It’s hard to think of a greater period of change within the automotive industry. The vehicles we drive, how they are powered and how we own them are all in transition.
Perhaps the most significant change for dealers in the UK is the looming shift to an agency model on new cars. It will not only redefine the relationship between dealers and OEMs but also create a new relationship with the consumer.
Automotive retail has already seen the rapid roll-out of online storefronts and new digital sales models. The pandemic certainly helped to accelerate this trend as retailers moved quickly to navigate various lockdowns.
However, to compete with new market players, OEMs and dealers must adopt a sales structure that gives customers greater price transparency, a seamless customer journey, and quick delivery. The agency model can deliver this while maintaining a local infrastructure to support brand presence and service needs. It also retains local product experts that are well placed to meet the needs of the car owner and provide an exceptional experience.
In Sweden, Austria, South Africa, and India, Mercedes-Benz has already implemented the agency model. It plans to start in Germany and the United Kingdom in 2023, and it claims that by the end of that year, more than half of its vehicles sold in Europe will be through the agency model.
It is highly likely that the UK will see some lower-volume brands move to only online sales over the coming months, with dealers acting as handover and service centres.
It is a watershed moment for the sector and one that demands a redefinition of the corporate culture in dealerships. Dealers must create closer relationships with consumers that last beyond the vehicle handover. And while data and technology will undoubtedly provide the tools to create longer relationships and, ultimately, greater lifetime value, it will be people who provide the service and provide the key.
In a study conducted by Accenture, 85% of dealers surveyed recognised that their sales model needs to change. As new players enter the automotive market, dealers see competition growing and tighter margins.
The key to unlocking the potential of teams within the new environment sits with giving people a greater voice in the operations of the business. Shared goals, or a universally successful destination, gives everyone a say and a stake in the business.
Talented people expect to influence more than just where or how they work. They want to actively contribute to the mission, vision, innovation and commercial success of their enterprise. Unlocking this potential in a business-like way needs to be the priority, while ensuring that the newly empowered people understand their responsibilities and the business priorities. They will reciprocate with their everyday actions.
Under the new agency model, a new way of working could mean the focus is only on attracting new talent. It’s an approach that would miss the opportunities of unlocking the accumulated experience of existing staff, who have empathy with the needs of the local car buyer.
If this change of approach is also aligned with digital transformation, AI-powered technology in partnership with people can act as a liberator by augmenting human capabilities, and personalising the customer journey so that it is relevant and specific to the individual customer.
In an industry that continues to face a skills gap, another benefit of a more inclusive culture will be the attraction and retention of talent. Better customer service and innovation will be others.
Dealers will be more aligned with the new ‘trust economy’ where they can build long term customer relationships by providing transparency and earning the same in response. Bringing together staff and the leadership team can align people and in turn, their customers to the aims of their business. It will serve the short-term commercial aims and drive longer-term growth.
There is no doubt that competition for customers in the new normal will be fierce, and the imperative to make changes has never been greater. The good news is that dealers already have the answers they need within their teams.
Those closest to the processes and experiences that need to be improved are the greatest people to rethink your present business. The benefits from such an approach will be fundamental.