Software as a threat, or not …

Dealer Day in Verona and Clepa 2022 in Brussels, two conferences where the fire channel was central and with an eye for the independent channel. Red thread: who wins the battle for the digital retail and / or workshop customer? This is a challenge for both channels, as both have difficulty digitizing their revenue models.

The ink in the new VBER is barely dry when dealers are already pushing back. The rules that are now to be implemented, and which are to form the basis for the new dealer and agent contracts, seem to mainly strengthen the car manufacturer’s (retail) position. Because the switch from reseller to agent model is implemented at the same time, VBER feels uncomfortable. Duplicate pricing strategies become possible, whereby the physical retail channel and the online retail trade (controlled by the manufacturer) can be treated separately, for example with regard to mandatory investments. In short: brand and customer loyalty will be a matter for the car manufacturer.

Upscale

What remains is a supportive role for new cars and in the future perhaps also in terms of used cars for some brands. Especially at the Renault Group and at Stellantis, their own used car platforms are already mature market participants. The agent model does not have to be unfavorable to the previous dealer, but new rules will be introduced.

Another difficult point is the further increase in scale in the image retail sector. Large retail stocks, which are increasingly multi-brand oriented, are becoming partners for almost all manufacturers. This increase in scale (see pages 18-19) has not yet been completed, certainly not from a European perspective. Just look at the growth of Van Mossel Automotive, Broekhuis Holding, Louwman Group, Emil Frey and especially Swedish Hedin Mobility, which is now gaining market share in seven countries. Or Constellation Automotive Group, which with the help of TDR Capital is investing massively in UK dealers, in the online apartment dealer Cinch and in BCA, Carnext and Leaseplan.

Connected

Back on after-sales. It also remains a challenge to keep the customer connected. The agent or dealer obviously has many more competitors ahead of him. However, he can count on the support of his brand towards his customers, partly due to the data flows for vehicles that are still determined by the car manufacturer. Now that focus is not new. When the dongle was introduced in combination with an app, it was a realistic attempt to connect the (workshop) customer with the car company. Mercedes Me in the dealer channel got off to a fresh start with a dongle, just like the leasing company Arval. The latter were relatively quick to connect their European fleet. There were also initiatives in the uninhibited channel, including Bosch, Fource and PartsPoint, but also standalone apps (without dongles), such as Profile and iGarage. With the dongles, the car companies, apart from technical imperfections, were not even willing to put their shoulders to the steering wheel. There was no success and hence the connection with the customer. Gone dongle concepts, but apps remain! It will be replaced by the over-air functionalities (OTA). Precisely OTA is a magic word that pertains to dealers and to a lesser extent the independent channel.

Resistant

Who will have the digital relationship with the customer in the future? How durable will that relationship be? What role does the EV transition play here? The first question is easy to answer. The person who manages the app and the online concept has control. So far, the amount of connected cars has been disappointing, but an acceleration is imminent. So make sure you are not left here. Find your partner (s) in time.

The second question is also not that difficult to answer. As long as the customer experiences the relationship as comfortable and valuable (or beneficial), the relationship remains. This is not obvious, because the competition will position itself as better and thus try to win customers. So make sure to stay relevant to the customer. Also keep an eye on the physical and online balance in the customer contact.

The third question is less easy to answer. The EV transition seems to improve the relationship between the customer and the car manufacturer. The consumer sees the EV as a new technology and will probably remain loyal to the brand channel for a longer period of time, is the expectation expressed by various car and spare parts manufacturers at both conferences. It is important for the spare parts sector to nurture their OE ratio.

Software

Another development that affects the relationship between the manufacturer, independent parties and the customer is the focus on software. The software-defined car is a slogan that you have heard for some time and actually means nothing more than that the software options will control the customer experience, of course through a higher content of software and electronic control components. This ensures that manufacturers and other parties can better follow the car (using current vehicle data) with regard to the condition of eg battery, cooling system, ADAS and therefore provide the customer with a wider range of services. Updates and (commercial) upgrades also meet customer needs.

It does not go smoothly everywhere. Look at the current (start-up) problems at Cariad, Volkswagen AG’s software house. VW wants to be self-sufficient when it comes to software for the automotive industry, but it requires large investments and the necessary patience. We are all familiar with SaaS or Software as a Service, but software that binds customers, as an opportunity or as a threat requires a little getting used to.

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