7:56 am, July 30, 2022
Car dealers need to prepare for big changes coming to the automotive industry if they’re to survive and thrive in the coming years.
Auto Trader CEO Nathan Coe has told Car Dealer that he believes the car industry is ‘well placed’ to be around for a ‘very long time to come’ – but there are obstacles to watch out for.
Coe was speaking to Car Dealer as part of a special Investigation video into how Auto Trader grew into the advertising giant it is today.
The special documentary is published on YouTube (which you can watch above) and as a Podcast on your favourite podcast platforms.
Coe said: ‘I think the car industry itself is likely to be around for a very, very long time to come. So I think as an industry, actually, it’s pretty well placed to cope with the threats to come.
‘Who does well in the industry is probably the more important thing.’
Coe said he believed electric vehicles will shake up how the industry performs both in new and used car dealerships.
‘I do think electric vehicles are going to come at us very, very quickly,’ he said.
‘Certainly as a new car retailer, if you’re not good at electric vehicles, you could find yourself caught out very quickly.
‘For anyone that’s in used cars, it’s easy to not be thinking about electric now because they make up such a small proportion of the car park.
‘But the reality is, at some time in the next 10 years, electric vehicles are going to be the sorts of cars that you need to be good at selling.
‘And at some point, they’re going to be most of the cars that you’re selling. So thinking forward, even though the business is so much about trading day to day, you need to know that your business is at some point going to need to be ready for electric in terms of how you prep vehicles, store vehicles, what you do on batteries, and how you sell those cars.’
Agency sales
Coe also believes that electric cars will have a knock-on impact to new car dealers as manufacturers roll out more agency agreements for sales.
These will see car manufacturers sell new cars directly to consumers on their websites with car dealers paid a fee to hand them over.
Coe added: ‘Tesla don’t have franchise networks, they don’t have dealerships, they’re operating in a different way. We know through agency agreements, other manufacturers are getting closer to that.
‘The industry itself is in a really good position, and fundamentally people are going to want cars, and the freedom and independence that they provide.
‘It’s really important for retailers to be thinking about how they make sure they’re thinking today about what they need to be good at in 10 years time and being prepared for that.’
Coe also gave his opinion on online sales and how important they will be to car dealers in the future.
He said currently Auto Trader believed ‘about five to six per cent’ of car sales are made without an interaction with a physical dealership.
‘Over time that might grow to 10-15 per cent,’ he explained.
‘But I think many retailers, and you’re even seeing this with the online car retailers, they are starting to set themselves up to be omni-channel businesses, because everyone knows that probably in five to 10 years time the majority of people will have some interaction with the retailer because at the end of the day, these are used goods and they are all unique.’
Online sales
Coe said Auto Trader will be helping dealers set themselves up to offer as much of the buying process online as a customer would like to do – but also ensuring they can complete what they want to in a physical dealership.
He added: ‘They might want to reserve a car, they might want to get a part exchange quote, but then actually they’ll complete that deal with the retailer.
‘We very much believe in a bricks and mortar or “clicks and mortar”, if you like, world where it is going to be omni-channel. And that’s exactly what we’re building, because that is going to be the way that most consumers go about buying a car.’
You can watch our Car Dealer Investigations: How Did Auto Trader Get So Big video on our YouTube channel now or listen to the podcast version on your favourite platform by searching ‘Car Dealer Investigations’.
