Why am I still working in the motor industry?

Writing this after a four day holiday weekend in the UK, when I had the chance to more or less put work to one side and do other things, it would be easy to start thinking about the options of everyday being a holiday and retiring or at least slowing down on the work front.  This was also brought home to me last week as I prepared some thoughts for a lecture that I have been invited to give to a meeting of the Fellowship of the Motor Industry in the UK tomorrow.  I have been told that most of my audience will have retired from the industry some years ago and the objective of the lecture should be to tell them how much things have changed and will continue to change in the years ahead.

As one thing that I will share with the audience other than a passion for the industry are grey hairs, my intention is to explain why I'm giving the lecture rather than sitting in the audience, why am I still working rather than playing with classic cars?  The answer is a fairly simple one, that I feel there is still a job to be done in terms of securing the fundamental changes that are still needed in the distribution model, and hoping that I can play some part in making that happen.  ICDP was established in the early 90s rooted in the International Motor Vehicle Program that was run out of MIT in the US, but which focused mainly on engineering and manufacturing.  Some of the individuals involved felt that distribution did not get the attention it deserved and therefore set up ICDP with the ambition of facilitating the same sort of transformation downstream that we have seen upstream.

I was talking to a dealer friend earlier and we agreed that in the 40 or so years that we've both been in the industry there has never been a time quite like the present in terms of the range of challenges that face anyone involved.  If you like a challenge rather than shy away from one, then this is definitely a reason to want to be engaged and part of the change process.

Electrification is a solution that has been dictated to the industry by regulators rather than one that has been chosen as the optimal way to deliver real environmental benefit, but it is now inevitably the mainstream choice in Europe - as too much has already been committed in the switch from ICE to BEV.  It's a technology that the Chinese industry with government backing has chosen to follow to leapfrog its longer-established rivals but one that might be challenged and be less dominant in other parts of the world.

Digitalisation is transforming the customer relationship but not as some suggest in the direction of online sales becoming dominant.  Even as customers’ online research has intensified, they're visiting more dealers more often and this has been a trend over the last decade.  But more online research activity means more data and that allows decisions to be driven by data, not by intuition or history.  We have already moved from analogue networks to digitally enabled networks and we are now on the point of a move to digitally driven networks.

Aftersales was in structural decline anyway because of more reliable cars and longer service intervals. Electrification has accelerated that trend and digitalisation brings the potential for some maintenance operations to be handled over the air.  ADAS has had a similar volume effect on the crash repair sector with fewer accidents, less mid-level damage and more write-offs due to the cost of technology.  The days of the service department funding dealerships are gone, independents are more professional, so the fight over a smaller cake will intensify.

Given all of the above it would be easy to assume that the dealer is dead, but that is not the case.  The role of the dealer in networks will change.  I believe that agency, properly executed, would be a good thing for the industry but there are many signs that execution will fall short of this standard.  However regardless of the contractual relationship, dealer groups will become more dominant, becoming larger and increasingly international.  They will continue to invest heavily in digital but they face a property time bomb with under-utilised physical assets.  The people employed in the dealerships will change as different skills are required to be successful.

The final point I will cover in my lecture is the rise of the Chinese manufacturers.  My experience working with them is that they see a dominant global position as being inevitable and when you look at other sectors of manufactured goods, and their progress in automotive, it is difficult to argue that point.  Tariffs and protectionism are not the answer – that will only delay the day of judgement.  Existing players must be more competitive and fight the Chinese newcomers on the basis of product and agility, not try to hide behind artificial barriers.

With all that going on there will clearly never be a dull day for anyone involved in the car industry.  Today more than ever, there is the opportunity for a breakthrough, but that comes against a background where the cost of failure may be even greater than it was in the past.  Bring it on, and count me in!