were likely to continue. Increased competition from online forums
such as Cazoo, as well as the greater prevalence of online car buying generally, are perhaps more permanent shifts. The Car Gurus 2021 Buyer Insight Report said that 63% of consumers are open to buying a car online, up from 43% pre-pandemic. Cazoo itself listed on the New York Stock Exchange in August, surely evidence that investors perceive its business model to be both here to stay, and robust. There are some other things that may never
be the same for our beleaguered motor dealers: as hinted at by the move online, a decade ago a car buyer would make on average seven visits to the dealer leading to a car purchase; these days it’s fewer than 1.5. And the experience is different: research by AX Innovations shows that almost two-thirds of buyers want unaccompanied test drives to be standard – and so dealers are looking to increased use of technology and telematics in particular to keep tabs on their demonstrator’s use, location tracking and driver behaviour. And then there is the possible move away by some OEMs from the traditional ‘franchised dealer’ model, to an ‘agency model’. Whereas franchised dealers are independent traders who acquire their vehicle stock from the manufacturers and sell it on at a mark up to us, the new model appoints businesses as the agent of the OEM, which means
all customer dealings are eff ectively with the OEM. One advantage is seen to be the ability to achieve a higher level of consistency across the board, because the terms are set by the OEM. On the other hand, consumers may lose the ability to set one
dealer off against another in an attempt to haggle the best deal. Recent Accenture research suggests that franchised dealers are undercutting OEM-set prices by an average of 12% to avoid losing the sale to a competitor. But dealers need not worry about having to re-purpose their
showrooms just yet: despite the increase in online activity, there is still huge value in the personal dealership experience: the Car Gurus 2021 report said that despite the majority of surveyed consumers being open to buying online, 67% would still ultimately prefer to buy their car in store and in person. Commentators say that instead of the dealer-based car purchase
being the end point in a linear buying journey, consumers will dial in and out of the franchised dealer experience at various touch points. In fact, Google estimates that there are up to 24 diff erent consumer touch points in the car buying journey – but says that the most valuable is still the humble phone call, and that dealers need to be agile and really get the most out of these early interactions without putting potential buyers off . Research shows that most callers have an intent to buy and that a quarter will go on to make purchases; most will already have done in-depth research into the car they want online – so they don’t want to be passed from department to department or compelled to complete a cumbersome questionnaire before they can proceed.
Andy Harris, Marcus Carter and Hannah Pryce routinely advise franchised and independent motor dealer groups on business-as-usual business, property and employment issues, as well as transactional matters. Andy is Head of Howes Percival’s automotive sector specialism. For more information, call Andy Harris on 01908 672682 or email
andrew.harris@howespercival.com
ALL THINGS BUSINESS 7
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