I read with great interest the recent press release from Volvo regarding their Selekt Direct Programme; very interesting. If delivered with operational and strategic competence this initiative could be the first in the process of securing and protecting their used car retailing future. In many ways it could be the strategy I have been advocating for years; creating the ability to lock in used car stock into successful used car retailing networks.
However for some reason the press release (as much as it’s not any concern of mine) has left me with some concerns! For those who didn’t see the press release the highlights were as follows;
• Volvo Cars have launched Selekt Direct; “The UK’s first end-to-end online service for buying pre-owned cars direct from the manufacturer.”
• The “Service launch provides a blueprint for Volvo’s ambitious digital sales strategy.”
• “The company has announced its intention to sell all its new electric models online and for the majority of its UK retail sales to be online by 2025, while all Volvo’s global new car sales are expected to be through online transactions by 2030.”
• The statement confirmed that “Volvo’s UK retailer network remains key to its business, continuing to provide all aftersales services.”
Now I wasn’t present at the meetings at Volvo when the operational decisions were made but if implemented with strategic competence, Volvo could now have the ability to lock used car stock into their own used car retailing network, with all the benefits this will deliver. Provided of course they have the used car professionals required to deliver and make this initiative successful.
However I get a sense that they are about to fall spectacularly short in what will be required for this initiative to work; why? In short no mention whatsoever regarding the their investment in the used car professionals required; leading to a perception of a naïve over reliance on technology to drive sales and a lack of understanding of what many customers experience during the purchasing process.
It is an inconvenient truth that the potential rewards from this initiative and the “Locking In” of future used car stock vehicle parks into their own used car retailing network, will only be enjoyed by blending all the initiatives (technical and operational) with successful and proven used car professionals; both at the manufacturer themselves and within their franchise dealer networks.
Sadly though the evidence of the fatal flaws, in terms of the delivery of these benefits for Volvo, is hidden in plain sight; in their statements. In fact, once read and digested they are indicative to me that there are no genuinely successful used car professionals working within the 4 walls of Volvo; if there was the statement would have read very differently.
Take the statement above, that Volvo has; “announced its intention to sell all its new electric models online and for the majority of its UK retail sales to be online by 2025, while all Volvo’s global new car sales are expected to be through online transactions by 2030.”
And then read that in the context of their further statement that; “Volvo’s UK retailer network remains key to its business, continuing to provide all aftersales services.” And this has the appearance of a manufacturer giving up not just on used car professionals (sales, acquisitions and business development) but on all sales professionals, along with their franchise partners; whether intentional or not? More on that to follow.
Those of you who have been following my Used Car Business Development Blog will know that I have been advocating the strategy of developing the best used car sales professionals and leveraging the best technology, for years. But I have warned about the consequences of over relying on technology at your peril; as discussed in my articles;
In the press release Volvo also confirm that; “Volvo Car UK’s research confirms growing consumer interest in new purchase models, with one in four people surveyed already saying that they find the direct-to-consumer used online concept ‘very appealing’. This positive shift in consumer attitude is reflected in the early success of the Care by Volvo car subscription service, which in its first year has delivered more than 2,500 online new sales, equivalent to 15% of all Volvo’s retail sales and 7% of the brand’s total UK new car sales.”
So what do I take from all this? Well Volvo appear to be betting their retail sales future on the basis that one in four people surveyed found a direct to consumer used online concept “Very Appealing” and the fact that in the first year of their Care by Volvo car subscription service it delivered 2,500 online sales; 7% of the brand’s total UK new car sales.”
7%?
Now I was not privy to any discussions that took place between Volvo and their franchise partners prior to the statement being released. But there is a danger here that for 7% they will have affectively lost the trust of their franchise partners, and will endure a sales talent drain, that will (I predict) leave Volvo’s sales ambitions floundering; let me explain why.
Firstly their franchise partners. If I had invested my career and financial future in a Volvo franchise, (bearing in mind that before Chinese investment it was a challenge wrapped up in a disaster), I would be pretty angry and worried right now. In fact it would be “Pitchforks and Burning Torches” on the walk down to Volvo HQ.
Go back to their statement; “Volvo’s UK retailer network remains key to its business, continuing to provide all aftersales services.” Wow! Thanks a bunch Volvo; why am I imagining a “Crumbs From The Table” arrangement here? At first glance this is transitioning to an “Agency Agreement” but on steroids and with the cat now out of the bag, I’m not sure how the diplomacy required between manufacturer and franchised partners works from here? But as an owner of a Volvo franchise I know that aftersales revenue probably doesn’t pay the overhead, let alone put food on the table; so urgent reassurances would be required.
Then there is the sales professionals, (both new and used), currently working within the Volvo network; unfortunately it would appear that this is your “Night of the Long Knives!” To everyone currently working in sales within the Volvo network, let me be frank and honest. Effectively this appears to be the first step in Volvo transitioning to an Agency Agreement via (no doubt) an “Apple Store” style retail environment; one with polo shirt wearing “Product Geniuses” helping customers through an ordering process.
All genuinely successful sales professionals know that this is not the environment for successful sales professionals or the salaries involved; I have no doubt that the majority of you will have already worked this out and be planning your exit.
Now, despite all the hubris surrounding Volvo at HQ; indulged in no doubt by those believing their own hype, this will be a dangerous moment. So let’s hope that someone working at the manufacturer has been brave enough to stick their head above the parapet and throw a few hand grenades into the equation.
If I had been in this “Masters of The Retail Automotive Universe” strategy meeting I would have cautioned by saying this.
Listen everyone, tech based sales platforms are now pivotal in the sales and customers research and purchasing process but we must remember at all times; they are nothing but the shop window, the hook to gain engagement. They are not sales platforms, regardless of what the tech geniuses tell us!
We need to start thinking like the customer; they are very busy and like to do a lot of research online during the decision making process, but without professional sales networks this initiative will fail. Let me tell you why.
Of late we have been very lucky; off the back of some very deep pockets, an expanded product line up has taken us to “Nose Bleed” heights. But let’s not let get ahead of ourselves. At the moment Volvo are flavour of the month, but this will not always be the case; our competitors are evolving product line ups and our own product line ups will age.
If we are lucky over the course of a product cycle our product will be the “Must Have” car in class at launch, a status that slowly ebbs away over the period of time before replacement, as other competitor products are launched; those that will be better than ours. Therefore it is both naive and dangerous to assume that the consumer will just continue to log onto our platform/website and order cars in the volumes required, just because we have an excellent online offering; that is for the birds!
During the process of researching the market, consumers are very likely to look at our competitors and then begin to ask questions before making a decision on the second biggest purchase they will make, after their house. At this moment we will need sales professionals capable of developing electronic engagement into sales, via the inevitable process of overcoming objections. If we don’t provide this environment we will lose sales to manufacturers that do still employ sales professionals within the evolving sales model. Rendering our state of the art new world all about price and the inevitable race to the bottom that that will become.
And when it comes to used car sales, the ability to align tech platforms with capable sales professionals is even more vital, because guess what; when it comes to investing vast sums of capital into used car stock, we only have a 45 day window of profitability, before we are effectively losing money. Regardless of where that money comes from?
Sadly and critically, it appears that we are betting everything on tech and this will cost us our professional sales network, just at the time we will need them; let’s think on that for a moment people.
Now I might be wrong of course, I might be reading the statement all wrong, but the perception here is vital; especially when it comes to their own sales professionals. There was nothing within the statement to appease my professional selling senses; if I was employed as a sales professional within the Volvo franchise dealer network, I would be planning my exit. Volvo’s biggest mistake in all this may be the inability to understand its sales resource, or the arrogance to believe that it doesn’t need to.
When it comes to used car retailing, securing used car stock at prices enabling your business to be profitable, although an incredibly skilled process and a vital foundation, is no guarantee of success; it is just one piece in the jigsaw of a very complex and highly specialised trading environment.
If I owned a Volvo franchise right now I would be waiting for urgent clarification from Volvo as to the new business arrangement, including the financial rewards involved in supporting the aftersales ambitions of the manufacturer. Being an acquisitions and used car business development professional I would also know full well that I was now in battle to secure used car stock with and against the parent manufacturer, in order for my business to survive in the long term.
Luckily, and having done this many times before, I would have absolute confidence in my ability to do this which would effectively put me in competition with, and hinder the online used car retailing ambitions of my parent manufacturer. The initiatives would be under way right now and as matter of urgency; after all my business is at stake.
This appears to be quite a “Can of Worms” for any manufacturer to open, but with an evolving (probably less financially lucrative) relationship with the parent manufacturer looming, I’m not sure that franchise holders have any other option other ensure that they secure as large a used car stock holding in the future as they can; aligned with the used car professionals required to acquire and retail this stock profitably.
Any Volvo franchise holder wishing to explore how this can be achieved can feel free to contact me in confidence.
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