ICDP's blog

The growth of Chinese car brands in the European market has been in the headlines in the last week or so, so it seems an appropriate point to comment on the news stories but also launch a new initiative from ICDP, where we have extended the ‘fireside chats’ that we have had in some of our recent members’ meeting to record interviews that we can then share more widely on a range of topics

This year, ICDP reaches thirty years since the launch of the first European Research Programme, so we have been looking back in the archives in preparation for our Members’ Meeting in Berlin in two weeks where we will share some old material that includes some not-so-dated thinking. 

We are finalising some thoughts at the moment for our Spring Members’ Meeting in Berlin in a couple weeks’ time.  We have a range of interesting topics to cover including an agency update, the progress of the Chinese brands into Europe and the question of whether independent aftermarket players need scale to survive – a topic that I touched on in a more general way in a blog a few weeks ago.  However, the topic that has been taking up some of my time is what the best management model looks like for large dealer groups, or for that matter repairer chains or parts distributors?

Earlier this week, ICDP was invited by the British Vehicle Rental and Leasing Association (BVRLA) to facilitate a workshop with their members on the subject of meeting the so-called ZEV Mandate in the UK.  This is legislation specific to the UK which mandates a given percentage of sales of zero electric vehicles (ZEVs), which in practice means battery electric vehicles (BEVs) between now and 2030.

We spend a lot of time talking about customer data, personalised marketing and the potential of AI.  From our point of view looking at the motor industry, we see the opportunity to reduce cost of distribution and grow ancillary revenues by working the customer database harder, and coming up with marketing communications that feel very personal, give the client a warm feeling about the brand, and increase the probability that they will come back and spend some more money with us. 

I have read and heard quite a lot of comment recently about the challenges that the Chinese new entrant brands (with the notable exception of MG) are having in getting sales traction in Europe.  Dealers are signing up to the available franchises, but then not rushing to actually open the showrooms or move from a temporary multi-brand site to a permanent solus site. 

Tesla announced its 2023 fourth quarter and full year results this week.  A dramatic fall in gross profit margin grabbed the headlines, down by a quarter year on year to 17.6% for the quarter, 18.2% for the full year.  This was largely attributed to the dramatic price cuts that have become a feature of Tesla’s approach to market over the last 15 months or so

It seems a long time since the holiday break…  We’re already more than half way through the first month, and in the UK there are Easter eggs in the shops.  The first couple weeks back have been pretty action-packed with a mix of research and consultancy activity, but across all of that one of the common themes that has emerged is that scale in downstream distribution (sales and aftersales) matters.

As my first blog of 2024, then the first priority has to be to wish everyone a happy new year!  I managed to squeeze in a longer break, only returning to work on Monday, but I am sure that many of you share the feeling that it seems a long time since the holiday already.

It’s been a particularly hectic time running up to the holiday period, and this will be my last blog until somewhere around January 8th.  We all want to be busy, so I’m not complaining, but we also want to make sure that our efforts are productive – that we’re not being busy fools. 

In the course of the typical week, I have multiple conversations, meeting and presentations with different people from across the industry and sometimes it's difficult to keep track of what you've discussed with whom, what’s ended up in different presentations and articles.

Again, my blog for this week is a bit late as amongst other things I have been supporting my colleague, Gareth Arnould, in the mammoth task of producing the latest version of our European Car Distribution Handbook.  This has been published annually since 2007, and is the only publication that quantifies the size of manufacturer sales and service networks across Europe.

As the industry progresses towards omni-channel, primarily thinking of car sales, but also applicable to parts and increasingly services, the approach towards designing and implementing the digital channel is becoming increasingly outdated.

There has been so much in the news recently about Tesla that it has been a potential subject of my blog for most of this year, and I’m sure that now I’m (metaphorically at least) committing pen to paper, there will be a lot more news in the weeks following this publication, making this rapidly look stale. 

I think for the first time since I started doing a regular blog I've actually missed two consecutive weeks for which I apologise, but it's a reflection of a particularly hectic period preparing for our Autumn Members’ Meeting last month, getting our European Top 50 ranking out and various other commitments for external events and consulting clients.

I seem to be on a stream of blogs with a common theme of looking at things differently, and potentially getting different answers as a result.  I make no apologies for this one continuing that theme as there is always a danger of getting stuck in a rut, particularly when an industry tends to be quite insular as is the case in automotive.

We have just finished our Autumn Meeting for members of the ICDP European Research Programme.  It seemed to go well with a lot of interaction between the delegates both during the formal sessions and over dinner and drinks in the bar.  The meetings force us to pause the daily routine and the reactions from members and discussions sometimes prompt new thoughts and ideas. 

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.