ICDP's blog

I generally try to vary the subject of my blogs each time both because it reflects the different discussions and experiences that I have in the course of every week but also to address the varying interests of readers from across the different parts of our industry.

We are often told that the customer experience in dealerships has been transformed in recent years through more diverse recruitment practises and improved training, reinforced by ongoing customer satisfaction surveys and mystery shopping.  

A combination of news items and conversations over the last few weeks have made me think about companies who chase the latest trend or fashion, and in doing so divert resources away from the core business and take unnecessary risks. 

There have been a few bits of news over the recent weeks all related to the used car business, all biased towards the UK market.  However, as the pressures that have driven the various actions are not specific to the UK, then I hope that readers elsewhere will bear with me, because I believe that the lessons are transferable.

The Tesla share price has dropped by 45% since the end of December on the back of a series of negative news stories and announcements.  In most listed companies this would be a source of huge concern, but despite the fall, the market capitalisation of the company remains over seven times greater than that of Toyota, and Elon Musk continues to demonstrate the robust attitude to the media and investors that we have become used to over the years.

There are a number of automotive industry related stories running at the moment that are all predicting some extreme outcomes when the reality is probably rather different.

After a hectic couple weeks with our Members’ Spring Meeting in Berlin and some consulting deadlines, it’s back to the blogs.  I’m sure you will have managed without my random thoughts on the issues of the day…

The growth of Chinese car brands in the European market has been in the headlines in the last week or so, so it seems an appropriate point to comment on the news stories but also launch a new initiative from ICDP, where we have extended the ‘fireside chats’ that we have had in some of our recent members’ meeting to record interviews that we can then share more widely on a range of topics

This year, ICDP reaches thirty years since the launch of the first European Research Programme, so we have been looking back in the archives in preparation for our Members’ Meeting in Berlin in two weeks where we will share some old material that includes some not-so-dated thinking. 

We are finalising some thoughts at the moment for our Spring Members’ Meeting in Berlin in a couple weeks’ time.  We have a range of interesting topics to cover including an agency update, the progress of the Chinese brands into Europe and the question of whether independent aftermarket players need scale to survive – a topic that I touched on in a more general way in a blog a few weeks ago.  However, the topic that has been taking up some of my time is what the best management model looks like for large dealer groups, or for that matter repairer chains or parts distributors?

Earlier this week, ICDP was invited by the British Vehicle Rental and Leasing Association (BVRLA) to facilitate a workshop with their members on the subject of meeting the so-called ZEV Mandate in the UK.  This is legislation specific to the UK which mandates a given percentage of sales of zero electric vehicles (ZEVs), which in practice means battery electric vehicles (BEVs) between now and 2030.

We spend a lot of time talking about customer data, personalised marketing and the potential of AI.  From our point of view looking at the motor industry, we see the opportunity to reduce cost of distribution and grow ancillary revenues by working the customer database harder, and coming up with marketing communications that feel very personal, give the client a warm feeling about the brand, and increase the probability that they will come back and spend some more money with us. 

I have read and heard quite a lot of comment recently about the challenges that the Chinese new entrant brands (with the notable exception of MG) are having in getting sales traction in Europe.  Dealers are signing up to the available franchises, but then not rushing to actually open the showrooms or move from a temporary multi-brand site to a permanent solus site. 

Tesla announced its 2023 fourth quarter and full year results this week.  A dramatic fall in gross profit margin grabbed the headlines, down by a quarter year on year to 17.6% for the quarter, 18.2% for the full year.  This was largely attributed to the dramatic price cuts that have become a feature of Tesla’s approach to market over the last 15 months or so

It seems a long time since the holiday break…  We’re already more than half way through the first month, and in the UK there are Easter eggs in the shops.  The first couple weeks back have been pretty action-packed with a mix of research and consultancy activity, but across all of that one of the common themes that has emerged is that scale in downstream distribution (sales and aftersales) matters.

As my first blog of 2024, then the first priority has to be to wish everyone a happy new year!  I managed to squeeze in a longer break, only returning to work on Monday, but I am sure that many of you share the feeling that it seems a long time since the holiday already.

It’s been a particularly hectic time running up to the holiday period, and this will be my last blog until somewhere around January 8th.  We all want to be busy, so I’m not complaining, but we also want to make sure that our efforts are productive – that we’re not being busy fools. 

In the course of the typical week, I have multiple conversations, meeting and presentations with different people from across the industry and sometimes it's difficult to keep track of what you've discussed with whom, what’s ended up in different presentations and articles.

Again, my blog for this week is a bit late as amongst other things I have been supporting my colleague, Gareth Arnould, in the mammoth task of producing the latest version of our European Car Distribution Handbook.  This has been published annually since 2007, and is the only publication that quantifies the size of manufacturer sales and service networks across Europe.

As the industry progresses towards omni-channel, primarily thinking of car sales, but also applicable to parts and increasingly services, the approach towards designing and implementing the digital channel is becoming increasingly outdated.