2:21 pm, March 10, 2023
Auto Trader has identified three forces of change that will change the shape of car dealer businesses in the coming years.
The Car Dealer Live headline sponsor’s chief operating officer Catherine Faiers unveiled the exclusive research at our conference yesterday (March 9).
She told host James Baggott that Auto Trader believes supply, EVs and changing consumer behaviour have the potential to cause dealers the biggest disruption.
Faiers told dealers they will need to ‘get real’ in 2023 as they face up to these changing forces.
Her thoughts were echoed by our car dealer independent and franchised panels who both identified supply constraints as particular cause for concern.
Auto Trader’s exclusive research paper prepared for Car Dealer Live is now available to download for anyone here.
If you’d like to watch back the session on video, and the rest of the day’s sessions, you can do so with a Watch Online ticket which will allow you to replay the whole event.
Faiers told the Car Dealer Live audience: ‘The most immediate challenge has to be supply. We are now, in the used car market, seeing the effect of those years of weak new car registrations play out.
‘When we look at the data and quite what that means, when you look at the size of the used car parc and look at that car parc of sub-five-year old vehicles, going back to 2019 we would have expected there to be around 11.5m cars in those age cohorts.
‘This year, as long as new car supply continues on the trend we’ve seen for the last few months, this year will be the toughest year. There will be just over eight million cars in that cohort.’
Faiers said there have been 2.6m cars ‘lost’ from the market since 2019 and these used cars are being desperately missed by the motor trade.
Automotive industry professionals watching in the audience voted on which of Auto Trader’s forces of change they thought would be the biggest. Some 44 per cent of attendees thought supply, 35 per cent said EVs and 21 per cent chose changing consumer behaviour.
Electric vehicles
Moving on to how EVs would change the industry, Faiers said they are already having a profound impact on car dealers and consumers.
She explained: ‘EVs are changing the brands we see, the product we drive and the way we buy.
‘They’re changing pretty much everything that today we associate with the car buying journey.
‘It’s not just the new emerging brands, it’s that well-established brands are talking about ID.3 rather than Golf, as well as throwing Tesla, Polestar and others into the mix.
‘The brands consumers are seeing are changing massively and the product is changing.’
Her message was that dealers need to face up to the fact that consumers want electric vehicles and they will continue to occupy an increasing share of the market.
Faiers said: ‘EV demand is strong, EVs work and a lot of the headlines you read at the moment say that consumers don’t want them and the cars don’t work.
‘What we see on site is that EV demand is pretty steadily growing over the last couple of years.
‘We get the odd bump but the long term growth is a positive and consistent one.’
She pointed to Tesla’s recent price drop and said following that there was immediate spike in advert views for its models and they have continued at a higher level ever since.
Auto Trader’s data showed that around one in 10 (11 per cent) of cars under five years old were currently an electric vehicle, but by 2025 this is expected to be 23 per cent – and by 2027 that will rise to 38 per cent.
‘When we asked retailers in a recent survey, one in four said that they don’t ever plan to sell an EV,’ she added.
‘To not plan to sell one ever, to us, felt like denying the inevitable because we are all moving to a market where EVs are going to gain share.
‘Our advice to retailers is even if you don’t have an EV on your forecourt today, start planning how and where you want to play in the EV market.
‘How will your sourcing strategy change, how will your customer experience on the forecourt change?’
The third ‘force of change’ identified by Auto Trader was the changing consumer behaviour it was seeing. The marketplace believes car dealers need to be ready to take car buying to where consumers want it – and increasingly that is an omnichannel experience that blends elements online with offline.
Auto Trader said, though, that full end-to-end online retailing has ‘stalled’ with the appeal to buying a car completely online ‘plateauing’.
Its research paper does show that the number of consumers it surveyed who found the concept of buying totally online ‘appealing’ peaked in 2021 and has dropped back since.
You can download the full Auto Trader Forces of Change whitepaper here and to watch back the full video of the session purchase a watch online ticket on the CarDealerLive.co.uk website here.
