There is some interesting debate in this month’s magazine concerning the future shape of automotive retail, with some key insights from a KPMG report.
After his obituary had been mistakenly published in the New York press it was Mark Twain who said: “Reports of my death are greatly exaggerated.” And for those of us who have been in the industry a long time, you could be forgiven for thinking that this phrase applies equally to the demise of the existing sales and distribution model, over which the death knell has been sounded many times – yet the model is still here and hasn’t really changed that much.
I remember how, back at the turn of this century, many predicted that the internet was about to revolutionise car sales. This prompted big names such as MSN and Virgin to try their hand – unsuccessfully – at a ‘clicks vs bricks’ approach. But things move on. Perhaps the biggest issue back then was that we were only acclimatising to online buying and people were just not ready to commit to such a big purchase over the internet; now most of us undertake a significant amount of our purchases and financial transactions this way. Online banking is commonplace and the buying processes have been refined by internet giants like Amazon who seem able to sell just about anything online – cars included, in the near future.
Furthermore, the way in which people are now buying cars has changed and lends itself more to online transactions: namely, buying the use of a car for a limited period, at a fixed monthly rate, rather than a single, large outlay. In addition, new models are already emerging. I noted that when Geely announced that Polestar was to be launched as a brand in its own right, selling high performance electric cars, it stated that these cars would be sold on a no-deposit, subscription-only basis.
So what does this mean for existing dealerships and the considerable investments in bricks and mortar that have been made and are still being made? Given the scale of some of the new developments, especially on behalf of premium brands, it’s not unreasonable to ask where all this fits into the longer term distribution strategy. And what exactly that strategy may be?
We already know that car buyers do much of their research online and that dealership visits have declined significantly as a result, so why do we need such big, traditional stores? On the other hand, the big used car operations are seemingly flourishing and there is still money in aftersales.
We hear a lot about Industry 4.0, or the next industrial revolution, and how robots will put us all out of work. Realistically, though, if the previous three industrial revolutions have taught us anything it’s that we cannot yet imagine what new jobs will exist to replace what we have today. Who could have foreseen jobs in radio and television before we had electricity? Our own industry didn’t even exist 120 years ago, yet it currently employs around 860,000 people in the UK alone. The same probably applies to the future of car sales and distribution. The current model has endured for so long that we struggle to see it being done differently, but the combination of factors surrounding the ways in which we now use, finance and own vehicles – together with an ever increasing tendency to research and buy online at our own convenience – means that some change is inevitable.
Whatever the future of car retailing may be, one incontrovertible fact is that the industry will always need professional people with finely-honed skills and copious amounts of knowledge. The roles may change but cars will remain the most sophisticated piece of machinery that any of us use and we will continue to need support in buying, owning and operating them. As such, I am not anticipating that our role as the industry’s professional body is in any imminent danger!