Blogs/Vlogs

The changing automotive landscape; or is it?

15 August 2018

Over the past couple of years there has been much noise about the future of retailing, and specifically the long term viability and requirement for franchise retail operations. There is no doubt that the retail environment is changing, as we see the likes of large high street retailers struggle against the low cost online competitors. Is this also the case for car retailing? I would suggest not - certainly not in the short term.

Manufacturers are talking about 'click to buy' with a number that have already set up the functionality for consumers to purchase directly from their websites, however, how many vehicles have actually been transacted through these sites? The purchase of a car is, for most people, one of the largest financial decisions they make each year and not always the most simple transaction when taking into account credit checks, part exchanges and other add on extras or products the customer may require. This, coupled with the fact that I believe a lot of people still like to go and touch/feel the vehicle they are likely to be committing to for a good number of years, supports the short and medium term outlook that the car retailer is still very much required.

Whilst the manufacturers are developing their online platforms for direct selling, there are also hundreds of millions of pounds being invested each year by the retail networks into the physical retail properties, which again does not correlate with the suggestion that motor retailing will move online. Millennials may be more comfortable making their purchases online and are perhaps more focused on cheaper monthly payment options due to their view of cars being simply a mode of transport, but for more high-end products it is unlikely the move to online will be as popular.

We could see a reduction in the number of retail points, with a hub and spoke model, eg. the main city location is supported by smaller service operations in the suburbs, as opposed to today’s model which probably includes numerous full retail facilities. Undoubtedly the model will evolve and change in the next decade, however the motor retail environment has not changed much in the last couple of decades when you look at the underlying business model.

If you would like to discuss this topic, please contact your local UHY automotive specialist.

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