The European Dealer of Tomorrow
ICDP’s European research programme was launched over 25 years ago with the primary objective of identifying a more effective way of distributing cars than the model which has been in place now for a century. That model survives despite the tensions that frequently exist between car manufacturers (OEMs) and dealers, and between dealers and their customers. The model is operated with inherent inefficiencies in the supply chain driving sub-optimal solutions. It depends on cross-subsidy of the new car sales business from aftersales, and in some markets from used cars. Yet it survives …
In this report, we consolidate our research from recent years, updated where needed, and put forward our views as to what form the dealer of tomorrow will take in Europe in the second half of the next decade, so around 2025-2030. For convenience, we continue to use the word “dealer”, but the business we describe is far from the short-term focus on the “deal” that has arguably shaped the distribution model today. We also talk about ‘sales’ and ‘purchase’ even though the product that is being ‘sold’ or ‘bought’ may not be a car where the customer takes ownership, but a service to which they sign up for some period of time in return for a regular payment. We have also focused on sales rather than aftersales, as it is clear that at least some part of servicing and repairing cars must remain a physical process requiring some type of facility and trained personnel, whereas there are legitimate questions about whether the same is true of sales. However, there are significant implications for aftersales networks as a result of changes in sales networks, and we do address these.
Overall, we do see a future for the businesses and individuals who operate today’s dealerships, if they adapt to the additional challenges and complexities that face us now, and that will only increase over the next decade. We do not dismiss the possibility that some OEMs may follow a different distribution model, at least for certain sub-brands or products, nor the probability that e-commerce players will play a greater role than they do today. However, we do not anticipate a “Blockbuster” moment for car retailing where the sector is revolutionised in a few years, with today’s dealers being the primary casualties.