ICDP's blog

As a little bit of fun before the holiday break I asked readers of this blog to consider where they would invest their own money if you were fortunate enough to win the euro millions and had the odd €200 million sitting in the bank.

It’s been an interesting year – to put it mildly, and most of us will be looking forward to a few days away from business life.  Rather than worry too much about the real world, and all the challenges that brings, I invite you to indulge in some festive fantasy… 

A busy week in the run-up to the holiday period, so my blog is a little later than usual.  However, there was no shortage of topics that caught my attention over the last several days.  The one that stood out however was around new car pricing.

BMW announced last week that they intend to make their trend research available to all. Their focus mainly relates to new technologies that will ultimately find their way into products in some form, but includes areas like connectivity and sustainability that will certainly also have an influence on those of who are more focused on the distribution sector.

In the last few days we have heard of delays to a number of the planned implementations of agency agreements in Europe.

Last week, the UK Government announced that battery electric cars would be subject from 2025 to the annual road tax from which they were previously exempt. The amounts involved are not huge in the context of the purchase price or annual operating costs for a car - £165 for cars with a list price under £40,000 and £355 for more expensive cars.

I spent part of last week reviewing and finalising our ranking of the Top 50 European dealer groups which we prepare for publication in Automotive News Europe, appearing in the coming days, and the focus of a webinar for ICDP research programme members which will be held on the 23rd.

The automotive industry, and the distribution sector specifically, faces many challenges in the near to midterm. These are in addition to the general uncertainty we all face because of the Russian invasion of Ukraine, the knock-on effect on energy and food prices, possible economic slowdown in China, and a range of other global and local economic factors.

As some of you may have noticed, this is my first blog for a couple weeks. A couple external conferences followed by our own Autumn Meeting for members of the ICDP research programme created a pretty demanding work schedule which forced blogs down the ‘to do’ list. They did however provide the spark for this week’s blog – the importance of communities to business.

Perhaps twenty years ago, I had a colleague who joined the firm I worked for from a small consultancy specialising in advisory work on mergers and acquisitions (M&A). He spent many hours over an extended period of time trying to persuade me to his point of view that companies were for buying and selling – in other words they were a commodity that should be traded just like a used car or a tonne of steel.

It will not have escaped anyone’s attention that Her Majesty Queen Elizabeth II passed away at the great age of 96, and that her state funeral was yesterday, marking the end of the period of Official Mourning. Her influence reached far beyond the UK, and even beyond the Commonwealth.

I’m writing this week’s blog whilst in Greece for a classic car rally. It’s the first time that I’ve driven extensively on the Greek mainland and what has occurred to me apart from the beauty of the countryside and the heat in a car without air conditioning is the total absence of electric cars

I was surprised in a positive sense by the reaction to my blog last week ‘Why is customer service so tough?’ particularly given that we are still in the holiday period. From my perspective I chose the topic as a reaction to some particularly poor recent experiences, both automotive and other, but it clearly touched a raw nerve for many.

I’ve met a few industry contacts in the last weeks, and apart from the fact that we all have an interest in the future of automotive distribution, the other thing in common is that we all have our premium German cars serviced at the same location. Life should be so easy for them – a strong OEM brand, waiting lists, a residual value premium associated with a dealer service history, some of the highest labour rates in the industry and consistently high dealer profitability.

A characteristic of the UK car retail market is the dominance of the large dealer groups. The Top 10 groups held over a quarter of the total new car market in 2019, and the Top 50 groups held half the market. The evolution of the groups as integrated operations kicked off with the formation of Pendragon, spun out of a diversified conglomerate in 1989 with an initial 19 dealerships.

I was catching up on my weekly Autocar last week – which I have been reading since I was a young teenager when my father used to bring it back from his office – and picked up on an article related to the latest Vauxhall/Opel Astra. The driving impressions were quite positive, but the bit that I noted related to the product range.

I had a catch-up last week with one of our research programme members, Ian Pugh, the MD of Fix Auto UK – the largest independent bodyshop network in the UK, made up of a mix of independently owned franchise sites and a growing number of wholly owned sites. Ian is a very smart operator, tuned in to the broader developments in the industry, not just collision repair, so every discussion is far ranging and stimulating.

Although I am sure that more than one family ends up fighting for control of the touchscreen in their car to get their preferred audio source or climate settings, the fight I am referring to is one that is happening in the background, but which will undoubtedly affect us all as car users, and many of us involved in the industry, regardless of who we work for, or what our role is.

Most manufacturers have some ambition in their strategic plan to generate some billions of additional profit in a few years from the sale of digital services. Inspired by companies like Apple, these are seen to be very high margin products delivered over-the-air throughout an extended period of the life of the car.