ICDP's blog

There was a great response to last week’s blog on the Near Term Dealer Model – I appreciate the feedback. It’s always useful and sometimes picks up on specific points that merit further comment. This is an example of that – with respect to the need to reconsider how processes work in dealerships, and whether there are opportunities to improve.

In recent months, members of the ICDP Research Programme have flagged some priority questions for us such as whether Covid has advanced digitalisation and changes in network structures, and whether there are lessons learned from the lockdown experience that can be applied to permanently reduce dealer fixed costs.

Some years ago, a colleague and I had a discussion about why businesses existed. He had a private equity background and asserted that businesses were there to be bought and sold, basically that the businesses were as much of a commodity as the products or services they produced.

Looking at the image, you may wonder what place a very used brake caliper leaning against a can of baked beans has in a blog that is aimed at encouraging people to think about strategic change in automotive distribution, but there is a connection and that relates to the changes that technology has made and will continue to make.

As any good dealer knows, used cars can be your friend in need. If a dealer business is considered as having three pillars, used cars is the one that tends to stand strongest through whatever disruption is going on in the broader market.

I read an article a couple weeks ago in Automotive News Europe related to pricing power.. It was a good piece, citing various researchers, and with data showing how some brands, notably PSA under Carlos Tavares, have done better than others in improving real pricing in recent years.

This wasn’t the plan for today’s blog but sometimes you just have to go with the flow, and I didn’t have much option today but to refer to an incident that I was involved in yesterday.

As I was completing last week’s blog, the news came out that Mitsubishi Motors had announced their withdrawal from Europe.

Distribution cost is generally viewed as being around one third of the list price of a car, and it is a proportion that has been fairly stable over many years, even decades.

I did consider picking this topic for my blog last week – the acquisition of Imperial Car Supermarkets in the UK by online used car start-up Cazoo last week. The rumours were circulating last weekend, but not confirmed until Monday.

The last week has seen a number of conversations with ICDP members and other contacts about the prospects for agency to replace the traditional franchise system in dealer contracts. 

My blog is a day late this week as I had to spend some time ‘spannering’ my classic rally car to get it ready for its MOT test today.