Will Amazon & Hyundai Reshape Car Sales?

Welcome to another episode of the Car Dealership Guy Podcast.

Today, CDG is joined by Andrew Wright, the dealer principal of Vinart Automotive Group and the chair of the Hyundai National Dealer Council.

In our conversation, we discussed selling over 6,000 cars annually in one county, the impact of the Hyundai and Amazon partnership, the push and pull between dealers and OEMs, and much more.

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Episode Topics:

(3:27) - Andrew’s background and career

(6:52) - VINart group

(9:35) - What are the benefits you see from being in the Lehigh Valley?

(13:57) - Shifting from mainstream brands to luxury

(15:32) - What brands are you bullish on?

(18:03) - What challenges is Hyundai facing?

(21:44) - Becoming chair of the Hyundai dealer council

(24:05) - Dealers and manufacturers need each other more than ever

(27:59) - What brand would you bet on if you were a used-car dealer?

(32:21) - Operations and service

(39:23) - Amazon & The future of the dealer/customer relationship

(48:39) - What are you seeing in terms of consumer health?

(56:07) - Is anything keeping you up at night?

1. Growing up as the son of a dealer.

Andrew Wright is a second-generation car dealer who, like many others, started out washing cars at his father’s dealership. Originally, Wright aspired to go into law but eventually earned a master’s degree from New York University. As Wright was knee-deep in his studies, the September 11 tragedy happened. Afterward, he decided to move back to Pennsylvania and jumped into the family business of selling cars. Five stores and 400 employees later, Wright’s group retails around 6,000 cars annually and does about $370 million in sales. 

2. The origins of Vinart Automotive Group.

Today, Vinart has five franchised stores representing Acura, Honda, Hyundai, Mercedes-Benz, and Porche brands, all of which lie in the Lehigh Valley region of Pennsylvania (about an hour outside of Philadelphia). Back in the 70s, Wright's father started selling cars at an Oldsmobile dealership. He then took a job at American Honda as a district sales manager. During that time, he met Vince Piazza, and together, they took over a Honda store in Allentown, PA in the early 80s. The Wrights and the Piazza’s are still business partners to this day.

3. Navigating dealership acquisitions.

For Wright, the best strategy for his portfolio of stores is to stay in and serve the Lehigh Valley region. Although he still has an acquisition mindset, he wants to “do it the right way.” In 2018, Vinart acquired a Mercedes-Benz and Porsche store, diversifying into luxury as well as retaining mass-market brands. Wright says the leap into luxury was pretty straightforward. Although there are definitely differences between highline and mainstream brand operations, adding value for customers is universal.

4. Wright is bullish on all five of his brands, but Honda stands out.

From Wright’s perspective, the Japanese automaker has figured out a way to “effectively balance” its production mix and strategy with respect to internal combustion engine vehicles, its first battery electric vehicle in the Prologue, and hybrids in between. Wright says that consumers are demanding hybrids, or plug-in hybrids, as a stepping stone to fully electric vehicles. “Honda has struck the right balance, much like Toyota has,” added Wright. He’s also impressed with Hyundai’s product line and the value it brings to consumers. 

5. How Hyundai is overcoming its challenges.

For example, the customer experience. Historically, Hyundai has lagged behind other brands in terms of dealer profitability. When that happens, Wright says, the dealership team is often second-rate. But it’s a different story for Hyundai today. The brand has products and marketing on par with Toyota and Honda. Still, a portion of Hyundai dealers are resistant to change, and they may not be representing the brand as well as they could be. 

6. Wright’s role as chair of the Hyundai National Dealer Council.

In addition to being a dealer owner/operator, Wright is also the chair of the Hyundai National Dealer Council, which means he liaises with the OEM executives to bring issues to the table and come together on strategic initiatives and product planning. Wright decided to join the council out of respect and admiration for his father and the dealer franchise system at large. While OEM and dealer relationships can be contentious at times, the partnership is of the utmost importance. “We need each other now more than ever,” says Wright. 

7. Advice to aspiring franchise dealers.

For dealers with a single store or independent dealers trying to break into the franchise world, Wright says Toyota and Honda are solid bets. But the dark horse turned challenger Hyundai/Kia is rapidly turning into to tier 1 brand. At the end of the day, if dealers can make the investment without living or dying by the new car market, they’ll likely find themselves in a fortuitous position. 

8. The importance of focusing on fixed operations.

On this fixed-operations side of things, Wright has over 100% absorption, which means that revenue from service is enough to cover his fixed expenses. Vinart got to this advantageous position thanks to his team's commitment and dedication to delivering on the promises made during the initial sale of the car. “Sales sell the first car, service sells all of the subsequent cars,” states Wright. 

9. Amazon and Hyundai’s partnership.

Wright believes it’s a response to the subset of consumers that craves transacting 100% online or at least partially. It boils down to the Amazon buying experience, says Wright. Consumers have grown accustomed to ordering something with a tap of a finger and having it show up on their doorstep two days later. Why should buying a car be any different? He adds that not all car buyers want to transact this way, but for the ones that do, retailers need to meet them where they are shopping as easily and as seamlessly as possible. It’s important to note that, as of right now, dealers will still be fulfilling the transactions, and Amazon will not retail cars directly to consumers.

10. How business looks today.

From Wright’s vantage point, business overall has been very resilient. In March, Wright’s Honda/Hyundai location was three cars short of an all-time record (new and used). The store did 519 cars in March. “The consumer, overall, is in a good place. I definitely think there are people out there experiencing challenging times, and hopefully we can get the economy growing again,” says Wright. Interest rates are definitely going to be problematic moving forward, but leasing is coming back in a big way.