Smaller deal­ers in fu­ture

Vet­eran car seller pre­dicts big changes in au­to­mo­tive trade

The Witness - Wheels - - MOTORING -

THE re­cent Sewells-MSXI/NADA Dealer Per­for­mance Con­fer­ence, which took place at the Kyalami Con­ven­tion Cen­tre, pro­vided plenty of food for thought for del­e­gates as a line-up of very com­pe­tent speak­ers high­lighted the chal­lenges fac­ing mo­tor re­tail­ers as their trad­ing en­vi­ron­ment un­der­goes a rad­i­cal change.

The speed of change in the over­all com­mer­cial en­vi­ron­ment is ac­cel­er­at­ing and mo­tor re­tail­ers must adapt quickly.

That was the mes­sage that came through loud and clear. It does not only con­cern the peo­ple work­ing in the in­dus­try, but also the sys­tems and pro­cesses they use, as well as the phys­i­cal fa­cil­i­ties in which a deal­er­ship op­er­ates.

Eric Scoble, a for­mer chair­per­son of NADA and nowa­days dealer prin­ci­pal of Auric Auto in Cape Town and chair­man of the BMW Dealer Coun­cil, spoke in his per­sonal ca­pac­ity in the open­ing ad­dress.

What he had to say and the way he said it set the high stan­dard and gen­eral tone for a most in­ter­est­ing and thought-pro­vok­ing con­fer­ence.

Scoble, who has enor­mous and wide-rang­ing ex­pe­ri­ence in all as­pects of the lo­cal mo­tor in­dus­try, gave mean­ing­ful in­sights into do­ing busi­ness to­day and then looked at var­i­ous sce­nar­ios for the fu­ture, which were most thought­pro­vok­ing.

He started by talk­ing about the present re­tail and mar­ket­ing dis­rupters, which in­cluded data cost and speed, the chang­ing face of tra­di­tional ad­ver­tis­ing caused by the ac­cel­er­ated use of the In­ter­net and so­cial me­dia, as well as the need for “Lean Mar­ket­ing”.

“Mo­tor com­pa­nies have made huge in­vest­ments in lean man­u­fac­tur­ing pro­cesses and tech­nolo­gies for many years, but we still do not have ‘lean mar­ket­ing’, due in part to red tape and dis­rupters such as pre-re­ported units and the chal­lenges they pose to dealer oper­a­tions and cash flow,” said Scoble, who es­ti­mated that be­tween 20-25% of month re­ported re­tail sales were pre-re­ports, which then had to be sold as new or used cars in the fol­low­ing months.

Scoble said that he be­lieved the dealer model was set to change rad­i­cally due to the cost of land re­quired for cur­rent-style large deal­er­ships and the pos­si­bil­ity of more man­u­fac­tur­ers mak­ing di­rect sales.

He added that the In­ter­net was be­ing used widely for in­for­ma­tion gath­er­ing by po­ten­tial ve­hi­cle buy­ers, which meant that sales­per­sons could end up act­ing only as deal closers.

Some of Scoble’s pre­dic­tions made for 2018 were: pos­si­bil­ity of a re­duc­tion of 1,5 per­cent­age points in the in­ter­est rate, eco­nomic growth at 1,8%, dealer sales in­creas­ing by 6-8% while he ex­pected the com­pact and af­ford­able SUV share of the over­all mar­ket to grow dra­mat­i­cally as sedans start to dis­ap­pear from pri­vate garages.

Look­ing fur­ther ahead, to 2025, he pre­dicted that there should be a mar­ket up­cy­cle be­tween 2020 and 2024 which could take the over­all mar­ket over 700 000 units with the “mil­lion ve­hi­cles a year” dream sim­ply not pos­si­ble.

He be­lieves that by 2025 75% of new ve­hi­cle sales will be to non-whites, with black Africans mak­ing up 50% of the buy­ers of new ve­hi­cles.

He added that he also thought that 50% of new cars will be sold on­line, with banks re­gain­ing the ma­jor­ity of new car fi­nance busi­ness on dig­i­tal plat­forms.

He fore­sees en­try level cars and ve­hi­cles sourced from China en­joy­ing a resur­gence, with Chi­nese makes lead­ing the way in terms of pro­vid­ing af­ford­able elec­tric mod­els, while hy­brid cars take a sig­nif­i­cant slice of the lux­ury mar­ket.

Scoble says he ex­pects land and other prop­erty costs to soar ahead of in­fla­tion, re­duc­ing the num­ber of ur­ban re­tail points by 30%, with a sepa­ra­tion of show­rooms and ser­vice work­shops. Floor sales will in­creas­ingly be re­placed by vir­tual re­al­ity.

“This will mark the be­gin­ning of the end of the ‘Taj Ma­hal’ deal­er­ships that we have grown to know in South Africa, as I see pos­si­bly only a few of these flag­ship sites in ma­jor met­ros and no more huge deal­er­ship fa­cil­i­ties be­ing built af­ter 2025,” Scoble con­cluded.

Sedans will start to dis­ap­pear from pri­vate garages, to be re­placed by com­pact and af­ford­able SUVs.

PHOTO: SUP­PLIED

Eric Scoble said ex­pen­sive prop­erty prices will be the end of ‘Taj Ma­hal’ deal­er­ships.

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