Dealers are facing an auto industry that’s “moving fast” and getting “more complex,” so the conversation turns to how to win amid uncertainty. Rather than competing on lowest price or relying on one-and-done automation, the guest argues for service, trust, and solving customers’ real problems—selling outcomes like access to work and groceries. Over a 5–10 year horizon, macro forces like deflation risk, shifting demographics, and AI-driven productivity matter, and customer experience becomes the differentiator, with service departments growing in importance as cars age.
In this episode of 3 Key Insights, Sanjiv Yajnik sits down with Vikram Mansharamani—a world-renowned "global generalist" and former Harvard/Yale professor—to reveal the unconventional forces that will define the next decade of automotive retail. While the industry is fixated on short-term interest rates, Vikram explains why deflation and surging AI productivity are the real "icebergs" on the horizon.
From why frozen pizza sales are a better economic indicator than the news, to how GLP-1 drugs are changing consumer impulsivity, Vikram shares how "connecting the dots" can help dealers turn global uncertainty into a local competitive advantage.
Key discussion points include:
The "Frozen Pizza" Indicator: How unconventional data points predict consumer confidence more accurately than traditional reports.
Service Over Assets: Shifting the dealership's focus from selling "metal" to selling "solutions and trust."
Generalist Thinking: Why the most successful Dealer Principals are naturally "dot-connectors" and how to lean into that skill to find new opportunities.
The 3 Key Insights:
Embrace Technology to Rethink Process: Use AI not just for efficiency, but to free up your team to zero-in on human connection and relationships.
Focus on the Service Experience: In an automated world, the relationship is the only true differentiator.
Optimize the Service Bay: Why fixed-ops is the most critical engine for growth in a changing economic landscape.
Whether you're looking to protect your margins or reinvent your customer journey, this episode provides a high-level roadmap for thriving in the modern automotive landscape.
""...the dealership is increasing use of GLP one drugs actually is reducing consumer impulsivity and that comes home to roost in last minute decisions being postponed...""
GLP-1 drugs are medicines that help with blood sugar and/or weight. Here, the point is that they may change people’s behavior—making them less likely to buy things on impulse—so dealerships might see fewer add-on purchases.
GLP-1 drugs (like semaglutide and related medications) are used for diabetes and weight management. In this discussion, the host treats GLP-1 usage as a behavioral factor that can reduce impulsive spending, which then affects how and when customers buy dealership add-ons like warranties and prepaid maintenance.
""...GLP one drugs actually is reducing consumer impulsivity and that comes home to roost in last minute decisions being postponed...""
Customer impulsivity means people decide quickly and buy on the spot. The host is saying if people are less impulsive, they may delay add-on purchases and dealerships may need to adjust how they run service.
Customer impulsivity is the tendency to make quick, last-minute purchase decisions rather than waiting to compare options. The host connects reduced impulsivity to delayed dealership add-on purchases and changes in how dealerships should plan staffing and service capacity.
""...there's a high margin prospect that once you sell the car you want to get the prepaid maintenance you want to get the extended warranty...""
Prepaid maintenance is a dealership-sold plan where you pay upfront for scheduled service (often covering items like oil changes and inspections) that would normally be billed later. The host frames it as a high-margin dealership offering that may be less attractive if consumers delay or reduce impulse purchases.
""...you want to get the prepaid maintenance you want to get the extended warranty you want to get the fabric treatment...""
An extended warranty is coverage sold beyond the factory warranty period to help pay for certain repairs after the original coverage ends. In dealership sales, it’s typically an add-on with higher margins, and the host suggests add-on attachment rates could drop if consumers are less impulsive.
""...you want to get the extended warranty you want to get the fabric treatment you want to get all of the the valuable valuable offerings...""
Fabric treatment refers to dealership-applied or dealer-sold protective treatments for upholstery and carpets, intended to resist stains and spills. The host groups it with other high-margin add-ons that may see reduced sales if consumers postpone last-minute decisions.
""...there are products that they offer customers that are really useful... but there's a cost of ownership and you know sometimes they don't think about maintenance...""
Cost of ownership means what it really costs to keep a car over time, not just the price you pay to buy it. The host’s point is that some customers don’t think about those ongoing costs until later.
Cost of ownership is the total cost to run and maintain a vehicle over time, including expenses like maintenance, repairs, and other recurring costs. The host contrasts this with how some buyers focus only on the car purchase price, which affects how dealerships can communicate value.
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on this episode of Three Key Insights.
You need not be transactional in a world where relationships are increasingly scarce.
Focus on a relationship-oriented approach to business. That may result in selling
some stuff below cost sometimes to people. But you know what?
Later, you're going to make it up, and then some. People are not going to shop for the lowest price.
It will be a trust or relationship-based interaction.
Yeah, and I think you're emphasizing something to make a point.
Not that dealerships should be selling things below cost and making a loss.
The auto industry is moving fast, and it's getting more complex.
Success today takes more than instinct. It takes insight.
Welcome to Three Key Insights with Sanjeev Yajnik, president of Capital One Auto.
Today, Sanjeev is joined by economist Vikram Masha Ramani,
a leading expert on global economics with a PhD from MIT.
He's a futurist whose expertise lies in connecting the dots between seemingly unrelated fields.
Sanjeev and Vikram explore how dealers can turn today's uncertainty
into tomorrow's opportunity and take the lead.
I am so excited today that we're going to get a chance to meet with Vikram Masha Ramani.
But before we get started, can you just talk a little bit about yourself?
Well, thank you, Sanjeev. I'm thrilled to be with you and looking forward to this conversation.
So a little bit about me is I think I describe myself as an odd duck.
I don't really fit in any boxes, and I never enjoyed being forced to specialize.
So while I had an undergraduate at Yale, I ended up double majoring in ethics, politics,
and economics. That's one major. That was really political philosophy meets economics
and some other sort of policy dynamics. And then I also added onto that East Asian studies.
I went and I got a PhD. I went and studied the field of innovation,
which is by definition broad. And so I think of my studies as getting a PhD in broad-minded,
thinking differently skills. I started teaching at Yale. I taught a class on financial bubbles.
That resulted to answer your question in my first book, which was called Boom Bustology,
Spotting Financial Bubbles Before They Burst. But then I also started teaching at, moved from
Yale to Harvard. I taught a class called Humanity and Its Challenges about the toughest problems
facing the planet. While I was doing that, my second book came out, which was called Think
for Yourself, Restoring Common Sense in an Age of Experts and Artificial Intelligence.
And along the way, I wrote my third book, which was called The Making of a Generalist.
And that was really about how being a generalist in a world of specialists leads to different
perspectives, variant understanding, and therefore, for some, a competitive edge.
You're reminding me of our dealer principles because to actually run a dealership,
you can't focus on one part of the business. They are massive generalists. They're some of
the best innovators that I've seen. How do you see the economy of the world traveling
in the next decade? And what are the implications do you think
for the US as we look over the next decade or 10 years?
Sure. Well, it's actually a great question, Sanjay, because I think far too few people
take the time to look beyond the horizon. It's easy to read the headlines. We can read the new,
oh, PPI data comes out slightly above or slightly below expectations, inflation is coming,
tariffs are happening. We can go on and on. What I find useful is to try to think the way
your question suggests we should, which is if we look further out five plus years, five to 10 years,
then it's impossible to focus on these little noise instruments because they may become completely
irrelevant. They may be totally different after five years. But let me tell you what will not
be different over five years, and that will help us understand the world. Technology is marching
forward at ever accelerating rates. It is allowing us to do more with the same or fewer inputs.
And all else equals, Sanjay, that means more supply. Further demographics, the world's largest
economies are aging. And as they age, we know that when people move to fixed incomes, they spend less.
That is all else equal, less demand. So right there, if we just took two major developments
that will almost certainly happen over the next 10 years, what I'm saying is you're going to have
more supply and less demand. That suggests a world of deflation, not inflation. So again,
you can start thinking differently by looking at a different time horizon, complicated by saying,
what are today's debt levels? Very high. If you have high debt levels and deflation,
well, I don't want to depress people listening to this podcast, but debt and deflation are not
words I want to put in the same sentence. That's 1929, right? That is a really tough economic
environment. Now, are we destined to go there? No, I'm not saying that by any stretch of the
imagination. I think we can increase our growth and debt becomes manageable, and there are different
ways. But if you look out, I would say one obvious insight to me is on a five-ten-year view. We should
be more concerned with deflation than we should be with inflation. That is so counterintuitive to
what everyone is talking about. They're talking about debt levels, and governments are going to
more. That is going to cause inflation to rise and so on. But you're right. I mean, if you look at
the major forces that are driving us, demographics is a given. It's going to happen. And like you
said, the older populations, now you're going to spend less. And then technology is not only
going to continue to develop. It is accelerating at a dizzying pace. No one knows where AI is
going to take us. No one really understands where AGI is going to take us. But one thing is for sure,
even today, we are finding efficiencies. That's right. And so productivity, we can think of it
this way. If I told you, Sanjeev, the labor pool is going to grow by 100% in the next year,
you would for sure say wages are going to drop. If we double the labor pool of the world,
well, that may be the type of dynamic that is going to happen effectively because of AI
over a five, 10-year view, maybe sooner. I can tell you in one of my small businesses,
I have cut our legal bills by 70%, 70% through the use of AI.
That is unbelievable. We're just unbelievable reduction in costs happening. Now, other businesses
it's harder to imagine how you do that, right? But yes, I think those are interesting dynamics
to pay attention to over time. The companies that manage to ride this wave are going to be the ones
that are growing in the meantime, because they can then redirect all their talent to do other
things and so on. But in that world that you're talking about, when you've got slowing demand,
you've got lower inflation, you're going to have both lower interest rates potentially,
but you're going to have more competition for scarce resources from a business standpoint.
And basically what you're saying is from a business standpoint, if you're just purely looking at it
over the next 10 years, they unfortunately are going to end up being winners and losers
depending on how businesses are looking at the long term. Is that the right way to think about
that? Yeah, I think so. And I think if you think of more competitive pressure coming because more
supply, again, all else equal, what I think that means is the basis for a business leader's success.
You need to think differently. Maybe it's not price that you should be focused on anymore in
terms of selling a product. Maybe it's the service that captures it, the trust you develop with the
customer, the functional solutions you provide to their problems. Now, I know you've talked about
this, which is, and I think it's very insightful, you're not selling a car if you're in the dealer
business, you might be selling access to work, access to children getting to school, access to
going and getting groceries at reasonable prices. It's thinking about it in a bigger picture way,
developing a differentiated solution to a customer's problem. That will be more resistant
to the competitive forces than someone who's just offering at lowest price because he can do volume.
These are major insights that I want to come back to. But let me try to summarize for my
great dealer audience that if you look out 10 years, if you look out over the long term,
what is it that one needs to get prepared for? I would argue you need to take the time. You cannot
turn on a dime on some of these things. You need to be prepared for it. What we are basically saying
is technology is going to continue to accelerate. It is going to lead to massive increases in
productivity. We know this as Capital One. We are a technology company. We are seeing it. We
are working it. We are leaning into it. But you're going to see massive opportunities to improve
productivity at the same time that demand is going to start becoming less. 10 years from now,
ostensibly, you will need less dealerships. But each dealership that is going to be
surviving and thriving are going to be the ones that are embracing technology in a very nuanced
way. They need to have the very best technology and the processes behind technology is just not
the technology changing the way they do business. That is one of the major insights here from the
long term. The second insight is, what are you focused on? What are you selling? What is the
product? You are suggesting that instead of thinking about the car as the product,
one has to start thinking about the experience and the psychological piece of the equation
as the real differentiator of the product because a car is something that is beyond just a mode of
transportation. It is intricately woven into the way we think about ourselves as human beings
and the way we support our families. Thinking way more from a customer standpoint versus an
asset standpoint is going to be key. Have I captured that?
Yeah, Sanjeev, it's interesting. My PhD, which I wrote at MIT in the early 2000s,
was about scale and differentiation in the services industries. One of the insights that might be
philosophical and maybe it's too academic, but I think it is going to shed some light on our
conversation here, is why does anyone buy a product ever? What is the role of a product?
Why do we care about products? Actually, my contention is most people don't want to buy
products. They want the services the product will provide. So I think you're right, that
thinking about it as why is someone buying this? It is for the use that it provides in some need
they have. I need to go to work every day. I need to get my children to school. I have an
older parent I must go see and take to medical appointments. There are emotionally useful
reasons to connect with customers and it so happens to be a product you may be selling
enables those reasons. That is such a deep insight and I think intuitively in dealerships
we get it, dealer principles get it. They always talk about their people and the things what you're
saying is leverage technology. Of course you need to get efficient, but keep your eye on the prize
and the prize is making sure that the actual experience what are you selling and much more
focus is going to come to that and later on we can talk about the fact that those dealerships
that are purely focused on the car as an automated process or the car selling as an automated process
I think they're going to find a ceiling beyond which there may be a few customers
who just want an automated process but most customers do not and I think that's the key thing.
It's interesting. One of the things I've done is look I live in New Hampshire today and
I've lived in the northeast for most of my life but I travel a lot extensively across the United
States and the city that I've done the most business in is actually Omaha. I've done more work in the
middle of the country any other state. Now why is this relevant to our conversation? I have
determined over the last 30 plus years of running around the country and interacting with businesses
large and small that there are two types of business leaders. One is a business leader that
views the world and the businesses they run in as transaction businesses that I'm going to do this
for you you're going to do this for me I'm going to sell you a car you're going to give me money
and it's just one and done thank you transaction if it makes sense we'll do it again if it doesn't
make sense we won't do it again I'm in the game of doing transactions. On the other hand and I
equate this with more of the middle America mindset rather than the coastal mindset and that may be
unfair but I'm saying it as my summary there are people that say business is about relationships
that actually transactions are the wrong way to think that transactions are going to cap the
ultimate volume and success I can have whereas if I can develop relationships with my potential
customers and actual customers and future customers through a process that understands their needs
a process that delivers solutions to their problems and a process that helps them through
good times and bad that I will become a trusted partner and that will be a stickier customer
a recurring customer and that is a simple insight which is I think what you're getting at which is
you need not be transactional in a world where relationships are increasingly scarce
focus on a relationship oriented approach to business that may result in selling some stuff
below cost sometimes to people but you know what later you're going to make it up and then some
people are not going to shop for the lowest price it will be a trust or relationship based interaction
yeah and I think you're making a you're emphasizing something to make a point
not that dealership should be selling things below below cost and making a loss
but I also want to underline something here just so that we are clear I don't think either of us
is saying that process is bad what we are saying is process is a tool that you can use to do
many different things you can create a process for efficiency
you can create a process for relationship of course you need to have a certain amount of
of efficiency but if a process the primary reason is only efficiency you may lose the game
you know your process should of course take into account and have a constraint on efficiency
but focus on the relationship and create your process for the relationship leveraging technology
but if I could I'm going to start bringing us now from the tenure and the the decade
view to more of a near-term view so as we look shorter term what's going on right now
and the consumer etc what do you see yeah it's a great question Sanjeev so
now we'll come back to some of the I think unconventional ways to interpret what is
happening right now I think there are unique ways to get your arms around what's happening
economically that are not conventional macroeconomic statistics I'll give you one and I'm biased
because I'm in this business now but the real reason I entered the business is because I had
an economic view frozen pizza sales Sanjeev absolutely telegraph economic weakness what
happens is people stop eating out when they start feeling consumer confidence is falling
or their budgets are getting a little bit pinched then they go to take home pizza or delivery pizza
from Papa John's or Domino's and then those prices feel a little bit higher than people want to have
and they eventually find themselves going into frozen pizza to take it home and make it this is
a trend that there is data I've analyzed going back decades that is absolutely steady frozen pizza
sales telegraph consumer confidence that's falling if frozen pizza sales are rising budgets are being
pinched likewise I think one another indicator we talked about which I think is interesting and
then we'll connect them to the dealership is increasing use of GLP one drugs actually is
reducing consumer impulsivity and that comes home to roost in last minute decisions being
postponed and I think interesting potential implications for dealers you know I know there's
a high margin prospect that once you sell the car you want to get the prepaid maintenance you want
to get the extended warranty you want to get the fabric treatment you want to get all of the the
valuable valuable offerings to a dealer can offer to a consumer and a consumer may value them but
they're higher margin for dealerships if there's a high propensity of GLP one usage in that dealership
vicinity I'm going to predict that those purchases are going to decline as a relative percentage
of what you know they'll decline relatively to what they historically have been
and if you think in these terms you are going to understand what might be happening in a segment
of the economy that you might not otherwise appreciate till the wall street journal reports
it six months from now you'll get ahead of it now what does that mean for dealership so okay you
might understand you might have less impulse and purchase it also may mean if the consumer's pinched
let's staff up the service department let's expect people are going to keep the cars longer
let's make sure we provide wonderful service there because when their car actually needs to
be replaced we want them to remember us right so I think there's some interesting relationship
ways to navigate the consumer psychology that is going through this bust then boom and bust and boom
cycles in terms of confidence where it can be actually a source of differentiation
so there are there are two things that jump out from from what you've just said
when I think about a dealership and the way in which our dealer principles run the business
you know there are products that they offer customers that are really useful actually
you know when when customers buy a car the thing they're buying the car and that's it but there's
a cost of ownership and you know sometimes they don't think about maintenance and they don't think
about you know other things that they really should be factoring into the cost of the car
and many of the dealerships have really good products their maintenance plans and other plans
that they that they sell to the customer and when the customer buys it they're more secure
you know I've always said when my son goes to buy a car I rather he buy an older car
and buy a maintenance plan than buy a newer car and then come and say dad
it broke down I need some more money so so but what you're saying is if there's less
of a propensity to buy and one would say you know you're calling it impulse buy but even I'm thinking
about add-on products the way in which it is offered to a customer may have to be more nuanced
than it used to be so that's one of my big takeaways from what you've said is just think
about the way in which sales happen in a world where customers are doing less decision-making
on the spot and maybe they need to think about it or they need to be offered in a particular way
and so on and so forth so that that may be a a really good yeah the kind of a way to think about
this yeah and I don't think I think such if it's a very useful way that you framed it because I
don't think it means less sales it means a different way to make the sale right so I'll give you an
example a rural versus more urban environment examples because a dealership in a more rural
environment may actually find that consumers coming in for maintenance are desperate for
their time they have to take a day off from work but if you had a loaner program that was part of
the hey we guarantee you a loaner with 24-hour notice that's just you know we're going to pay
an extra 10 on the premium of the but we're going to solve your problem you'll never have to worry
about you call for your maintenance you'll drive in we'll give you a car you'll drive out when you're
back the next evening you come back swap out the car and go and but that's a point of anxiety for a
lot of people dealing with maintaining their cars in less urban environments right so maybe that's
part of the if you would understand the consumer problem it offers unique ways to sell solutions
to that problem right so it's it's a it's an emphasis so if there's right now an emphasis
on running the dealership of making decisions of taking the time and so on a lot of that is going
to become way more efficient but instead of just thinking you're going to but take all the money
to the bottom line reinvest some of it into thinking about what are the additional services you can
give and the servicing department one is another very interesting insight of what one should be
thinking about even in the short term to get through this this particular arena now vikram
there is something that we have seen consumer confidence to buy a car is at the lowest that
it has been is risen just slightly but it's even lower than it was in the great recession
and and despite the fact that it is at the lowest point and despite the fact that inflation has
you know taken up the price of cars cumulatively by about 30 percent since 2019 and so it's a
massive kind of a change so despite all of that
the payment to income for every quintile that means one fifth of the population
by by their earning power has remained fairly flat that means the customers the ratio of what
they pay for the car their payments the monthly payments to their total income
that has remained particularly flat is that because the customer is being more prudent
is it an affordability issue is it something that dealerships are doing how but what how
could you square this what is that what it looks it's interesting it's an interesting
problem so I don't know per se but what I sense is happening is cars are this is a non-discretionary
item to think of it is a non-discretionary item I need a car I cannot earn I need a car to get
to school I need a car to go do things in my life and so this is not something and there's a budgetary
allocation and you're seeing it stay reflected so what ends up happening is when inflation rises
and gas price right it's not discretionary I have to fill up my gas tank to go so the rest of my
budget gets pinched which changes the consumer but a car is something people need they need a car
it's a need it's people would probably miss a home payment before they miss a car payment
because they they know they're not getting kicked out of their home but they don't want their car
being seized or taken from them or repossessed right so I sense that there's something very
important about cars in that day to day absolute essential to my life and what I need to do
role that a car has it's been fascinating having this conversation I'm going to end our
podcast with with the three insights I've taken out from from our discussion but before I do
is there anything else on your mind that you would like to share with our audience
yeah so all I would say is this it's always been turbulence in markets in the economy
in consumer behavior and that shouldn't scare people that actually the uncertainty is merely one
side of the coin the other side of the coin is opportunity and that if one can embrace the
ability to connect dots seemingly irrelevant at times that you can develop a different insight
or differentiated view a differentiated strategy and that should serve you really well through
both uncertain and certain times in good times and bad times in the near term and over the long
run so that would be the one insight I would like to sort of leave people with Sanjeev which is
don't be intimidated by uncertainty but rather embrace uncertainty and that is
such a great thing to always keep in mind and it is going to resonate a lot with with our audience
because imagine putting yourself up by a bootstraps I mean everything is uncertain and then you've
got to make decisions in uncertainty and I think some of these great people thrive on
on making decisions in uncertainty but if I if I step back I'm going to Vikram end with my
with my three insights based on everything that we've talked about today the first insight is
if you if you want to be around for really competitive in the next decade you need to
embrace technology in a very sophisticated way because it's not only to improve efficiency
it is to help you rethink your processes so over time you're spending more time focused on my
second insight which is about the service you provide versus the the mechanics of of getting
the sale done in the most efficient way do not use technology to just make things efficient
you have to start thinking about how to make the experience more enjoyable for customers the whole
thing and then the third insight that I've picked up is even in the short term but I would argue in
the long term the servicing department of a dealership is going to be incredibly important in the
short term older cars means more servicing what do you do there what kind of service do you provide
do you give a loan a car how do you repair cars how do you provide that assurance to customers
is going to be incredibly important the other piece of the equation is how do you present it in a
different way that connects to your servicing department and all the other service you provide
after the car is bought in a way that the customer can actually take it in in a in a great way that
whole process needs to become much more sophisticated than it that it even is today
but Vikram this has been a fantastic time with you you're sharing your thoughts many
counterintuitive thoughts here I just love it every time I meet up with you I learned something new
so thank you for for spending your time with us well thank you I enjoyed the conversation
the dealers who win turn insights into action now's the time to take the lead this has been
three key insights with Sanjeev Yajnik we'll see you next time views and opinions expressed by
guests on this podcast are solely their own and do not necessarily reflect the official policy or
position of capital one auto capital one na or its affiliates this content is provided for
informational and educational purposes only and is not intended to serve as financial legal tax
or business advice viewers should consult their own independent professionals regarding their
specific individual or business needs
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