Once created to keep up with vehicle manufacturers’ volume-focused production lines, traditional dealer networks have stayed surprisingly intact over time.
Now, a number of technical and business challenges demand new answers, for example:
- Car buyers initiate and sometimes complete their buying journey online, comparing alternative offers before even talking to a car dealer
- Manufacturers seek and develop their own, direct channels, competing directly with the resellers
- New players, like Wayke and a range of smaller operators around the world, offer new cost-effective shortcuts to the buyers.
- Changing attitudes regarding car ownership, leasing vs buying, car sharing, etc
- Electrification, affecting the need for and revenue opportunities of services
So, how will the vehicle manufacturers and their franchised dealer networks deal with the ongoing evolution?
Interdependence and conflict of interest
Both the interdependence and the inherent conflict of interest between manufacturers and retailers seem to be rather universal. One US-based automotive consultant anticipates that marketing and distribution will focus on establishing durable customer relationships along with two principles: “Follow the car” and “Follow the consumer” respectively.
The traditional “Follow the customer” route is likely to favor the local dealerships with their superior local market insight, established car owner relations, and aftersales buyer contacts.
Conversely, new concepts along the “Follow the car” axis are bound to take manufacturers more actively into the second and third transactions in a vehicle’s lifetime. Used-car certification programs are a typical “follow the car” concept, increasing in popularity today as a means of supporting initial sale prices.
Understanding the buyers’ needs
Historically, the car manufacturers have spent small fortunes on media advertising while their distributors and retailers spent less on media and focused more on developing down-to-earth relationships with existing and prospective customers. New digital forms of access will no doubt give manufacturers closer contact with the buyers. Time will tell who can best understand and meet the car buyers’ needs and wants in the longer-term.
In many other industries, the power balance has gradually shifted from manufacturers towards distributors and retailers with direct access to the consumers. In the automotive sector both manufacturers and resellers are investing in online presence, often including increasingly life-like digital showrooms and related functions and services.
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