Comment: To succeed in the future, businesses must learn from the past 12 months

Time 7 months ago

I just can’t do it – I can’t write yet another article about how Covid is impacting on the motor industry as, like all of us, I’m just bored and frustrated at the whole mess.

However, with almost a year of trading in pandemic circumstances, I think we can look to the trends that may be here to stay beyond the end of the crisis.

I have read many articles which imply that the motor trade have never heard of online retailing, and recently called out Cazoo founder Alex Chesterman for making that very claim, but what has changed is the acceptance that your investment and skill at physical retailing needs to match your digital capability.

That’s not to say that all dealers or indeed manufacturers have platforms which are fit for purpose at the time of writing, but that I would hope boardroom conversations about capital investment are not limited to site acquisition or development.

Big dealer groups and manufacturers should take a leaf from the book of Cazoo or Carzam and invest significantly in websites, preparation processes and people who are completely geared to online retailing.

Alex Chesterman has faced a backlash over his criticism of the car trade

Adding slots on Auto Trader or taking better photographs won’t be enough as this trend accelerates.

One of the fears for retailers around online trading was the impact of distance-selling regulations.

Nothing there has changed, but there’s an acceptance that if you want to participate fully in a digital sales channel, this is a potential cost for which it may be prudent to budget.

Similarly, declaration of known paint issues is something that Cazoo especially has mastered. Consumers will happily accept small defects but on the clear proviso the faults are disclosed before the point of order.

Manufacturer used car programmes can imply that every used car is perfect but that is simply not the case, particularly in paint or trim condition, so franchised dealers need to ensure their sales process is robust around communicating known problems with buyers.

New car deals are also becoming more uniform and streamlined across franchised networks.

Gone are the days where ad-hoc bonuses were paid to dealers based on targets or scale.

Compliance and competition rules both legally and within franchise agreements mean that advertised deals between operators within the same franchise are more consistent than they once were.

New car margins on hybrid vehicles are also less lucrative, so this looks to be a trend that continues.

The one potential issue on the horizon is the emergence of lease operators such as Arval or ALD into the private leasing market.

Not all dealers have access to these funding systems, so there is a potential peril here, but they are a peril to the wider market and, as I have said before, manufacturers would do well to choose their bedfellows carefully.

The sales departments are not the only parts of the business that need to think about the future.

There are some amazing waiting areas in dealerships up and down the land, complete with baristas and cakes, but what will the appetite be for consumers to wait for their service in future?

Businesses need to adapt by being more flexible and efficient on waiting jobs or at least have more collection and delivery provision.

Bodyshops have also felt the effect of fewer collisions and less willingness on the part of insurers to write off vehicles. Pivoting to smart repair operations or manufacturer approval business may be the only way to survive in the long term.

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One thing is clear: businesses will not be able to succeed in the future without a creative and forward-thinking attitude that takes lessons from the past 12 months.

James Litton is an automotive retail consultant who always has something to say about the industry he loves.

This column first appeared in Car Dealer issue 155. For more like it, view the latest edition by clicking below.

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