Creating a Car-Dealership Enterprise
A new car dealership model is giving Vancouver-region dealers the opportunity to grow into thriving medium-sized enterprises.
For almost a century, the Canadian auto sales industry has been the shining example of local entrepreneurship in action. In every town and city, individual dealers own one or several showrooms. In Canada there are 3,300 car dealerships owned by an astonishing 2,500 dealers. As a result, profit margins are small (typically two to three per cent of sales) and growth is minimal. However, in the Vancouver region a new model has been able to beat the small-dealership trap and grow into a thriving medium-sized enterprise.
The Problem
An ambitious dealer faces the unique challenge of growing his or her business while at the same time retaining the small-business “community” feel that’s so important to selling cars.
The Solution
OpenRoad Auto Group Ltd. was started by president Christian Chia in 2000 after he noticed that the automotive sales industry was fragmented into small individual dealerships. Why, he wondered, had it not spawned larger businesses that could take advantage of economies of scale to provide better services to buyers?
Chia recognized that the dealership model had changed little since cars were first sold. Understanding that the industry is far more complex than simply selling cars, Chia resolved to take an “enterprise” approach. A typical car dealership today is multifaceted: it sells new and used cars, sells parts as both a repair shop and a wholesaler, is a service centre, is a financier of purchases and has an insurance component in its warranty services.
But Chia’s “Aha!” moment came when he had four import dealerships and realized each had its own accounting and control system. He decided to break down the silos between dealerships and create an automotive sales operation that would sell different models but function with a centralized back-office system.
His first challenge was to convince the automakers whose cars he sold that their models would be distinct and not part of a generic system. He did this by converting each dealership’s design to fit with the brand it was selling. If it was a luxury brand, the dealership reflected that in its design; if it was a more practical brand, the dealership would appear as more practical, but still with amenities common to all his dealerships.
At the same time, Chia instilled a team approach among his staff, allowing them to move among dealerships, advance their careers and stay longer with the company. All new staff postings were first disseminated inside, creating frequent growth opportunities. Chia also built an in-house training program for staff who wanted to go on to become managers.
Lastly, OpenRoad used modern marketing methods such as social media to maintain a sense of community among buyers and potential buyers.
As a result of this enterprise approach, there are now 10 OpenRoad dealerships with 480 employees, selling $300 million worth of cars every year.
Lessons
• Create Common Systems.
Install systems so that common operational arms can function more efficiently.
• Create Career Paths.
In 2011, OpenRoad was ranked by AON Hewitt as the sixth best employer in Canada, largely because staff could move into better positions.
• Create a Sense of Community.
Through events, online and offline media, and direct communication OpenRoad strives to remain in constant contact with buyers, prospects and the communities in which it operates.
- Tags
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