3. 2
Executive Summary
The study highlights a set of future and contemporary challenges that OEMs and dealerships
are facing. In order to address these problems a series of strategies and suggestions are put
forward and evaluated by a team of industry experts. Once the individual strategies designed
to achieve a competitive advantage are combined a holistic visionary strategy is created.
This entails developing a retail network composed of large retailing groups with managerial
expertise and financial backing to drive a market consolidation. Acquisitions of under-
performing dealerships by over-performers would help reduce amount of breakeven volume
of sold vehicles by 20 percent1
, hence stabilizing a healthy profit margin of 2,2 percent until
20202
. OEMs should develop a framework to balance the trade-off between network
coverage and a dealership’s profit margins.
The strategy would also entail an introduction and expansion of retailing formats.
Cooperation models between OEMs and dealerships in a region would be required to roll-out
the outlets. This consists in splitting up the initial investments and operational costs of the
outlets and most importantly sharing the benefits and profits amongst the dealerships. They
would contribute to capturing customers during the awareness phase, enhance branding and
offer an advanced customer experience. Most importantly new leads would develop and
operating costs would be shared amongst the whole network further benefiting revenues and
margins.
A uniform omni-channel marketing strategy would help retain and attract customer
throughout the research phase. Manufacturers and dealership would have to first harmonize
all digital channels and then integrate the offline channels. It is estimated that if undertaken it
could help increase revenues by 13 percent and the profit margin by 2.4 percent3
.
Finally a competitive advantage for manufacturers and dealerships would be achieved by
meeting new consumer product and service expectations. The introduction of greener
vehicles and offering advanced in-vehicle technology will help both OEMs and dealerships
maintain value propositions. Dealerships will have to innovate their service offerings and
experience in the showrooms.
1
See. Wendt, T. et al, 2014, p.22
2
See. Wendt, T. et al, 2014, p.25
3
See. ATKearney, 2013, p.13
4. 3
Summing up future retailing automotive networks would consist of differentiated retailing
outlets operated of large dealer group fully integrated with the manufacturer’s channels. The
network would be able to offer vehicles and services that match consumer requirements. The
strategy and models would be tailored to customers segments and local needs4
. Effectively
transforming the retail network would address changes in consumer behaviour along the
retail journey and counterbalance industry pressures leading to a competitive advantage in
automotive retailing.
4
McKinsey & Company Inc, 2014, p.28
5. 4
Table of Contents
1 Introduction.................................................................................................................................Page 5
2 Understanding the automotive retailing structure and legislative changes in the European
Union ..............................................................................................................................................Page 6
3 Contemporary challenges in automotive retailing..............................................................Page 12
3.1 Competitive pressures in automotive retailing.............................................................Page 13
3.1.1 Increased transparency in vehicle pricing.............................................................Page 14
3.1.2 Competition in aftersales by independent and discount repair groups ............Page 16
3.1.3 Market entry of online retailers in the used car segment....................................Page 17
3.2 Consumer requirements and behaviour along the customer retail journey............Page 19
3.2.1 Customer requirements and behaviour during the awareness phase..............Page 20
3.2.2 Customer requirements and behaviour during the research phase..................Page 22
3.2.3 Customer requirements during the acquisition and ownership phase..............Page 25
3.3 Summary...........................................................................................................................Page 27
4 Strategies to counterbalance challenges in automotive retailing.....................................Page 28
4.1 Over-Performer consolidation strategy and restructuring the retail landscape......Page 29
4.2 Developing a competitive advantage along the customer retail journey.................Page 33
4.2.1 Developing a competitive advantage in the awareness phase
by introducing new retailing outlets..................................................................................Page 35
4.2.2 Developing a competitive advantage in the research phase
by omni-channel marketing...............................................................................................Page 39
4.2.3 Developing a competitive advantage in the acquisition and
ownership phase to meet modern consumer product and service requirements.....Page 46
5 Evaluation of strategies and implementation suggestions from industry experts .........Page 53
5.1 Over-Performer Dealer Consolidation ..........................................................................Page 53
5.2 Establishment of new retailing outlets ..........................................................................Page 54
5.3 Omni-Channel Marketing strategy ................................................................................Page 56
5.4 Development of product and service value propositions...........................................Page 57
5.5 Summary...........................................................................................................................Page 59
