L’unico vantaggio competitivo sostenibile consiste
nella capacità di apprendere e cambiare più rapidamente degli altri.

Philip Kotler

All hands on deck: major changes ahead for Auto Dealers and Manufacturers

Automotive Distribution is an open pit with around-the-clock work in progress.
Digital transformation challenges the traditional dealer format and role. Manufacturers will still need Dealers – but must be able to lead their indirect networks through massive, far-reaching change.

Only 20 years ago, car salesmen kept jealously guarded their customer lists – typically, in old-fashioned and very private notebooks: their very own and precious relationship capital. Now, well beyond CRM, we have all sorts of landing paths for customers to access Manufacturers and for Dealers and OEM’s to contact them – no barriers, plenty of information.

Walls are pure glass: the King may reach his subjects easily – but he may also appear as naked as he could possibly be. Because in the land of digital connectivity, customers expect immediate response, professional competence, transparent information from Manufacturers – in short: they expect the “seamless Brand experience” we very much jaw-jaw about.
Still, in the traditional B2B2C setup, Dealers remain the relationship kingpin: the only human contact in a mostly digitalised purchase process.
Dealers must follow up to leads, provide immediate, professional and transparent information, service and assistance – not simply move the metal, close sales, pay for chassis and parts and be damned.

Major change is required – not only in terms of operating standards, processes and competences. Dealership layouts are bound to change: probably a different sort of showroom space – and located in shopping areas for virtual and static product demonstration. Lesser investments in huge Brand Cathedrals, perhaps – and more into e-marketing and technologically-equipped showrooms. More used car marketing, and more web marketing. Less sales of owned cars, more sale of rental and mobility services. A lot of direct customer contact – more social media and community management. Younger staff, different profiles: digitally fluent and ready to react.

A different kind of business, a different way to invest - thus different KPI’s…
Still, a sustainable business, provided skills and operating model are clearly redefined.
This happens while product technology evolves from Internal Combustion to Electric propulsion – a future of lesser service needs, thus smaller service investments and returns. This will change over time, gradually – but change it will. While rental replaces ownership in ever wider customer segments.

It means that Dealers will intermediate an increasingly smaller share of volumes. The time-honoured role of metal resellers is bound to lose weight. But they will still be the ones who pay for chassis and parts – most of all they will be the key service-givers: animating consumer communities, promoting products and services, delivering new cars, buying and selling used ones, providing after sales and mobility – representing the Brand in front of customers.

So: all hands on deck – things must change, quickly.

Sharp-sighted, clear-minded and strong leadership is required as Manufacturers need to lead their networks through an inevitable change.

Once upon a time we all used to say: a car is a car, is a car… - it’s all over now.