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Changing the wheels whilst driving along Realigning sales and service networks with market developments and future customer needs
Andrew Tongue Research Director, ICDP
Norges Bilbransjeforbund, Wednesday 9th April 2014, Oslo
ICDP is a unique cross-auto industry research and consulting organisation focused on improving retailing and distribution, with cross-industry membership and support
Mainly European, plus Australia and expanding
globally
Research, consultancy, data services, education
and events
Sales and aftersales; manufacturers, dealers and
suppliers, associations
Members correct as of March 2014
2014 Pilot Programme
2
ICDP’s 2014-2015 programme focus: helping players within automotive distribution and retail plan and implement change
• Market pressures • Customer behaviour • Car usage and
service requirements • Digital world
• New approaches • New entrants • New structures • New roles and
processes
3
Most European new car markets are in gentle recovery after five years of unprecedented turbulence – Norway has been exceptional!
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
jan.0
8
jul.08
jan.0
9
jul.09
jan.1
0
jul.10
jan.1
1
jul.11
jan.1
2
jul.12
jan.1
3
jul.13
jan.1
4
Year-on-year sales: 12 month moving average
EU15 France Germany Italy Norway Spain UK
4
Source: ACEA, ANE
Failure to adjust the size of European dealer networks to long term changes in market demand has left many dealers sub-scale, unable to invest in the future
0
100
200
300
400
500
600
700
800
900
0
10 000
20 000
30 000
40 000
50 000
60 000
2005 2006 2007 2008 2009 2010 2011 2012 2013
Un
it s
ale
s p
er
ma
in d
ea
ler
p.a
.
Nu
mb
er
of
ma
in d
ea
lers
Number of main dealers and sales per outlet
Western Europe main dealers USA main dealers Western Europe sales per main dealer USA sales per main dealer
Source: ICDP European Car Distribution Handbook, NADA. Western Europe = 17 markets
5
The Western European new car buyer today follows a very different journey to that which would have been typical even 5 years ago; sales networks will have to adapt
Starts looking 5-6 weeks before
purchase
Visited supplying dealer twice and one competitive
brand dealer once Felt well-
prepared before any dealer visit
Conducted research on the internet
Bought with finance, part
exchanged old car
Goes back to the same dealer for
aftersales
Made one dealer contact before
visiting (typically by phone) Research included
finance and part-ex
59% contact a
dealer before visiting
42% research
finance or part
exchange online
For 36% the second
dealer visit is same brand
Grew by 22% from 2010 to 2012
59% felt well
informed before any dealer visit
75% of consumers remain loyal to supplying
dealer
Source: ICDP Consumer Survey 2013, Google reports
Owns a brand to which he/she feels quite loyal,
less dealer loyal 81% of
consumers brand loyal, 60% dealer
loyal
64% use finance,
57% part exchange
6
The aftersales business is already in decline due to the impact of longer service intervals, improved reliability and reduced driving distances
Source: ICDP, dealer composite data. AR = authorised repairer, IR = independent repairer, DIY = do-it-yourself
0%
20%
40%
60%
80%
100%
0-1 2-3 4-5 6-7 8-9 10+Age AR IR Fast-fit DIY
0%
20%
40%
60%
80%
100%
< 2 2 - 4 4 - 6 6 - 8 8 +Age AR IR DIY Not specified
After-sales channel share by age of car
8,4
50,5
66,1
55,6
12,5
37,4
46,1
8,4
46,9
60,2
50,4
11,7
34,5
42,2
0
10
20
30
40
50
60
70
Total number of repair and maintenance operations, in millions
2012 2020
-1% -7%
% decline 2012-2020
-9% -9% -6% -8% -8%
7
Dealers will need to embrace with, or co-exist with, new formats which recognise changing customer behaviour, and may reduce or at least refocus investments
Property
Multibrand
Digitally Enabled
Shopping Mall
Shop in Shop
Source: ICDP
Tesco recognises that large format stores do not deliver appropriate returns as shoppers move online, direct delivery increases and store stock is reduced • “Store in store” formats • Acquired Giraffe restaurant chain to drive footfall,
add revenue and extend visit times • Complementary partner outlets including tyre
fitting
8
Providing local contact points to support larger outlets and online channels can be through traditional structures such as ARs or new, small format simple locations
Local contact
• Miranda – largest dealer in southern Italy, Naples region • 18 Ford ARs described as “Partners” provide local contact • Integrated into Miranda CRM, sales and aftersales systems • Generate 35% of new car sales and 60% of parts turnover
Source: ICDP
9
Repair and maintenance solutions need to provide improved service at a lower price in response to the growing competition for a smaller total market
10
28%
23%
38%
19%
22%
28%
31%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Share of consumers that have a car covered by a service plan
19%
Share if sample limited to used car owners only
24%
33%
15%
10%
24%
15%
Source: ICDP consumer survey 2013. n = 1077
Fast turnaround
“Schedule – Accompany – Approve”
One point contact
Alternative channels
Personalised service
In crash repair, there are a number of pressures which are forcing increased scale in bodyshops, and in some cases the withdrawal of franchised dealers from the sector
Franchised workshops
Pressure from insurers to reduce prices and accelerate
repair times
New players (including insurers) directly owning repair capacity,
independent groups, and SMART techniques
Already marginal profitability,
although parts business remains
important for manufacturers and
dealers
Additional investment required
to meet new environmental and technical standards
Invest in full repair capacity at an
appropriate scale – as a regional centre
Focus limited investment on SMART
and one day repair capacity
Exit crash repair activity – refer
business to third party on a
commission basis
90
100
110
120
130
2002
2004
2006
2008
2010
2012
2014
2016
Number of Repairs Average Repair Cost
Indexed to 2012=100, Constant 2012 prices
Source: ICDP, Trendtracker
Crash repair
11
58% fall in dealer bodyshops in 10 years
Organisation of the parts business around a retail-based dealer network is illogical and inefficient – there are a number of pressures to separate it, but progress is slow
Single Network, Comparable Dealers
Traditional Parts
Counter
Dedicated Trade Sales Operation
Revenue 100 291
Market Share (10 year parc)
100 285
Source: ICDP, Bosch, CEVA
B2B opportunities
Independent competition
0%
5%
10%
15%
2007 2012
Share
of Tota
l M
ark
et
Top 10
IndependentWholesalers
Market Share(EU5, NL, PO)
0%
1%
2%
3%
4%
5%
6%
0
100
200
300
400
500
600
700
800
2009 2015
% in R
&M
part
s m
ark
et
Turn
over
in €
mill
ion
Online parts T/O inc Tyres
% in R&M parts market
Online channels
• Drops per local delivery van up 58% • Local van fill rate up from 68% to 80% • Cost per delivery down by 10%
“Last Mile” logistics
12
Online channels and telematics will give the sector the opportunity, and the challenge, of forming more direct and ongoing customer relationships
Source: ICDP, Google Gearshift Research
Purchase process moving online Telematics
‘Connected car’ services
In-store technology
Online owner services
Tighter customer/car>brand direct relationships
13
Manufacturer CRM
Dealer
Will regulators need to step in
to preserve aftermarket competition?
Will ‘outsiders’ beat sector players to
become ‘system integrators’?
• What value are customers looking for?
• How to deliver this value right first time?
• How to develop a continuous improvement cycle and culture?
• Does online capability meet customer needs?
• Do my outlets meet future needs; if not, can they be adapted?
• What portfolio of partner brands for my business?
• What sort of people do I need? • How to select them? • How to reward and develop
them?
• How can better use of I.T. and data improve processes?
• Do I have sufficient skills and scale; can I build them?
• How to build a data-driven organisation and culture?
Faced with external pressures and changing customer behaviour, both dealers and repairers have little choice but to ‘change the wheels whilst driving along’
People Processes
Systems Structure
Source: ICDP
14
5, The Hen House, Oldwich Lane West, Chadwick End, Solihull B93 0BJ, UK
E-mail: [email protected]
Web: www.icdp.net
All requests to reproduce this material should be directed to the address above
Limited company registered in the UK, no. 2860398