Service usedcar sales likely means of dealer survival in future poll indicates

Service, used-car sales likely means of dealer survival in future, poll indicates.

Survey: Online Sales Threaten U.K. Dealerships

Executives interviewed by KPMG for the consultancy’s  Global Automotive Executive Survey 2018 believe 20% to 50% of the brick-and-mortar car retailers no longer will exist by 2025.

LONDON – As many as half of U.K. car dealerships will disappear in less than a decade because of competition from online auto providers.

That’s the opinion of three-quarters of automotive industry executives interviewed by KPMG for the consultancy’s Global Automotive Executive Survey 2018. The executives believe 20% to 50% of the brick-and-mortar retailers no longer will exist by 2025, the survey shows.

“The majority of U.K. automotive executives are convinced that the only means for dealers to survive is by restructuring into a service factory or a used-car hub in the future,” says Justin Benson, U.K. head of automotive at KPMG.

“This is certainly a warning sign for physical retailers and presents a need to rethink retail concepts and business models, particularly with customers purchasing more of their goods and services at the touch of a button.”

The study also looked at the trend toward millions of U.K. consumers taking advantage of financing options, such as contract hire and personal contract plans (PCPs), and finds 61% of U.K. automotive executives believe issues around vehicle financing may become a concern owing to lower residual values.

“We live in the age of credit, which is often convenient for those who want to make big purchases and spread the cost out over a period of time,” Benson notes. “However, existing credit arrangements for vehicles taken out over the past couple of years could cause additional risks for credit companies.

“This is particularly true if residual values fall further in the short term and people are handing their keys back when the residual value of the vehicle is lower than the PCP contract value.”

The report reveals 63% of automotive executives believe that by 2030 the global share of vehicles manufactured in Western Europe will drop significantly, to less than 5%.

“Whilst it sounds dire, the truth is that sustainable growth can only be generated in Asia, based on current market forecasts, and this is reflected by the opinions of U.K. automotive executives, and Western Europe is home to numerous premium brands,” Benson says.

“So, European carmakers need to make use of the technologies offered by Industry 4.0, the internet of things and data analytics to take advantage of opportunities to manage costs and continue to be globally competitive.”

Three out of four consumers surveyed cite data and cybersecurity as a prerequisite for their purchasing decision, suggesting automakers who fail to provide this will suffer severe consequences.

“Data ownership is a sensitive issue, and the question of who owns the data generated by vehicles and consumers on the go is one that is yet to be answered,” Benson comments.

“What is clear is that consumers predominantly only trust themselves, and with data breaches and hacks making headlines in recent years, who can blame them?

“What is interesting, however, is that almost one in three executives believe that car manufacturers will be the data guardians.”

TAGS: Retail
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