious advantages for OEMs, it is crucial that OEMs also consider the risks involved, including those related to dealing with current dealers during the transition and operational risks for the OEM moving forward.

To reshape the relationship between the manufacturer and the dealer and give the manufacturer considerably more control over inventory, advertising, and the customer experience, Steve discusses how OEMs will embrace an agency model. Using Europe and Australia as extreme examples, where dealers are largely redefined into just being an agent where they are a point of distribution for the consumer to come in and pick up the car they've already ordered and still service the vehicles, there is currently a lot of anxiety regarding servicing because as we aggressively move toward electrification, those cars will be much more dependable. Therefore, these vehicles will be much more reliable and be in the shop less frequently, both from a service interval and a components aspect.

He discusses the standard risk assessment, which he refers to as "the automotive ventures retail risk assessment," to determine the likelihood of any given event. Then, what will be the impact's size if it does occur? So that we won't become overburdened by all of these other concerns. And instead, only concentrate on those that are more likely to have a significant influence.

Dealers need to be ready for the possibility that most of the recall work may be completed, except for instances where hardware changes to the vehicle are required. By eliminating the need to bring automobiles in for warranty or recall repair, you will need to be able to deploy a software update and alter the characteristics. They will, therefore, proactively depend on the consultancy company.

Since these cars will have fewer or longer service intervals, there will be many changes to the dealer service base. They won't spend as much time in the shop, and there will be less demand for components from owners, mechanics, and those working on these vehicles. On the other hand, you will require highly skilled technician skills. You'll need sophisticated tools. Because I believe independent shops won't have the technical expertise or the tools needed to work on these cars, I think the countervailing effect for us will be a higher billable rate when we are working on these cars and a significantly lower defection rate at the end of the warranty period. The vehicles are likely seen less frequently in terms of frequency, but the average repair cost could be higher. Additionally, franchise dealers may enjoy substantially higher levels of customer loyalty, which has a strong deterrent effect.

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