I’m slightly shocked to discover that it is a month since my last ‘weekly’ blog… Although I know that many of you enjoy the blogs, I hope that nobody was holding their breath waiting for it to land!
It has been a hectic month – our ICDP Summer Members’ Meeting, panel slots at the Automotive News Europe Congress and the BVRLA Fleets in Charge Conference.
And with my Auto West London dealer hat on, the chance to drive the new Jaecoo J5, organising a pop-up (including a robotic dog) in the amazing Battersea Power Station, kicking off the refurbishment of our second site and a range of discussions which relate to the further growth of Auto West London.
With all of that going on, it’s difficult to pick a theme for the blog, but the over-riding factor that has influenced almost every experience in the last few weeks has been uncertainty in some form.
Clearly when you launch a new model or open a new dealership, there has always been uncertainty with respect to how it will be received, will the customers turn up – will you meet the financial returns set out in the business plan?
Clearly I am not responsible for the Jaecoo product plan, but the brand is on a roll, particularly in the very open UK market.
The uncertainty with the J5 will be that there are directly comparable combustion engine and battery electric models, so customers will have the straight choice with little now in the way of Government incentives to influence the retail choice.
We’re going to be investing as a dealership in improving the ability of the sales team to address any customer concerns on BEVs, and I’m sure that the manufacturer will provide strong financial incentives, but I suspect that the retail mix will still remain well short of the 28% mandated BEV targets.
Our second site at Auto West London is 5 miles but 30 minutes from our first site, primarily to provide new car preparation, storage, aftersales and used car facilities.
It is in the heart of south-west London, but a traditional dealership site rather than a modern glass box. Will location beat appearance? ICDP research suggests that it should, but some potential OEM partners do not seem to be convinced. Who will prove to be right?
The question marks around the pace of electrification were the raison d’être for the BVRLA event – the UK fleet and leasing sector, considering how they manage their businesses through the transition.
There are still strong incentives for business customers to buy BEVs, or at least the more capable PHEVs, but when it comes to the point when they need to be defleeted, the fleet owners are carrying the cost and uncertainty of depreciation.
Collectively, this is the costing the industry hundreds of millions of pounds, but even that number is just a ‘best guess’. As the technology continues to evolve, there is the potential for further downgrades, and little likelihood of any upside as discounting remains high to move the new metal.
A widely held view at the event, and the focus of a specific panel that my colleague Thomas Chieux contributed to, was that action is required to stimulate the used BEV market – also the focus of an ICDP webinar held in May.
My contribution at the ANE Congress and a significant part of the ICDP Summer Meeting were focused on sales networks.
We had confirmation the previous month at the Quintegia Automotive Dealer Days from Jean-Philippe Imparato of Stellantis that they would not roll out their New Retailer (agency) Model to other markets, and a further blow to agency has been dealt by the unofficial news in recent days that VW Group will now not move to full agency in Ireland and Sweden as originally announced last year.
This still leaves agency in place in multiple European markets with Mercedes and Mini, still officially due to be applied to BMW across Europe, and in place in selected markets with Honda, Hyundai, Nissan, Polestar and Volvo.
Others have said that agency remains their long-term strategic objective, so it seems that network structures in future will be mixed.
Our expectation is that in practice the way in which the different formats operate will however still converge as they must all meet the desire of customers for an omni-channel buying journey – something that is covered in the just-published Car Buyer of the Future report from ICDP.
Data will still need to be shared across networks and systems, and processes will need to better integrated, and manufacturers and dealers will need to work in a much closer partnership to deliver a great buying experience – still largely completed in dealerships.
Am I confident that manufacturers will adapt to this, in a way that some notably failed to do in their agency projects? Unfortunately, no.
I am sure that saying we live in uncertain times – without even considering geopolitics and trade – will not be a surprise to anyone, but the question is whether you are adapting your own business to reflect this?
Whatever your role – as a direct player or as a service provider – your business model has to be focused on looking for the opportunities, and not being too exposed to the threats.
‘Buttoning down’ on existing business, cutting costs and hoping that there is an end to the tunnel is unlikely to offer long term survival. Uncertainty is not the same as downside – it’s just not clear where and when the upsides and downsides will be. Seize the opportunity on the upsides, and be cautious through the downsides.
For those planning holidays, have a great time – there’s a fair amount of reading material in the links above if you need an automotive fix!