ICDP's blog

I did not expect to get a blog out this week as it has been particularly hectic with preparations for our Autumn Members’ Meeting next week near Geneva and other client commitments including leading a discussion panel tomorrow at the annual conference of the European Car Transport Group in Copenhagen. 

Attention of late has mainly been on the larger players in our sector – the long drawn out sale of Pendragon, the UK dealer group to an even larger group (probably Lithia, but we don’t yet know for certain), the continuing saga of would-be used car disruptor Cazoo desperately trying to cling on to what is left of their dream, the further expansion of LKQ and Alliance Automotive in parts distribution or the completion of the ALD acquisition of Leaseplan to create a giant in the leasing sector with over 3 million vehicles globally, or the expansion of Halfords, the UK retail and repair chain to become the largest repair network in the UK by far, exceeding dealer groups and other independent chains with 650 autocentres. 

Although my blog relates to one of the main headlines to hit the UK news last week, my point is relevant to readers of this blog everywhere – so read on, I’ve not turned UK-centric!  The big news story was that the UK Government confirmed rumours that have been building for a while that the ban on the sale of ICE cars which was due to take effect from 2030 would now be pushed back to 2035, so that it is now realigned with the EU which is where it started.

Interesting news this morning which has ramifications beyond the UK concerning Pendragon, ranked the seventh largest dealer group in Europe in our 2022 rankings.  The business has been ‘in play’ for some years, since the Hedin Group first bought a stake in 2019, subsequently attracting formal offers from both Hedin and Lithia.

I was in Munich at the start of this week, unfortunately fully immersed in client work and unable to actually visit the IAA Mobility Show that has taken over the traditional Frankfurt Motor Show slot in the calendar.  However, I got some flavour of it through some side-meetings, exhibits that were on the streets in the city centre and obviously the press coverage.

A couple weeks ago, the UK Independent Automotive Aftermarket Federation (IAAF) signed up to the global Right to Repair movement’s position statement which promotes fair and open competition, and regulation rather than voluntary codes to force access to repair and maintenance information.

I was speaking at a UK event last week and was asked a question about the impact of the Zero Emissions Vehicle Mandate – the UK legislation that will enforce 100% zero emissions car sales by 2030, five years ahead of the equivalent enforcement date in the EU. 

I recorded a podcast last week, when one of the discussion topics was the recently announced cuts to the Renault UK dealer network of around 20% from 144 franchise points to 115, a move that has attracted descriptions like “radical” and “slashing”. 

I'm just kicking off a new workstream as part of the ICDP research programme focused on used cars and in particular looking at why some dealers can regularly outperform others even when the basic principles of how to be a great used car dealer are well known.  Within that statement I recognise that I'm already making some assumptions.

It’s not deliberate that I link the blog to Tesla for the second week running, but there’s always a lot going on when Elon Musk doesn’t apply a filter to any of his comments.  Last week, Tesla announced their second quarter results with the key highlights being a 10% core automotive operating margin despite the succession of price cuts, volume ambition this year of 1.8 million (double those achieved in 2021!), and a promised start of production date for the Cybertruck in the final quarter of this year. 

Over the last few months, price cuts seem to have been a consistent theme in the headlines.  Arguably kicked off by Tesla in the last quarter of 2022, other manufacturers jumped in (or were dragged), leading to an extended period where headline prices have been adjusted by 10% or more on a regular basis. 

In some amazingly rare alignment of the stars this week, three wise men of the automotive consulting world had similar thoughts on the same topic.  Given that those three wise (arguable) men would at one time have been competing for big ticket jobs from the global OEMs, trying to establish differentiated positions, this is quite significant, a bit like trying to get a consistent view from three economists.

In the tale of King Canute (King of England, Denmark and Norway in the eleventh century interestingly) he set up his throne on the beach in the face of the incoming tide in order to demonstrate that even Kings had limits to their powers.  However much he was respected by his courtiers and subjects, he could not hold back the tide, so he did get his feet wet.  We face a different tide now in the shape of the Chinese car manufacturers, a topic that is perhaps second only to agency in discussions that I have with car dealers in Europe.

BEV charging seems to be in the news at the moment.  The British comedy actor Rowan Atkinson attracted attention with a column in the Guardian newspaper suggesting that he had been duped into buying a BEV by incomplete environmental analyses, but also commented on unsatisfactory charging experiences.

I’m on holiday in the Algarve at the moment, so wasn’t really planning on a blog this week, but one thing struck me on the way from the airport, and subsequently driving round in my rental car.  (Opel Corsa, very nice drive, well equipped by the way)

Omni-channel retail seems to be back in the news again in automotive circles.  This week the UK marketplace AutoTrader will publish a new report in conjunction with ourselves and the NFDA looking at the readiness of UK franchised and independent dealers to operate in an omnichannel world. 

Over the last three years, since both manufacturers and dealers discovered that they can make more money by selling fewer cars, we have been assured that lessons had been learned and that we would not return to the bad old days of oversupply.

My blog is again a little late this week, but it has given me the opportunity to pick up some inspiration from the Automotive Dealer Days, organised each year by our friends and partners at Quintegia in the beautiful city of Verona.  With an attendance of over 5,000 people this year, it is the largest dealer event in Europe, and next year they hope to expand and increase the international coverage.  May 14-16, 2024 – get the dates in your diary now!

Yesterday we held a webinar for our research programme members looking at dealer consolidation in Europe and in particular what was going on in respect of cross-border deals. The consolidation trends creating ever larger groups with a higher domestic market share is well established and in some markets like France, Netherlands and the UK, the share held by the top 50 groups exceeds 50%.