ICDP's blog

Last week the UK winners of the recent £184 million (say €215 million, but who’s counting?) Euromillions lottery draw were revealed. Based on market capitalisation, they could go out and buy a decent dealer group like Vertu, but apparently, they are more focused at the moment on a larger house and a holiday to Hawaii.

Multi-branded dealerships have been part of the automotive distribution picture for as long as we have had dealerships. I am not aware of any data to prove this, but I suspect that it was more common in the early years of the industry before going into decline as manufacturers sought to establish clear brand representation through solus dealerships and dealer investors mitigated risk through having a portfolio of large single brand dealerships rather than multiple brands under a single rooftop.

My blog is a little late this week, as we had the great excitement of a face-to-face workshop open to our ICDP Research Programme members yesterday, our first physical meeting since January 2020. We were a little nervous about whether members would be able and willing to travel after so many months of restrictions, travel budget cuts and Zoom calls, but the outcome was in line with our hopes. We had a good range of companies represented ranging through OEMs, dealers, online disruptors, listing platforms and service providers, coming from five countries, and active across many more.

There was an announcement this morning from Free2Move, the mobility brand of Stellantis, that they were going to buy Share Now, the European market leader. It is a joint venture into which BMW and Daimler put their car-sharing businesses in 2018 in response to the challenges they faced with their respective operations at that time

My colleague Andrew Tongue, our in-house expert on all matters related to regulation, wrote a blog for ICDP members recently on the implications of the UK regulators’ initial thoughts on what rules should apply to agency agreements in the UK. This is related to Brexit and the need for the Competition and Markets Authority (the CMA) to come up with its own take on the Block Exemption Regulations (BER).

Last week, I had a call from one of our team which brought mixed feelings. He had received an offer to join one of our members where he will be putting into practice what he has learned over the last several years with ICDP. On the one hand you are pleased for the individual that in a competitive process, they have been picked as the best qualified candidate as that is a positive reflection on both the individual and us as the employer that has provided the skills and knowledge to allow the employee to reach that position. On the other you know that you have a challenging period ahead, to cover any temporary resource gap, and to identify and bring up to speed a new recruit.

Last week, we had our annual judging session for the AM Awards, one of several similar awards programmes in the UK to recognise achievement in the automotive sector. Other markets and industries have similar programmes, in some of which I have been involved in the past. The results of the judges’ deliberations will obviously remain secret until the Awards Dinner on May 12th, but the process did make me think about the value of such programmes, and comparing some of the entries with what I know of best practices in the industry identified through ICDP research.

All of us in the industry have an appreciation of the link between battery electric vehicle (BEV) take-up in terms of sales and the confidence that buyers have in being able to recharge them easily and conveniently if they take the plunge. As battery range extends from the 100-150km of early models in real world conditions to up to 400km today, this puts more focus on charging rather than the actual range.

The level of interest in different forms of shared use mobility schemes seems to have died down relative to the peak of a few years ago, if you measure that in terms of news headlines and launch announcements.

When there is so much uncertainty around, it’s always good to have something you can count on. In the world of automotive retail, that is usually aftersales.

It is difficult to watch the news coverage of the Russian invasion of Ukraine and think about anything other than the human suffering. You would have to be inhuman to do otherwise. However, we all have a business life, and within that the impact of the conflict is likely to be significant. We have been asked by a number of members over the last couple weeks what that might mean. Will chip shortages look modest by comparison?

The big news in the automotive world last week – other than the possible effects on our industry of the shameful events in the Ukraine – was the announcement by Jim Farley of Ford that he was going to split the business into two separate divisions, one focused on electric vehicles ‘Ford Model e’, and one on combustion engine vehicles ‘Ford Blue’.

For many years, a move from ownership to use has been flagged as a major threat to the traditional business model that is focused on every individual having access to their own car. Progress has been slower than the various commentators have suggested and many schemes have been launched and failed over the years.

Last year, when we published the latest edition of the European Car Distribution Handbook (ECDH) I wrote about the slow pace of change in the size of dealer networks over the years since the end of the Global Financial Crisis. Some conversations in the last couple weeks have come back to this subject, not so much about the principle of reducing dealer density, but about the timing and the risks.

One of the hot news items over the last few weeks has been the significant drop in the share price of Cazoo along with other ‘tech’ stocks. The markets appear to have decided that they need to pay more attention to profit than to Powerpoint, and are applying a more realistic valuation to businesses that are burning through investor cash, but are yet to turn a profit.

I’ve talked before about the need for a more disciplined approach by manufacturers to balancing supply and demand – the traditional ‘stock push’ approach is not only the driver of a lot of waste in terms of distribution cost, but it will make any attempt to deliver a true omni-channel seamless customer experience impossible.

You might recall that a couple months ago, I commented in my blog on the acquisition by Constellation – the parent company of British Car Auctions and online used car retailer start-up cinch – of a majority stake in Marshalls Motor Holdings, the 6th largest UK dealer group, 15th largest in Europe.

When I joined ICDP in 2010 our first projection of the size of the aftermarket had just been published, looking at the market volumes to 2015. It showed declines relative to a 2008 baseline of around 15%, driven by changes in the parc, longer service intervals and improved reliability.

Last week saw the announcement that the new CEO of Volvo Car Corporation will be Jim Rowan, replacing an industry veteran Håkan Samuelson who seems to have done a pretty good job of improving Volvo’s fortunes over the last ten years, and presumably disappointing a number of internal candidate who might have aspired to the top job after decades of service.

Welcome back, and best wishes for 2022! At present the new year looks pretty much like the old year, but we can only live in hope that the coming months will see our way out of Covid impacts on us all personally and professionally, and chip shortages specifically on the new and used car markets.