In this third episode of Presidio’s Podcast, Full Throttle, Bill Cariss President and CEO of Holman Strategic Ventures, talks with host Jason Stein about the role technology will play in the future of retail and how Holman is cracking the code on where the next revolution will, or could, occur.
In this third episode of Presidio’s Podcast, Full Throttle, Bill Cariss President and CEO of Holman Strategic Ventures, talks with host Jason Stein about the role technology will play in the future of retail and how Holman is cracking the code on where the next revolution will, or could, occur.
And we're actually working with one of the major OEMs right now to think about subscription for EVs being like an extended test drive, consumers have range anxiety, you know, where am I going to get my vehicle, recharged? What does that look like? So, instead of buying a vehicle or leasing a vehicle for three years, let me let me try it out for a month or two. So subscription is definitely playing a role in that space right now.
This is Full Throttle, The Presidio Group's automotive industry podcast. I'm your host Jason Stein, Presidio's Marketing and Communications Advisor and host of Sirius XM's Cars and Culture on business channel 132. On a monthly basis, Full Throttle serves as the industry's meeting point for great conversations with leaders across the automotive world. And on this month's episode, we dive into the world of technology amidst a retail revolution, a changing of the guard for the consumer and dealer, and who better to address those trends than Bill Cariss, President and CEO of Holman Strategic Ventures. Staying relevant is all too important for retailers as they consider the next step in the journey of automotive retail. The challenges of an ever more sophisticated consumer who's presented with an array of easy to use technology in E-commerce is making it more challenging for dealers who need to stay ahead of the curve. Relevance is essential, as is providing real value in the face of those changes. Are subscriptions emerging as an option again? How about over the air updates that make service an increasingly complex business model in the future? What about EVs? Digital retailing and meeting the consumer where they're doing business? Home and Strategic Ventures considers all these options all the time and deploys capital to the most savvy startups, cracking the code on where the next revolution will or could occur. Bill Cariss and his team have a lot to say in the conversation on relevancy value trends and the future. In his near seven years at the helm of Home and Strategic Ventures, he's been outlining the vision of tomorrow, while most are still stuck in yesterday. So are subscriptions finally finding their price value footing? What about new technologies such as Orbi? Today, he pulls back the curtain and shares the view with us. It's Bill Cariss on Full Throttle, the Presidio Group's automotive industry podcast.
Hi, I'm Bill Cariss, and this is Presidio's Podcast, Full Throttle.
What a pleasure to welcome my friend back onto a microphone stage, if you will, with me. It is great to be with you, Bill. And it's been a while since we did share a stage together. But you know what, even then we were talking about trends that very few people were discussing. And specifically you were talking about an ecosystem that probably some of us couldn't have imagined. So if you go back to four years ago, when I was hosting the retail forum for Automotive News, and you laid out a certain vision of the retail roadmap, how well do you think we're doing on that retail roadmap? If you think about it now?
Yeah. Great question, Jason. And that was a that was a lot of fun hosting, I remember that in Chicago, that was a fun event we had there. And it is interesting, as we take a reflective look at what we were doing and saying and prognosticating and seeing you know what, what came true here and what we're still working on. So, you know, I remember, Jason, one of the things you asked me about, we had just invested in a partnership with Cox automotive, for a subscription company by the name of flex drive.
And I have to tell you, the flex drive dream was that we would have hundreds of 1000s of consumers subscribing to cars today. And that didn't happen. It didn't quite materialize the way we thought it would. Along the way, however, the pivot was that we were able to capture a really interesting client by the name of Lyft. And we were able to help them power what is their Express Drive service. So really interesting, the way that worked out we had a small exit where Lyft ended up buying flex drive from us, and it's still powering their product, which was fun. But then the whole idea of consumer based subscription has not materialized quite the way we thought it would here in the United States. Europe, different story, tax law changes, tax law, differences have really allowed subscription to flourish there. And we've been partner, we've been able to partner with some folks and banks in Europe, some other entities in Europe. And we've seen that take off, but not quite what we thought was going to happen here in the US.
Is that the biggest difference? I mean, what why why has the American consumer COVID aside, why has the American consumer not been as interested in subscriptions?
So I would say the American customers, he American consumer is very interested in subscriptions but at a price and what we found in by home and operating a subscription fleet of vehicles, we were able to do some price elasticity and we found that within a price those vehicles would just jump off the lot and consumers loved it. They love the convenience of subscription, all of those brand promises we talked about are still there. But it has to be at a price. And right now the unit economics are very difficult to make that work. The margins are razor thin. However, what we're seeing right now, Jason is interesting, the EV space, because of some tax credits, is affording a little more volume in the subscription space. So we're seeing some glimmers of hope there.
So you're not giving up on it? Certainly.
Certainly not. No, we're actually through a partner of ours at a tech we still own a tech platform for subscription. And we're actually working with one of the major OEMs right now to think about subscription for EVs being like an extended test drive, consumers have range anxiety, you know, where am I going to get my vehicle, recharged? What does that look like? So, instead of buying a vehicle or leasing a vehicle for three years, let me let me try it out for a month or two. So subscription is definitely playing a role in that space right now.
What else occurred during COVID that you think reset the table on auto retail in the future? And maybe, as it relates to relevancy of dealers in that changing consumer world?
Yeah, you know, it's interesting.
There was an accelerate some of our dealer friends, and I've discussed about this, if things fundamentally changed because of COVID. My opinion is no. But things that were starting to trend, COVID was an accelerant for that. So digital retailing platforms, modern retailing platforms, there's quite a few of them out there. And there's a lot of changes that were made there, some of which was really afforded by things like the DMV, not requiring as many wet signatures, banks, people saying we can use Docusign. And that will be compliant now. So there were, there were some compliance issues that needed to be relaxed, quite honestly, for this to really take shape and make it easier for the consumer. You know, I'd like to say I think some of our dealer friends would say the same thing. We work really, really hard in retail, to try to make it a modern retailing experience. But it's so hard because of so many of the compliance issues. So COVID. Yeah, I would just say it really loosened a few of those national state restrictions to allow us to do a better job for our clients.
How do you anticipate dealers remaining relevant going forward?
Yeah, great question. So first of all, I do believe they will be relevant. And of course, any car dealer would say that, but you know, I think Jason, you know, we're, we have a pretty robust retail platform, but we also do fleet, we do manufacturing, as a few other businesses. So we, we see a couple of different sides of that coin, maybe. But when you look at what took place during COVID, and you look at the fact that customers still are coming back into the showroom, and customers like to come into the showroom, not all of them. And I hate when people cast, the American buying public as one psychographic or Demographic, it's not, they're you know why they made chocolate and vanilla, a lot of people like different ways of shopping for cars. So we still believe that the dealer will have a very relevant part of this future going forward. I think the you know, really, the subtitles to this, or the subplots are, what will that look like? And now we get into things like the agency model, which has been discussed very heavily. There are some OEMs that are exploring that have done it in Europe, and are thinking of bringing it to the US. So I think that's really kind of a subplot that the dealers may change the way we actually interact and deliver services to our customers right now.
You've said before that when it comes to dealers fighting franchise laws, don't be fixated on the process. Know that obviously, the you know, franchise laws are there for a reason, and they promote the the system that we currently have, but don't get fixated on that. What did you mean by that?
Yeah. So I'm actually I'm blessed to have some people in my life that I look up to as, as mentors and one of those is John Bergstrom. And I remember John saying this years ago in one of our, our small dealer group meetings, and he said, if if we're just relying on state franchise laws to protect us, then we will be extinct. Every day we go into our offices into our showrooms, we need to bring value to the customer. Otherwise, eventually, this is just not going to work. So this whole idea, I mean, should we be as dealers, supportive of state franchise laws, of course and those the state associations NA DAs of the world. All of those folks, we we do support at Holman and we really appreciate everything they do for us.
So we shouldn't neglect that. But if that's the only thing we're doing, we're not going to be around for a long time. So, as again as my good friend John said, we as dealers need to figure out, what is it in that supply chain that we bring value everyday to our customers? What is it? Like what the Ritz says, you know, could you imagine a world without the Ritz Carlton, let's kind of could you imagine a world without Holman Toyota, without Holman Ford? What would that look like? And we want our clients to say, Oh, my goodness, no, no, no, we need them. So that that's what I meant, when I said, D\don't be fixated on that, let's be fixated on the value proposition we bring.
So how do you think dealers will provide value, say, over the next five to 10 years, you tend to look out over the horizon, Unlike many others, you you, you have a very long range view. So how will dealers provide value?
I think, a lot of the things that we do right now, we will continue to do those services. So
we will continue to repair cars, whether it be under customer pay or warranty, I absolutely believe we will continue to do that. We have the technology, we have the tools, we have the facilities to do that. And I think it would be foolish to try to take that outside. And I don't know of an OB that wants to take that on. So that will absolutely be there. Um, I, the agency model has a lot of discussion right now. And I think as most of your listeners would, would know what that the fundamental change there is that we the dealer become a sales fulfillment center, we become a delivery agent, and we provide all those services we do today. However, the manufacturer, the OE would actually handle the transaction direct with the customer, again, just fulfilled by the dealer.
There's a lot of feelings on that pro and con, and I'm talking from the dealer body, there are some dealers that I've talked to said, You know what, it might not be so bad, depending on what that reimbursement is, the economics of it might not be so bad. And as long as we the dealer can still be the face and the ones that interact,my feeling is I really liked the way the process works right now and the transaction works right now. But I think there will be some manufacturers that push for that. And, you know, barring major pushback, I think I think that might happen in some limited capacity. So that will definitely change the way we do business. I think the second thing is, I think there will still continue to be consolidation, not only of the number of new car dealerships, but also how many owners there are of those new car dealerships. That's a trend that's taken place. And I think that will continue to take place.
Is that just because of the sheer amount of investment that's going to be required in order to achieve economies of scale and to and to the amount of capital needed to support new technologies that are coming on?
Absolutely. Yeah, that is the you just said the number one and number two reasons for that to happen. And I I do believe, and again, I hate to put everybody under one bucket here. But I do believe the OES do enjoy working with the large dealer groups that can invest in what you just described, facilities, technology, people training, all of the above. So you know, there are some great standalone stores and I hate the word Mom and Pop because they're some great dealerships, that they only own one dealership, and I wouldn't call them mom and pop at all. They're sophisticated operators. But it's really hard to do that. Jason, to your point, just the capital, not only capital, but you know, we talk at home and a lot about human capital and financial capital. The human capital is really, really difficult to attract those people unless you have something else. What what is the mission? Are you bigger? People want to become part of something bigger than themselves. And that's hard to do when you only have one dealership.
Home is always on the forefront of the what I would you know term the retail technology revolution, I guess. So what are some trends that we'll be considering or thinking about or or dealers will be incorporating into their businesses going forward? Where does the technology take us bill?
Yeah, well, first of all, thank you that we're on the forefront. We work really hard to do that. But thank you and that's that's a you never arrive at that, right? I mean, if you're if you're out front, you better work really hard, twice as hard to stay up front and we strive to do that. So I would say in answer your question, the whole customer data platform CDP that's kind of a new term. I didn't even know what that was a year ago. But Customer Data Platform well, how are we taking information from our customers and information can be transactional, it can be buying patterns, it can be watching as people interact on our websites, how they respond to all of that. And then coming back using it to come back to them in a way that they're used to when they go on modern retailing sites like Amazon, that's always the classic, you know, you go on there, it's like, my goodness, they're just reading my mind. Well, there's a lot of work that goes on to do that. And I'll give you one, for instance, we actually just invested in this company, there's multiples that do this, but we just invested in a startup called Orbea. And that's what they do is customer data platform, and how do I track customers so that when I respond to them, it's the way they want to be responded with a targeted response for something they're interested in. So that whole idea of data management to provide this world class experience, whether it be digitally or physically in a showroom, I think is going to continue to grow.
The second part of that it, it really feeds into that data piece, as well is the connected car. So much has been done around the connected car. I really believe we're just on the cusp now of some major breakthroughs in use cases there. We're working on a couple right now.
We're working on a platform that would help with doing inventories, new car and used car inventories, using telematics using a connected car. And you said, Well, how does that help the customer? Well, there's so many other use cases we can provide for them, once their cars connected. So there's one where the dealer becomes more efficient, banks like it because they're more efficient. And now the the consumer can use that connected car for everything from service loaner scheduling, you name it, you can just go wild with what you can do with connected vehicles.
Right. In fact, that connected car as a as an ecosystem has been predicted to be a $30 billion business by the end of the decade. So which is not that far off anymore, Bill. And I think a lot of dealers out there can't quite envision what that means and not over the air updates for the sake of fixing or addressing recalls. But in terms of a revenue source. And I would venture to say that you believe that there's a lot of revenue opportunity out there.
Yeah, there is. There's a lot that the OEs are looking subscription services are looking to provide. I think that's great. It's such a monster tam as you just described that there's there's room for many of us to monetize it while still providing great services and value to the customer. So yeah, over the air updates. That's a little bit of controversial one, because who is going to benefit from those over the air updates? While the manufacturers absolutely Well, there's a little bit of a sharing element there with the dealers, because that's a big part of dealer profitability. But let's face it, it's about customer care and customer expectations. And, you know, Jason, you and I know that it's really cool when we go to bed, and we have an iPhone or an Android that needs to be updated. And all you need to do is make sure that you're connected to Wi Fi and power source and you wake up the next day. Oh, my goodness, that's called warranty, right? So for a car, would I rather take my car to a car dealer, even though they're really nice and have good coffee, and no, I would rather it be flashed at night and repaired while I sleep or While it's in my garage, absolutely over the air updates as a consumer convenience. So that's something that absolutely should come in between the OEs and I believe the OEs are going to treat the good OEs will treat their dealers fairly let's put it that way. So we need to figure that out. But from our standpoint, there's so many things you can do with connected car from, you know, theft recovery systems, to consumer apps that they can use the always have consumer apps, but you could have a consumer app for a dealer. We built a home consumer app for our for our clients as well. So there's so many little, not only use cases, but the experience of me knowing that your car needs something done because it sent a DTC code to us a trouble code came to us. We notify you that you need to get your car in tomorrow. Do you want to come in at 10 o'clock or two o'clock? And would you like your service loaner ready tomorrow? Oh my goodness. Isn't that the way it should work? And that we're just about there right now when I say we the industry to be able to provide that type of service.
Well, we know you have a ringside seat to all that is changing. And I appreciate you sharing your your thoughts and your vision on where this massive auto retail technology revolution goes. Bill, thank you so much for being on the program.
Thank you, Jason, a pleasure to be with you.
Thanks again to my guest Bill Cariss and thanks for listening to Full Throttle. Come back to us in March for our next interview on this platform. Suggestions? Email me at Jason@flatsixmedia.com. And to learn more about the Presidio Group, go to thepresidiogroup.com or follow us on LinkedIn. Thanks again for listening and we'll see you next time.