The classic car dealership will undergo a major transformation, as a pwc study shows. For 56 percent of customers, the dealership is the most important contact partner. However, the willingness to order directly from the manufacturer or via online platform is increasing.
According to a pwc study, the traditional car dealership will lose importance in the coming years. Direct sales by manufacturers and independent sales platforms on the internet are seen as the biggest threat to the traditional distribution model. Image: mirpic – fotolia.Com
The majority of german car dealers are aware that the future will require new business models and innovative concepts. This is shown by the study ‘the future of automotive retail’ by the auditing and consulting company pwc, which conducted a survey among 1.800 german retailers. 58% of those surveyed said that the traditional car dealership would become noticeably less important in the next few years. Direct sales by manufacturers (82%) and independent sales platforms on the Internet (72%) are seen as the greatest threat to the traditional distribution model. In addition, every second dealer notes that customer loyalty to both the brand and the traditional dealer is declining.
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At first glance, the worried outlook contradicts another survey that pwc conducted in parallel under 1.000 german consumers. The majority of customers (56%) stated that the dealer remains the most important source of information when buying a car. In addition, 84% of those surveyed said they could not "under any circumstances" imagine buying a car completely without prior personal consultation. So there’s no need to worry?
"In fact, however, this supposed contradiction can be resolved.", says felix kuhnert, global automotive leader at pwc: "car dealerships as such will not disappear. But you will have to evolve your business model, and add new customized services around mobility and advice. In the future, customers will no longer sign a sales contract at the dealership. Ideally, they will be provided with the right mobility concept in the most uncomplicated way possible.
One in two customers is open to buying a car via an online platform
Traditionally, dealerships in this country operate largely independently of the car companies – even if they exclusively sell the brand of a single manufacturer. The car manufacturers are setting certain standards for the dealers. Within these guidelines, however, the dealerships are independent – also and especially when it comes to setting prices. "However, it is questionable whether this business model can be maintained for much longer in view of the almost complete price transparency in the Internet age", says pwc automotive partner simon strom.
The survey shows that even if customers continue to seek personal advice at the dealership, this does not mean that they will ultimately buy the vehicle from the stationary dealer. Almost two-thirds of the consumers surveyed said they could well imagine buying their car directly from the manufacturer. And at least one in two was open to buying via an online platform. "This means that not only the dealers but also the OEMs run the risk that in the end it will be independent third-party suppliers that do the business,", pwc expert marco fischer explains.
Independent dealers become sales agents of the OEMs
The pwc study therefore concludes that manufacturers and car dealerships will have to work much more closely together in the future in order to defend their sovereignty over sales. Consequence: the dealer model is likely to gradually give way to an agent model in the next few years, in which car dealers live not only from their self-determined price range, but also from a sales commission they receive from the OEMs. "The car companies will clearly set the tone in this constellation – while most dealers will only survive if they accept the new role as stationary sales partners and individual mobility partners.", says Felix Kuhnert.
Agent model in vogue: BMW has been selling its i3 for years on a trial basis via a network of so-called ‘BMW i-agents’. Image BMW
This development is by no means just a dream for the future. mercedes is currently testing new direct sales models – of course with the involvement of dealers. Volkswagen, in turn, recently announced its intention to introduce new dealer agreements from 2020 onwards. These contracts are already moving toward the agent model, at least to some extent. And finally, BMW has been selling its i3 for years on a trial basis through a network of so-called ‘BMW i-agents’.
However, the pwc survey also shows that many car dealerships are willing to participate in the realignment of their own business model. 49% of the dealers surveyed are planning to invest in the next few years in order to develop into a ‘mobility service provider’ that can then offer its customers car-sharing services, for example. "But these are precisely the steps where local suppliers are almost forced to rely on the support of manufacturers", according to simon strom. "In this respect, such trends also speak more in favor of the agent model than against it."