CBT News Interview with Chris Walsh

Voiceover This is coverage of the 2022 NADA Show on CBT News.

Jim Fitzpatrick Hi, everyone. Jim Fitzpatrick here at the NADA 2022 convention in Las Vegas. Thanks so much for joining us this morning. We're joined by Chris Walsh, who's president of Reynolds and Reynolds. I know you know that brand it's just--phenomenal company here in retail automotive. Thank you so much for joining us, Chris.

Chris Walsh Oh, you're welcome, Jim. It's great to see you again. And live in person.

JF Sure. Imagine that.

CW Even better.

JF Exactly. And, you know, as you know, Vegas is always a big draw for dealers. They love coming out here for NADA and it seems like there's a great buzz in the air. Have you found that to be the case with dealers coming in?

CW Yeah, I think, you know, this is, you know, I'll be honest like the 20 NADAs that I've come to, I'm not always real excited to be here because it's, you know, it's tiring.

JF It is. It's a long day.

CW You're on your feet a lot. I said, but this one for me was a lot different. I was really excited to be here to reconnect with friends and to meet new people and just to be back to some semblance of normal in the industry and showcasing our products.

JF And it's your first NADA as president of Reynolds of Reynolds, right?

CW Yes it is.

JF That's pretty cool. How's it going so far?

CW So it's, I mean, it's going great. You know, our traffic has been really phenomenal. Even more important than that I think the quality of the conversations that we're having has been really, really powerful. People are staying a really long time. There's, I mean, there's a lot going on in our industry right now--

JF -Yeah.

CW --that everyone's really trying to figure out. There's a lot of change.

JF Right.

CW And I think, you know, rightfully so, dealers are concerned about how they can embrace these changes.

JF Right.

CW And not just survive but thrive in the market.

JF That's right, that's right. So there's a lot of talk out there about, you know, hybrid omnichannel buying experiences. Talk to us about that because there is a lot of concern on behalf of the dealers. What is future--what's the future car buying experience going to be like, not just for the consumer but for the dealer, right?

CW Yeah, I mean, well, what the future-- I don't know. I wish I knew the answer to that, I don't know. But we are seeing it obviously evolve. We are seeing customers do more on the front end of the customer journey online and then still come into a dealership at certain points whether it's to test drive, or to obtain financing, or to finalize the deal. So I personally think it's going to remain a hybrid approach. I think dealers still have a lot of value to offer a consumer from an in-store perspective. I still think you buy cars and lots of things from people you trust. And I think that dealers have really good people. That that's their face of their franchise. And so I think it's going to continue to evolve, but I think it will be a hybrid approach is what consumers will take.

JF Many of the dealers that I talk to, many of them are your customers, in fact, say that, when I ask them the question, "What's the future of automotive retailing?" Is it-- does it lie online? If I was having this conversation with you 10 years from now, what would the percentage be of consumers that are buying their cars completely online much the way we see maybe a Carvana or a Vroom conducting their business with their buyers?” And many of the presidents of these large dealer groups, and small dealer groups, have come back and said, "It's not so much the percentage that's going to be done completely online. What we're focused on," and I'm paraphrasing here, "is that we want to be able to give that option to those customers, whether it be five percent of them or 50% of them, we want to give them the power to make that determination." Have you found that to be the case and is that something that Reynolds is focused on working with dealers on?

CW Yeah, I mean, I think that's absolutely what's going to happen. I think the potential struggle that we might have if we're not careful is that when the customer is online, and they're going through part of their journey and interacting with the dealer in some way, shape, or form, and then when they move to in-store, like it can't feel different to the customer. Like it has to feel the same and it has to be connected. So, if you're chatting with a customer about a vehicle and maybe you've had some payment discussions and then they come in the store and they feel like you're restarting that process again, that's not what they want. That's the friction that they're trying to get rid of. So I think the--while I think the hybrid approach is good in lots of ways, I think it just presents some challenges that we need to be cognizant of and be aware that we have to make it the same in both scenarios.

JF Yeah, for sure. Talk to us about, you've got a phrase, Retail Anywhere. Talk to us about that? What does that mean?

CW So Retail Anywhere is a little bit like the hybrid approach and online approach that we just talked about. It's really simply, when I think about digital retailing, I really still think it is dealership operations at the end of the day. So how does a dealership retail a vehicle, a new or used vehicle, or you could also be talking about fixed operations. And, so how do they do that and then how do you take that process and maximize it outside the four walls of the dealership? So that when you do have a hybrid approach you're able to meet that customer where they are, interact with them in such a way that makes you a value-added partner in the discussion, keeps the customer progressing in the journey, so that they do end up moving forward with whatever it is that they're doing. So it's really just meeting the customer wherever they are and where we fit in is providing the products and services that enable the dealer to be able to accomplish these things. So how do you take your process and move it online? And how do you make it consistent when the customer comes back in? How do we make those things match? And how do we make the flow such that when the customer first interacts and they start to give you information and you're collecting information, how do we make that go from that point, whether it might be from an initial touch point on a website all the way through to the signing ceremony, when they're buying the car and it flows seamlessly end to end.

JF Sure, sure. So how exactly do you connect the touch points from department to department?

CW Well, we've often taken the approach that there's the term DMS that's out there and we've used that term for 50 years. And several years ago, we decided we were going to start looking at the DMS as an RMS, so a Retail Management System. And, you know, you could obviously say that's just a marketing term for DMS just to make it sound different and I guess there would be some logic to that. But the value to us was not in what the name of it was. The value to us is the way we looked at a DMS differently as an RMS. And what I mean by that is that when we would build things or when we would buy things and we would try to integrate them into the ERA system, we felt like the integration of those things wasn't nearly enough. Something we're building or buying, it needs to be deeply embedded into the DMS because I don't know that integration is enough anymore. I think if you want to have a seamless end-to-end process, whether it's with a customer online or even a customer in the service drive, you need to have things flow seamlessly. And in order to do that, they have to be very deeply embedded in the DMS. So that's that's how we're able to connect those touch points is just build things all in the DMS.

JF Do you have any examples of that?

CW Well I think Gubagoo is probably the best example and the most recent one. So, we obviously bought Gubagoo. I've been partnering with Brad Title and his organization and they're phenomenal people. And what was interesting to me is that when we bought them I felt like this is a perfect marriage of Reynolds, which really understands dealership operations, and Gubagoo, which really understands kind of the front end, so the website business and the digital business and the consumer experience business. So I felt like it was that perfect marriage. So when we started to understand what their platform looked like, we started to and worked pretty quickly to embed that into our DMS. So that when a customer is using, whether it's on the chat side or whether it's on the VR side, as that deal progresses that it's integrated with the CRM tool. It's integrated with desking. It's integrated with F&I and inventory and accounting and even service. Once the customer buys, the relationship doesn't end and we need to be cognizant of that. So we were--it was real important to us to make it so it is completely embedded into the RMS.

JF You made a lot of waves out there in the auto industry when you announced that acquisition because I think a lot of people said, "That's like the perfect fit," right?

CW Great--it's a great company.

JF There's no question. And today's dealer really wants to be partnering with a company that's able to bring all of those suite of services together so it is a seamless transaction for their consumers, right?

CW Exactly. Yeah, exactly.

JF Reynolds has been one of the names out there that dealers have trusted for so many years.

CW Yeah, I mean, I like to think so. I've been here 35 years.

JF Wow.

CW I love this business. But it's changing. But that's also one of the good things about this business is that it is always changing. So it's challenging for sure.

JF Yeah. We had the opportunity to sit down with John Murphy who is the, as you probably know, is the lead analyst over automotive at Bank of America, and we asked him, you know, "What does the future look like? What does 2022 and 2023 look like with the war in mind and with the interest rates and gas prices and such?" And he said, "Well, here's my take on it. If we gave dealers 18 million new vehicles to sell, we'd sell every one of them in 2022." The demand is still there for dealers, right? It's just incredible. It's such a great industry to be in. And as we move into the EV revolution dealers are going to need to align themselves with the right vendors to take care of that as well, right?

CW Yeah and you know the EV thing is a little bit interesting to me just because, I mean, it's going to take us a long time to get there, right? There's probably somewhere in the neighborhood of 290 million internal combustion engines on the road today. And we don't have the ability to meet that kind of demand on the EV side yet and who knows how long it'll take for that to evolve. So it's going to be a journey before we get there, but it's going to be one that's going to be fun to be a part of.

JF And with cars lasting longer and longer all those vehicles still need to be serviced. If we hit the switch tomorrow on EVs, to your point, we have 290 million vehicles that still need to be serviced, right?

CW Doing everything you can to get a customer to come into the service drive and to stay with you in servicing their vehicles is, I mean, it's just as important as it's ever been.

JF That's right, that's right. So where does Reynolds go from here? What should customers be excited about?

CW Well we're going to continue to evolve and transform our organization and we've talked a little bit about this before. I've mentioned that I felt like there's an opportunity for us to be a little bit more flexible in the way we do business both with, when I say customers, I'm talking about OEMs, I'm talking about retailers. We have to serve both in some fashion or another. So we're going to continue to do that. We're going to continue to build the best products that we can build and sometimes that might mean we don't build, that we acquire things like Gubagoo. We're taking a hard look at lots of companies that are here right now and how could they fit in and complement the products that we have.

JF Wow. So we might hear about some new acquisitions.

CW Yeah, potentially. There's a lot of activity in the acquisition side right now. A lot of companies are looking. But I also think there's the opportunity to partner with people sometimes and just leverage what they're really good at and how can we kind of get some kind of a marriage together where we can both mutually benefit from it. So we're going to continue to transform our company. I also think I want to be a bigger part of the automotive ecosystem whether it's with OEMs or partners or just the industry in general. You know, how can we have a bigger voice and a bigger influence in helping to solve some of the problems that retailers are facing today? I mean, it's been a pretty constant theme that a lot of retailers are a little concerned about the future of the franchise model.

JF I know, I know. No question about it.

CW And I'm a big believer in the franchise model. And--but it's going to evolve. But the idea of how do we help enable dealers to be more successful, I mean, at the end of the day I think our role is to help retailers compete and win in their space and we're going to continue to be focused on doing that.

JF Yeah, that's great. Big vision from Chris Walsh, the president of Reynolds and Reynolds. Check Reynolds and Reynolds out. If you weren't able to get out here to the 2022 NADA Convention in Vegas, they've got an incredible booth here. It's incredibly busy. So thank you so much for taking up all the time that we took up from you. So I'd love to visit with you again, see how these things are rolling out

CW Would love to, Jim. Thank you very much.

JF Thank you.