ICDP's blog

Last week, I wrote about how the focus on electrification of new car sales was ignoring the fact that there would be a substantial ICE parc for many years to come, even in markets that enforce electrification relatively early like Europe.

For understandable reasons, we hear a lot of talk about the growth of battery electric vehicles (BEVs) and the disruption that this will cause in the automotive distribution system – new and used car sales and aftersales.

One of the topics within the ICDP research programme in the last year or so has been looking at the distribution model adopted by new entrants to the European market. We have considered a range of brand launches, some still in progress where the success or otherwise cannot yet be determined, others that have already failed such as Qoros, others that you would already consider a success such as MG or Tesla.

The momentum of the switch to agency contracts for car dealers seems to be gathering pace, with agreements being reached for some brands and markets, and formally proposed in others.

The news the last few days that the French leasing business ALD is in discussion with the private equity owners of Leaseplan about possibly quitting the business caught my attention for a number of reasons, because I have been discussing both the future of the business car market and the potential evolution of leasing with a few different parties in the last couple weeks.

This week’s blog is a couple days later than normal as we have just completed the Summer Meeting for our ICDP Research Programme members – a day and a half of pretty dense research and insights covering everything from connected customer relationships through to potential developments in vehicle powertrains beyond current battery electric technology.

I had an interesting conversation with a dealer group head this morning about whether the introduction of agency formats would result in suppressing innovation as all dealers were forced to follow manufacturer-defined processes, use manufacturer-supplied systems and present customers with manufacturer-defined offers.

In the last couple weeks, Volkswagen UK launched a new service offer on cars from 3 to 6 years old, offering two years’ warranty, roadside assistance and MOT (the annual roadworthiness check) at a cost of £33.45 (less than €40) per month.

As everyone in the European motor industry must be aware, last week Stellantis held dealer meetings across Europe to announce that they were terminating all existing dealer contracts, some of which have only been in place for a couple years, and would enter into discussions with a reduced number of partners about new contracts.

Foxconn, the Taiwanese-headquartered contract manufacturer of a range of consumer electronics products, with a client list that includes Amazon, Apple, Dell, Google and Lenovo, announced last October a new electric car platform, called ‘MIH’, which they said would be the “android system of the EV industry”.

t’s been a busy couple weeks for those following the development of autonomous cars – or at least the capabilities and regulations that may enable autonomy. Last week, Elon Musk tweeted that Tesla hopes to roll out “version 9 of its Full Self-Driving software” in the EU “hopefully this summer” and that the functionality will “blow your mind”.

Polestar continue their entry into European markets, and last week they opened a new test drive centre close to my home. They have two ‘Spaces’ so far in the UK, one in London, the second in Manchester with two more due to open in Birmingham and Glasgow by the end of this year, further additions planned for 2022.

Last week the Shanghai Auto Show opened its doors, with the only evidence of the changed world we now live in being a requirement for a negative Covid test to gain entry. Change was however evident in another way, and this was one which will have a longer-lasting impact on the industry and society than Covid.

We are not really any the wiser about what shape the economic recovery will be after the worst effects of the pandemic have passed. I was obviously premature just under a year ago talking about the recovery from the pandemic, and the ‘elephant in the room’ being the mood of the public when released from lockdown, but the question remains valid even whilst lockdowns and restrictions continue.

Whilst I appreciate that many readers of this blog will be facing quite different conditions, ‘non-essential retail’ reopens in England today, April 12th.(Other parts of the UK have slightly different timetables).This includes car dealers, who have been operating ‘click and collect’ for sales and socially distanced aftersales for over three months now.

When discussing the customer buying journey with a few members over the last few weeks, the subject of vehicle handover has come up. Over the last few months, there has been a lot of innovation to allow a socially distanced handover, either with the salesperson outside the car, or through using video to give the customer a self-help guide.

In my blog last week, I referred to the challenges that complexity brings to automotive distribution, in terms of the customer journey and being able to match a customer requirement with an available vehicle. A conversation later in the week with a good friend in the industry, Philip Nothard at Cox Automotive, brought us onto a related topic of improving stock turn in the used car business.

The car industry has moved on a long way from the days of Henry Ford when he recognised the negative impact of product variety on his manufacturing process.

To many commentators, the official announcement last week by Volvo Cars that they would move to an ‘online only’ model (their press release headline) coincident with a move to only pure electric models being available from 2030 marked the end of the dealership.