Posted 17 October 2022 by Tanja Linken, Executive Director – Automotive Dealer Network Development, IHS Markit.

No-haggle prices, direct-to-consumer, firm design – there are
OEM announcements about brand-new retail concepts practically weekly, and
often referenced in an EV context. However is selling EVs truly all
that different from selling ICE vehicles?Evolving client expectations – instead of electrification –
is the impetus for change. Electrification is merely the lever to
interrupt a market that hasnt altered its retail design in over 80
years and still stays slow to adjust.Even prior to the COVID pandemic, and prior to mainstream EV sales
removed in the majority of markets, customers wanted a simplified and more
digital purchase procedure, according to S&P Global Mobility
studies. However does that naturally lead to the elimination of the
physical dealership?Customer Convenience Newly DefinedThe effect of online engagement and omni-channel journey is
already quantifiable in changing geographical customer behavior
information. Customer Convenience traditionally is a metric concentrated on
consumer drive time to dealers and used by OEMs to determine network
protection. Consumers today travel 11% further typically than five
years earlier, minimizing the need for really thick dealership networks.With moving consumer behavior, numerous have questioned the future
require for bricks and mortar display rooms. And certainly, some decrease
of physical footprint will occur. If there is a Business, that stated … Dealers are still appropriate
CaseFor all the appreciation of the Amazon design, purchasing an automobile involves a.
various sensibility. Customers wish to touch, feel and experience.
the item. They also require the assurance to have a regional go-to.
point for servicing, as remote-servicing designs continue to deal with.
obstacles. Physical representation will for that reason stay vital.
Consolidation should initially happen in facility optimization and.
investor consolidation, only then followed by accountable roof.
consolidation.Facility recycling and right-sizing display room area is not just.
essential to minimize dealership operational expenses, however likewise vital.
to changing car dealerships as the sales process becomes more casual.
and personal, instead of transactional. Eliminating desk space and.
printers in exchange for casual seating and coffee shop is just the.
Tip of the iceberg to a new physical retail experience – which.
supplies an opportunity to enhance on ESG in retail.There is chance to generate a win-win result from this.
market disruption, for OEMs, dealers, and consumers.Is Agency Model the answer?All innovative retail designs eventually intend to provide exceptional.
consumer experience, long-term profitability for dealers (beyond.
present beneficial market conditions ending), and reduced cost of.
retail.Agency Models (where contractually practical) appear to be a.
ideal lever to harmonize and streamline the sales process, offer.
smooth experience along online and offline touchpoints, also.
as lower unneeded intra-brand competition through better rate.
transparency. If such design is embraced, Retailers and oems should.
go all-in. However, hybrid designs such as non-genuine firm fall.
short of producing the anticipated performances and expose legal.
risks.I understand we do not like to utilize other folks information, but a recent Pied.
Piper mystery-shopper research study discovered HUGE shopper resistance to the.
new omnichannel approach.To discover more about our Dealer.
Network Development solutions, click hereAuthors: Tanja Linken – Executive Director, Automotive Dealer Network.
Development, S&P Global MobilityMartin Garbutt – Associate Director, Automotive Consulting, S&P.
Global Mobility.

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is an independently managed department of S&P Global.