At first glance this question might seem unimportant after all you are the manufacturer, you produce the product and only you decide who will get the new car product to sell, and on this basis you might be tempted to ignore the ramifications of the question.
However, those of you who read my last post; Do We Need To Discuss The “Pre-Registrations” Elephant In The Room, will hopefully be aware that for some of you, your traditional trading model may well be under threat and worse than this, some of you will in advertently already be supporting the third party independent businesses that are in direct competition with your franchise partners and who threaten your current trading model.
In the post referred to above I began to look at how over supply of new car product and the process of pre-registering unsold new car stock, was making it difficult for franchise partners to operate effective and successful used car operations, and how this situation was supporting competitor business models and changing the trading model in both the UK and in other European markets.
I began to explore the ramifications and promised that I would explore them all, so in this post let’s look at the some of the other dangers mentioned in the original post, that over supply of new car product and “Pre-Registrations” can cause;
- It forces desirable used car stock into the hands of competitor businesses, therefore feeding the growth of your competitors.
- Franchise partners are more likely to have to make new car and pre-registered stock available to competing internet based new car supply businesses.
- Drives your customers to competitor businesses.
In my opinion the 3 points above are probably the most threatening to your business and your current trading model, and at the moment all 3 of the above will already be occurring, and the long term trading dangers of not combating the points above is that both your new car and used car businesses will be under threat.
In the UK we have seen how 3rd party independent Tech Businesses and independent used car operations are targeting the existing trading model and changing consumer habits, and I have watched with interest how these companies and these business models are now targeting European markets, building on the success they are having in the UK, where alarmingly for manufacturers, they are now changing consumer purchasing habits, undermining the importance of the franchise dealer networks in the eyes of the customer and taking customers directly from manufacturers and their franchise dealer networks.
In the UK, as it is in Europe, every part of the purchasing process is being targeted by independent businesses; everything from the disposal of the customer’s current car to the supply of their next new or used car, is now a business model for an independent business in direct competition with you and your franchise partners. In the UK some of the biggest purchasers of customer part exchanges are independent electronic trading companies, we have independent internet based companies advertising on national TV as the most competitive supplier of new cars and in the some of the largest towns and cities, the largest and most successful retailers of used cars are now independent used car businesses and many of these companies are now targeting European markets.
This a dangerous time for the Automotive Sector because the illiquidity caused by the process of pre-registering unsold new car product, is leaving franchise dealer networks unable to purchase more traditional profiles of used car stock, because they are inheriting this expensive, nearly new stock profile which is actually in direct competition with the new car operation within their business. Therefore they are unable to support more traditional profiles of used car stock as it returns to the market, driving it straight into the hands of independents businesses, and forcing franchise dealer networks to make unsold new car stock and pre-registered new car stock, available to independent internet based new car companies, the likes of which are now targeting European markets.
Now as threats to business models go, the situation above is very serious, but it is happening and for many manufacturer based professionals reading this post, the most successful retailers of new and used car product may well not be some of your franchise partners, they will be these independent businesses successfully targeting your current trading model and who are, (by stealth), becoming very powerful in your market. If the current situation doesn’t change then I predict that it will not be long before some manufacturers are having to discuss trading strategies and solutions with these independent third party businesses, as well as their franchise partners, because in the eyes of the customer, they have become the businesses to go to, because they are making parts of the purchasing process either easier or cheaper, or both!
Some of you may doubt that the situation is so threatening, but I assure you all that it is; I have watched with interest how these well-funded and very professional businesses have targeted the Automotive Sector, and how they are now increasing market share by changing the way business is done, and as long as they have access to new and used car product, they will continue to grow and take customers from you and your franchise partners. I will not name them here, but I will happily discuss them, their trading models and threats they pose to your current trading model in more detail, with any of you who wish to contact me directly, so please feel free to do so.
However I will add the positive note that, as powerful as these independent businesses are becoming, the answers to dealing with the threats they pose are in your own hands. It is important to remember that they only have a business if they have access to product; remove that access to your product and the customers will have to return to the franchise dealer networks. It is our opinion that now is the time to meet head-on the challenges that these businesses represent, otherwise for many of you, your new car success in the future will lie in the hands of independent businesses with no loyalties to you as the manufacturer and no trading restrictions of a franchise agreement, the dangers of which I will be discussing in my next post in January.
But it is important to remember that the process of removing access to new and used car product for independent businesses, can only be achieved via a franchise dealer network that is successful at selling approved used cars and supporting your wider aims as the manufacturer.
Unfortunately though, the strong and resilient franchised used car dealer networks, (those capable of trading themselves and you, as the manufacturer, out of these perilous trading conditions), do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call us on 0044 345 057 3177.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
No comments:
Post a Comment