ICDP's blog

Given that the COP26 Climate Change Conference kicks off in Glasgow today, it seems to be the obvious topic for a blog today. Many of you may now be about to click on, some may have already done so when they saw the title and the image above, but I hope you will bear with me.

ICDP positions itself – and I hope is widely recognised by others as – the leading authority on the future of car distribution in Europe. We focus on the likely developments over the next decade, and how this will affect all players in the sector, whether sales or aftersales, new or used, franchised or independent sector.

When CarNext was established in 2017 as a subsidiary of Leaseplan – one of the largest leasing companies in Europe, focused mainly on the B2B market – we thought this could be a breakthrough development.

At a time when all the talk – in Europe at least – is about moving from franchise to agency as the best approach to enabling effective omni-channel retailing, it may seem odd to write a blog about the effects of going to agency, then changing your mind.

There have been a number of recent announcements about new or expanded subscription offers, including the announcement last week that Stellantis will launch its Free2Move service in the UK, and earlier in the month the launch of AutoAbo in Germany by VW offering young used ID models for minimum terms of three months.

Electric cars have been in the news headlines in the last couple weeks. The story that Sir Clive Sinclair – the inventor of the ZX Spectrum computer and the C5 electric vehicle (pictured) – had died probably got more coverage in the UK than elsewhere.

Life certainly never seems to be dull at Cazoo, the used car start-up that launched its used car proposition less than two years ago. Over that time, they claim to have sold a total of 20,000 used cars – around half the volume that the average of the Top 25 European dealer groups managed in a Covid-affected market in 2020.

There have been a number of occasions over the last few weeks when I have in some way had to consider how the many changes that we are seeing in the industry will affect the dealer business model.

Back from a week off on a ‘staycation’ in the UK having cancelled a planned trip to the Algarve due to the ongoing pandemic restrictions. As one of the news stories whilst we were away was the possibility that a local music festival had potentially been a ‘super-spreader’ event, I’m not sure that we made the right choice simply on those grounds

The quote “buy land, they’re not making it any more” is attributed to Mark Twain who died just as the motor industry was getting into its stride in 1910. However, his advice has been followed by car dealers around the world as they have bought property, and then invested in ever-larger premises, built to increasingly higher standards.

When discussing long term trends in the motor industry, sharing generally features alongside autonomy, connectivity and electrification – together making up the ‘ACES’ acronym. When discussing sharing, most attention is on start-ups in the field of micro-mobility schemes offering cars by the km or minute, such as Car2Go or Zipcar, some of which have been founded by the OEMs or attracted major investments from them.

Last week, I wrote about how the focus on electrification of new car sales was ignoring the fact that there would be a substantial ICE parc for many years to come, even in markets that enforce electrification relatively early like Europe.

For understandable reasons, we hear a lot of talk about the growth of battery electric vehicles (BEVs) and the disruption that this will cause in the automotive distribution system – new and used car sales and aftersales.

One of the topics within the ICDP research programme in the last year or so has been looking at the distribution model adopted by new entrants to the European market. We have considered a range of brand launches, some still in progress where the success or otherwise cannot yet be determined, others that have already failed such as Qoros, others that you would already consider a success such as MG or Tesla.

The momentum of the switch to agency contracts for car dealers seems to be gathering pace, with agreements being reached for some brands and markets, and formally proposed in others.

The news the last few days that the French leasing business ALD is in discussion with the private equity owners of Leaseplan about possibly quitting the business caught my attention for a number of reasons, because I have been discussing both the future of the business car market and the potential evolution of leasing with a few different parties in the last couple weeks.

This week’s blog is a couple days later than normal as we have just completed the Summer Meeting for our ICDP Research Programme members – a day and a half of pretty dense research and insights covering everything from connected customer relationships through to potential developments in vehicle powertrains beyond current battery electric technology.

I had an interesting conversation with a dealer group head this morning about whether the introduction of agency formats would result in suppressing innovation as all dealers were forced to follow manufacturer-defined processes, use manufacturer-supplied systems and present customers with manufacturer-defined offers.

In the last couple weeks, Volkswagen UK launched a new service offer on cars from 3 to 6 years old, offering two years’ warranty, roadside assistance and MOT (the annual roadworthiness check) at a cost of £33.45 (less than €40) per month.