New White Paper Explores the Dealer Value Proposition for Credit Unions…

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In this post, Jeremy Alicandri, managing director at MK&A, explains how credit unions can increase their relevance in indirect auto lending.

You can view Jeremy’s post by clicking the link below:
https://www.cudirect.com/blog/new-white-paper-explores-dealer-value-proposition-reveals-opportunities-increase-relevance-credit-union-indirect-auto-lending/

 

Photo Credit: CU Direct.

Automotive Industry Veterans Keller & Mercer Form Alliance Advising Automotive Startups and Investors…

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STAMFORD, Conn., June 26, 2017 /PRNewswire/ — Automotive industry veterans Maryann Keller and Glenn Mercer have formed an alliance targeting automotive startups and the investors funding them. The collaboration is intended to help selected startups maximize their opportunities within the automotive industry by leveraging the knowledge of these two leaders. “Startups in automotive often begin with a solid theoretical grounding within their niche, but have little practical knowledge of how the industry actually functions on a day-to-day basis” explains Keller.

Whether it’s autonomous cars, fintech disruptors, media properties, or even ride-sharing apps, startups are now rapidly contributing to innovation within the automotive industry. Although no one has the crystal ball to identify which of these will eventually succeed, many entrepreneurs and investors have already chased deals where, as Mercer points out, a failure to take into account auto industry practicalities has led to disappointment. “It’s easy to see where entrepreneurs can misread the landscape. Take online used-car marketplaces. While these may attract funding as sexy asset-light app-based ventures, industry economics can become serious stumbling blocks. For example, the allure of avoiding a physical car lot may fade as the firm realizes it has replaced costly real estate with costlier logistics, as cars are repeatedly shuttled from sellers to buyers. In the case of the physical car store, the customer takes on the burden of getting to the sales point, and of taking their purchase home later.”

Keller is known for her prescient calls about trends and turns in the automotive industry for over 40 years. As a former Wall Street securities analyst and later as well-known industry consultant, she early on called for Detroit to pay attention to the Japanese, spearheaded the early public-offerings of a number of dealer groups, and questioned the viability of many automotive “disruptors” during the early days of the Internet. She is an advisor and investor in the successful startup Appraisal Lane where she helped the company with its early success. As Jeff Risner, CEO of Appraisal explains, “Maryann was a valued resource throughout the process of forming and funding The Appraisal Lane. Our industry has attracted venture capital investors but without the knowledge of how specific segments of the industry work, the success rate for many of these businesses and investments is likely to be low.” Maryann currently serves on the boards of DriveTime and AutoCanada, and she’s also been involved as an advisor or investor in dozens of other automotive companies.

Mercer is known for his two decades as a Partner with McKinsey & Co.’s automotive practice (where he interacted with hundreds of projects annually), and a decade of independent work as an advisor to venture capital, private equity, and public equity investors. He continually refreshes his industry knowledge via research projects. For example, working on behalf of NADA, the National Automobile Dealers Association, he recently completed an in-depth study on the future of automotive retail. Mercer also has served on a variety of automotive-related boards, and has been involved with automotive research groups from IMVP to Gerpisa and more.

Keller and Mercer have significant experience in the investment advisory space, with notable firms such as Kleiner Perkins Caulfield & Byer on the venture capital front, Greenbriar Equity Group in the private equity realm, and leveraged buyout specialists KKR as past clients. Martin Bruncko, Co-Founder and General Partner of Steam Capital, a London-based venture capital fund focused on early stage “deep tech” (automotive and otherwise) European companies, states “With the acceleration of autonomous vehicle R&D, the proliferation of mobility service experiments, and intensified activity in automotive business-model innovation (e.g. new approaches to the online marketing of cars), there is a great deal of funding chasing a huge number of startups, few of which have some if any automotive-world real-world experience. This kind of advisory service could go a long way toward helping such startups and their investors dodge any number of obstacles to and opportunities for commercialization, which are well-known to Keller and Mercer, if less known to the venture capital community.”

Operations of the startup alliance practice will be led by Ken Elias, a Partner with MK&A, and a former vice president of Priceline.com, investment banker, and automotive dealer. The practice will advise  startups of any size within the automotive space where the alliance can provide added value, with a particular emphasis on the “nuts and bolts” of industry operations, rather than on “deep tech” expertise (e.g. in artificial intelligence) that these startups typically bring to the table. As Elias explains, “there is a lot of money chasing innovative tech start-ups in the automotive industry. While many have good ideas, oftentimes the entrepreneurs and investors actually have little or no automotive experience. We can help them better understand the industry, outline where opportunities could be found, assist in the strategy development, and, sometimes, prevent investors from chasing projects that have fundamentally flawed theses.”

Media Contact: Jeremy Alicandri, Managing Director

SOURCE Maryann Keller & Associates

Dealer Talking Points: Countering “The Myth of Direct Sales”

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States enacted franchise laws to protect dealership franchise owners (and consumers) from auto manufacturer overreach.

Short Summary:
In our analysis, we explain the economic justification of the U.S. dealer franchise system. Additionally, we also counter arguments against the franchise system and dispel the “direct sales myth,” by providing real facts with simple talking points.

Background:
The product and nature of dealer interaction over the life of the car (service, parts, recalls, protection of residual values, etc.) determines the investment that is necessitated to support sales and ownership requirements.  The costs associated with providing those services would be identical whether by direct sale or from independent dealers.

There is a simple economic fact that mandates the protection of a franchise.  If an automaker mandates location, design, service equipment, software investment, monthly reporting of financials, and other burdens on the dealer, the investment is so great that no one would make such an investment without the protection that franchise law provides. The authority of the auto manufacturer to mandate and require a dealer to make this substantial financial investment in a dealership required that states and the Federal Government enact protections for dealers from adverse actions from their automakers. Even with large auto dealership groups, manufacturers see each store individually in terms of its performance relative to the market, its competing same-brand stores in a region, and for goals and objectives set by the manufacturer.

Obtaining this analysis:
Our analysis can be obtained by contacting us directly. Please visit our contact page.

Related:
Ms. Keller and MK&A Partner, Kenneth Elias, are the authors of the “Consumer Benefits of the Franchised Dealer System.” This study, which was sponsored by NADA, substantiates that consumers receives significant
benefits from the franchised dealer system.

The study can be downloaded from NADA’s website:
https://maryannkeller.com/consumer-benefits-of-the-franchised-dealer-report/

AutoNews: More buyers are upside down. Will it pull down the industry?

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Maryann Keller, principal of MK&A, was quoted in Automotive News on the rise of negative equity in financed vehicles. Maryann is quoted “negative equity is becoming a problem,” she said:

The article can be read by clicking the link below:

http://www.autonews.com/article/20170612/FINANCE_AND_INSURANCE/170619973/more-buyers-are-upside-down.-will-it-pull-down-the-industry%3F

*Photo Credit: Automotive News.

USA Today: CEO Mary Barra shakes up GM

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Maryann Keller, principal of MK&A, was quoted in USA Today on Mary Barra’s leadership at GM. Maryann is quoted “GM came out of bankruptcy with a clean slate, none of the baggage that had crippled them,” she said:

The article can be read by clicking the link below:

https://www.usatoday.com/story/money/cars/2017/06/04/ceo-mary-barra-shakes-up-gm/102484738/

*Photo Credit: USA Today.