New moves, same challenges

I struggled a little bit this week to pick the topic for the blog.  There are some obvious options around more restructuring at Cazoo and more delays to agency rollouts in Europe.  It's also interesting to see a change in the arrangements between Renault and Nissan as yet another illustration of how the globalisation of the last 30 years seems to be reversing.  At the NADA Show that's been going on over the last few days in Dallas, I understand the dealers generally remain quite upbeat after three highly profitable years of trading, but are taking a fairly combative stance about manufacturer direct sales and the possibility of agency reaching US shores.

But instead, I'd like to pick up on a couple of stories, one hitting the headlines and one developing in the background, but both related to US players coming to Europe.  At the start of last week it emerged that Lithia Motors who had previously expressed interest in buying the Pendragon dealer group in the UK have now set their sights on the smaller Jardine Motor Group, currently owned by the Hong Kong based conglomerate Jardine Matheson.  With extensive interests in Hong Kong, mainland China and across Asia through a 50% stake in Astra Holdings, Jardine Matheson are a similar size to Porsche Holdings and therefore one of the largest players globally in automotive distribution and retail.  Despite this backing, Jardine have not been grabbing any headlines in the UK.  Although very capable, they have largely sat on the sidelines whilst other groups have grown, and although they have done some interesting things in the digital field, adapting the Rockar omnichannel platform for their Jaguar Land Rover dealerships, you get the sense that the business has been constrained by its current sole shareholder.  The question is whether Lithia Motors from an only slightly less inconvenient distance can unleash Jardine in a way that allows them to be an active player in the changing UK retail market?

The second development that has been underway for some time is the strategy adopted by Cadillac to develop it into a BEV-only global brand including a return to Europe.  Deliveries have just started in the US of the Lyriq crossover priced at under US$70,000 and details are beginning to emerge of the Celestiq range topper priced at up to US$300,000.  Those who've been around the industry for a while will recall that this is not the first time we have heard of plans to position Cadillac on a much more international stage, and many of us have probably rented a Cadillac whilst on holiday in the US and chuckled at the idea of trying to thread it through European city streets.  However now that two metre wide cars are not so unusual even from European brands, then perhaps the playing field has become more level.  The more interesting question is whether even with a history as rich as Cadillac, it is possible to squeeze it onto buyer consideration lists which will typically have Audi BMW and Mercedes occupying the top three spaces.  It is also interesting to draw parallels between what Cadillac wants to do, and what we understand to be the new strategy for the reinvention of Jaguar as a pure BEV brand in a space that's above where the old XJ saloon used to top the range, reaching up towards Bentley territory.

Given that neither an unleashed Jardine or a reinvented Cadillac are likely to expand the market in which they play, the question is how easy they will find it to win market share in highly competitive environments.  In the case of Jardine or any other dealer they are the brand behind the brands, and whilst they can achieve some local wins, particularly in used cars and aftersales, real growth will only come by persuading the OEMs that they can do a better job of representing their brands in new car sales than other dealers.  Jardine is currently focused exclusively on premium brands which are the first ones moving to agency so that will represent a particular challenge as they and their peers learn how to win in a manufacturer driven market.  That might prove helpful in time to Lithia in the US but the learnings will be flowing from the UK.  For Cadillac they need to persuade loyalists to the German big three and others ambitious to join them like Jaguar, Lexus and Maserati that they have a unique proposition.  They cannot afford to have a flawed product but positive differentiation will almost certainly come from service and services rather than product.

In that respect both cases are similar, in that headquarters can provide an environment but the execution will come down to being better at the coalface with customers through local teams.  Managing consistency and quality of process delivery in that environment has always been the Holy Grail in car retail, and new ownership and new product do not in themselves deliver that.  New investments must be accompanied by new thinking around the customer experience and that will critically depend on the people who plan and deliver that.