Europe’s dealerships of tomorrow should already be changing the way they do business in order to survive.
That’s just part of the Dealer of Tomorrow report from the ICDP in the UK, which says even the term “dealer” is hardly a full description of the distribution model for new cars used today or in future.
Report author and ICDP executive director Steve Young says there are “challenges and complexities” facing the dealer of 2018, but doubts it will be automotive Armageddon.
“We do not dismiss the possibility that some OEMs may follow a different distribution model, at least for certain sub-brands or products,” Young begins.
“Nor (do we dismiss) the probability that e-commerce players will play a greater role than they do today.”
“However, we do not anticipate a “Blockbuster” moment for car retailing where the sector is revolutionised in a few years, with today’s dealers being the primary casualties,” he explains.
The report’s market outlook doubts that the “mature” Western Europe passenger car market shows little evidence of growing beyond the rough average of 14 million vehicles under ownership.
The devastation caused by the Global Financial Crisis is also another example of the dealer business model, reliant on small returns for high turnover, saw new car sales collapse for dealers who were over-dependent on them.
A significant 24% of German dealers in 2017 reported losses in their business.
The ICDP suggests structural changes are on the horizon, with digital threats, the evolution of fleet management into mobility management, and the obvious financial warnings.
“Our own consumer research…and research in France by an independent consultancy suggests that car sharing is used in addition to existing transport modes or replaces public transport,” the report says.
“Car sharing lobby groups in the UK claim that one car club car in London replaces between 10 and 13 privately owned cars.”
“Data allows customers to be better informed on the products and services they want to buy and the dealers who offer them,” the ICDP report continues.
It says the same benefits of data access also flow both ways.
“Manufacturers and dealers can be better informed about their customers and their interests.”
The ICDP report suggests dealers prepare for OEMs choosing to manage the physical distribution network themselves, identifying “opportunities for a reduced number of existing dealers.
Mid-size dealers could could be victims of consolidation or elimination, with smaller operators vital to reach regional consumers, and major sites being integral to OEM business models.
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