Automotive sector growth - Centralise or Disperse?29 October 2020
With evolution continuing at pace within the automotive industry new business format’s are rising to challenge the status quo.
At one end of the scale, you have the likes of Arnold Clark and Lookers with high coverage of showrooms around the UK and the ability to both serve a local audience as well as move cars around within the group to match this audience.
✔️ High brand awareness through physical locations
✔️ Ability to serve a local audience and know the market there
✔️ Logistics operation which makes nationwide deliveries cheaper/easier
❌ High overheads from staff and sites
❌ Sites less used to dealing with distant sales
❌ More administration when selling/moving cars
At the other end of the market, we have start-ups like Cazoo and Cinch who are aiming to sell fully online using a small number of hubs around the country.
✔️ Low overheads
✔️ No/less haggling with fully online orders
✔️ Streamlined operation with sites and dealerships not competing to sell the same stock
❌ Higher marketing costs with no/few physical locations for customers to see brand and view cars
❌ Need to maintain a very high trust level when customers can’t turn up at dealership with questions/complaints
❌Almost 100% reliance on website to make sales
To confirm which business model will prove successful will take years to play out, however, most in the industry agree that ALL dealerships will gain some of their sales through full online channels.