Teaming up to tackle dealers' problems

Early last year, leaders at dealership consultancy NCM Associates and accounting firm Dixon Hughes Goodman faced an unsettling realization: Dealer clients were asking questions that neither firm could answer.

"They are asking things that we never even thought about addressing before," said Tim York, DHG's managing partner of industries in Charlotte, N.C.

It became clear to both companies, he said, "If we don't figure this out collaboratively, with each of us throwing in all our resources, then we're just going to be another accounting firm and they're just going to be another consulting firm."

So the powerhouses are launching a venture owned equally by the two, to be called Auxilio Group. The mission of Auxilio — which is Latin for "help" — is to identify the biggest problems confronting car dealers, research solutions to those problems and offer services that help provide solutions.

"The reason behind the joint venture is to dedicate resources to attacking these challenges, something that independently, neither organization is set up today to do," said Paul Faletti, CEO of NCM in Kansas City, Mo.

York: "Second-level questions"

Resources

York and Faletti are conducting a nationwide search for an executive director and additional staff for Auxilio.

DHG has 160 employees in its dealership services division, serving 2,500 to 3,000 rooftops. NCM has 120 employees serving about 5,000. Those clients will have free access to Auxilio's services. Auxilio will be able to draw on all of NCM's and DHG's products, people and capital. If dealers want to hire Auxilio to study their dealerships or groups, though, that would cost extra, said York and Buddy Dearman, DHG's managing partner of dealerships.

Among other research areas, Auxilio will examine the impact on auto retail of disruptors such as self-driving vehicles, new ownership models and online shopping.

Faletti: Data use stumps dealers.

"Progressive dealers are not running away from disruption. They're embracing it," Faletti said. "You're starting to see signs of that, such as individual dealers putting in place their own subscription services."

Another topic is the growing consolidation of dealerships, said York. "With private equity, public companies coming back into the [buy-sell] space, private groups and family offices coming in — these are sophisticated groups that need sophisticated answers."

Big data

But the main problem that has stumped many dealers is technology in dealerships and the use of data to gain efficiencies, Faletti said. "The average dealer is logging into seven different systems a day," he said. "They don't have a great feeling on utilization, on return on investment."

York added, "Data is a huge topic. Who owns it? How do we measure and manage it? How do we make money off of it? NCM is terrific in some areas, we're terrific in some areas, but there's a long way to go to answer dealers on data."

Auxilio also will study ways dealers can better use their centralized accounting, Dearman said. "They ask, 'How many accounts payable clerks should I have if I process this many transactions a month to be as efficient as possible?' "

NCM and DHG will launch Auxilio at the National Automobile Dealers Association convention March 22-25 in Las Vegas. Its first product, a benchmarking report, will be free to DHG and NCM dealer clients. "It marries the work we already do — an audit or tax return — into the performance metrics and business metrics" that NCM does, York said.

A future project will address: "How effective someone is against their peers on maximizing their tax positions. We've never seen it done," said York.

NCM and DHG also want to hear what keeps dealers up at night, beyond how to sell more vehicles in a softening market, said York. "We want more the second-level questions," he said, "things they haven't asked about yet."