Americas The threat to Ineos Dealers

[[ Adam ]]

Over at the Ineos Automotive AMA, @Kiefffff asked about Service options for the Americas. It's an interesting topic, and one that surely needs to be resolved.

But I don't think we'll see a resolution in the short term as Ineos USA has a structural problem on their hands.

If you review the 2024 NADA Report, dealership revenue is typically divided into three streams: New Vehicle sales, Used Vehicle sales and Service/parts. To date, Ineos dealersh have very little of any. This has resulted in a vicious cycle - dealerships are struggling to attract and retain service personnel due to a lack of service revenue and ability to pay a competitive hourly rate. Low volume, low pay, poor service - expensive customer bring backs. Ineos has also chosen to establish dealerships in some of the highest cost of living areas of the country - resulting in high labor costs for dealers, exerting additional margin pressure.

Lets assume it was even possible to offload service work to BMW (I don't believe it is), or to Bosch service centers (if they could have, they would) I hypothesize that If the warranty and other service work were offloaded to any other service partner - the existing dealerships would struggle even further and likely be unable to survive.

When combined with late 2024 production stoppage, Ineos USA's failure to advertise over the last 24-36 months has resulted in abysmal per dealer sales in the US. So few that dealerships are struggling. Ineos USA MUST increase the number of units sold in order to support dealers. Advertising, and strong discounting of MY24/25 vehicles will probably be strong drivers in the short term. If they can't get sales up for MY26, I can't see most dealerships continuing to exist. Overhead costs are just too much for dealerships to be able to survive much longer.

 

[Catpaw4x4]

I found today on the Triad/Greensboro Ineos Grenadier website that Ineos is "branding" with Costco Auto Finance. I haven't though received any word from Costco. Another slip up.

 

[Jean Mercier]

Over at the Ineos Automotive AMA, @Kiefffff asked about Service options for the Americas. It's an interesting topic, and one that surely needs to be resolved.

But I don't think we'll see a resolution in the short term as Ineos USA has a structural problem on their hands.

If you review the 2024 NADA Report, dealership revenue is typically divided into three streams: New Vehicle sales, Used Vehicle sales and Service/parts. To date, Ineos dealersh have very little of any. This has resulted in a vicious cycle - dealerships are struggling to attract and retain service personnel due to a lack of service revenue and ability to pay a competitive hourly rate. Low volume, low pay, poor service - expensive customer bring backs. Ineos has also chosen to establish dealerships in some of the highest cost of living areas of the country - resulting in high labor costs for dealers, exerting additional margin pressure.

Lets assume it was even possible to offload service work to BMW (I don't believe it is), or to Bosch service centers (if they could have, they would) I hypothesize that If the warranty and other service work were offloaded to any other service partner - the existing dealerships would struggle even further and likely be unable to survive.

When combined with late 2024 production stoppage, Ineos USA's failure to advertise over the last 24-36 months has resulted in abysmal per dealer sales in the US. So few that dealerships are struggling. Ineos USA MUST increase the number of units sold in order to support dealers. Advertising, and strong discounting of MY24/25 vehicles will probably be strong drivers in the short term. If they can't get sales up for MY26, I can't see most dealerships continuing to exist. Overhead costs are just too much for dealerships to be able to survive much longer.

I think the problem is global. Last week I was at 50m from my dealer in Belgium, and I didn't see any sign anymore of Ineos dealership. I saw a sign for ... RAM! They are still dealing and doing the maintenance, but the dedicated showroom was closed months ago and transformed.

 

[[ Adam ]]

I think the problem is global. Last week I was at 50m from my dealer in Belgium, and I didn't see any sign anymore of Ineos dealership. I saw a sign for ... RAM! They are still dealing and doing the maintenance, but the dedicated showroom was closed months ago and transformed.

I think you may be right.

I think Ineos may intentionally dragging their feet on any secondary service capabilities - largely because they've got large dealers with big investments already.

Before creating more dealers or service, Ineos needs to maximize revenue in the markets where they are currently. It does not make sense for a fledgling brand to invest in service centers to sell in low volume sales areas. Whatever sales are being lost to "I'm too far from a service center" will quickly be made up in volume from actual advertising and will help build a more robust core dealer network.

 

[ADVAW8S]

I believe the goal of Ineos America was to use establish dealers to help with cost of ramp up and also ability to absorb trade ins. It also provided the service network to support repairs. Maybe Ineos shouldn't have been so picky(restrictive)on number of dealers. Also making dealers to have a separate showroom right way of a tough pill to swallow in terms of cost. They could have done a speakeasy style approach. You like the Toyota pickup. Come over here, let me show you something that is special and rare. We don't show this to everyone because only 10k can come to America a year. We will do 70k taco this year alone.

I agree with you Adam that sales need to increase dramatically to get dealers excited to continue to support. Time to deep discounts on MY24. Get more buyers who are waiting. How about 0% financing or 10k off at 4.9% financing. On a positive note, I am seeing more people driving them but also people asking me about my truck. Had 3 people on Friday spend 30 mins asking me about it. Would I do it again? what's it like driving? Ineos needs to advertise more and get word out. Stop being so niche. Not everyone watches F1 or snowboarding. Go after the wannabe, I am never going into the woods but I might people. My neighborhood is switching from Land Rover Defenders to the Lexus Overland.

Ineos also needs to crush the negative talk track that continues to be used about the steering and build/reliability problems. Stop the talk track the Dealerships are closing. Number of post on Facebook, I am interested but concern they are going out of business are rising.

You need to get ahead of things like this one, Some dude posted a YouTube short about why Ineos is bad using information from this forum. Not a owner or a potential owner, just a random looking for clicks. But if you search Ineos Grenadier in YouTube, he shows up on the feed. If you Google Ineos Forum, you will see a link to the post INEOS Nightmare.

 

[NQ94]

The flat rate per job model that are paid to techs by some workshops in the US especially for warranty work is likely the cause for tech turn over. There would be diagnostic and unfamiliar tasks with the Grenadier that run over time and the extra hours are not paid to the tech or to the dealer from Ineos and claiming extra costs from the oem is a drawn out process.

 

[[ Adam ]]

The flat rate per job model that are paid to techs by some workshops in the US especially for warranty work is likely the cause for tech turn over. There would be diagnostic and unfamiliar tasks with the Grenadier that run over time and the extra hours are not paid to the tech or to the dealer from Ineos and claiming extra costs from the oem is a drawn out process.

Agreed - the model works well when there is a significant amount of what NADA refers to as "Customer Mechanical", ie non-warranty work. It's a huge slice of income. Currently, there are few to no customers coming in for standard "book work". This will change over the next few years as customers exceed their 50k mile warranty period.

 

[NQ94]

Agreed - the model works well when there is a significant amount of what NADA refers to as "Customer Mechanical", ie non-warranty work. It's a huge slice of income. Currently, there are few to no customers coming in for standard "book work". This will change over the next few years as customers exceed their 50k mile warranty period.

Flat rate is extremely rare in Australia and most techs wouldn't take flat rate jobs. If a job blows out because of unforeseen issues the tech still gets their hourly rate.

 

[MattA]

I don’t think flat rate work is the issue for dealers, as a side note who in their right mind would work like that?
But I digress, the issue is what comes up when people / potential customers search Ineos grenadier, it’s all faults and problems with lots of negative experiences which puts off most people who want to own the vehicle
Ineos have to make some big changes and fast or the whole thing will be done and dusted in 3 to 4 years and owners will be left high and dry with no service and parts
Worst case scenario and I hope far from what eventuates but it’s not looking good at this stage, even the promises made by Lynne in the letter to Ineos thread have been disappointing and not kept

 

[Catpaw4x4]

Agreed - the model works well when there is a significant amount of what NADA refers to as "Customer Mechanical", ie non-warranty work. It's a huge slice of income. Currently, there are few to no customers coming in for standard "book work". This will change over the next few years as customers exceed their 50k mile warranty period.

I've noticed today that with financing thru Ineos or Costco, the warranty period is extended to 60k. This is not sitting well with me given I was a "Reservation" buyer.

 

[Catpaw4x4]

I don’t think flat rate work is the issue for dealers, as a side note who in their right mind would work like that?
But I digress, the issue is what comes up when people / potential customers search Ineos grenadier, it’s all faults and problems with lots of negative experiences which puts off most people who want to own the vehicle
Ineos have to make some big changes and fast or the whole thing will be done and dusted in 3 to 4 years and owners will be left high and dry with no service and parts
Worst case scenario and I hope far from what eventuates but it’s not looking good at this stage, even the promises made by Lynne in the letter to Ineos thread have been disappointing and not kept

I think the service can be picked up by Independent shops (I'm using one now as my closest dealer is 2+ hrs and $100 in toll fees, or 3+ hrs away and no fees) . Its lack of access to computer programs / workbooks etc that has me the highest concerned.