REIMAGINING THE AUTO RETAIL

Last year, during the Paris Motor Show, Mercedes-Benz unveiled its plan for the development and growth of the brand. In this new corporate strategy, the acronym CASE defines four pillars that merge together in the construction of a single comprehensive offer of mobility. In the words of the brand, these letters will shape their future and represent the strategic focus on connectivity (Connected), autonomous driving (Autonomous), shared use (Shared) and electric propulsion systems (Electric).

Indeed, with one specificity or another, before and after this announcement, brands such as Renault, BMW, Volvo, Tesla, among others, have been developing strategies based on the same essential underlying premises, in an attempt to ensure a dominant role in the mobility the future.

But what is the impact of this revolution and what is the expected role of the respective dealer, and car retail networks in general, in a new mobility ecosystem? Faced with these transformative forces, we must reimagine what it will mean to be a car retailer within a few years.

The consultancy firm Deloitte, in an article on the future of auto retailing, proposes that the analysis be based on two vectors representative of two coinciding forces: Ownership of the vehicle (from the current predominant ownership model to the generalisation of the emerging sharing model) and control of the vehicle (from driver-centred to the fully autonomous vehicle).

“Pivoting towards providing mobility services or fleet management are some of the possible paths pointed out by the consultancy firm.”

The first has tremendous potential for disruption. Not only because it is beginning to take shape and quietly be part of the daily life of many cities around the world (in this respect, the most recent initiative of the Portuguese company Brisa, which in partnership with DriveNow offers a new shared mobility alternative in Lisbon). The full realization of this dimension may even ultimately make the current car retail business model perfectly irrelevant. However, as always, what at first glance may seem catastrophic, opens up new opportunities. The fact is that manufacturers and retailers begin (or can begin), with consent, to collect and take advantage of a great deal of precious data about their customers and their cars, which when treated and analysed provide indispensable information on people mobility patterns. And having this information their disposal can give a huge competitive advantage. Pivoting towards providing mobility services or fleet management are some of the possible paths pointed out by the consultancy. In any case, in this scenario, the current retail business model will need to be thoroughly altered.

The second force under analysis, though it only seems a distant science-fiction-reality, has already covered some ground. At the Web Summit, the president of the Renault-Nissan alliance, Carlos Ghosn, said that cars will no longer be a means of transportation, but rather connected mobile spaces. Fully autonomous personal vehicles with a very high level of software and hardware customisation. In this ownership model, even though we are at the bottom of a conventional retail process, the fact that the driver’s attention is no longer centred on driving, the very strong technological component and the unprecedented level of customisation raises difficult questions, which require a careful and discerning approach by retailers. The consultant stresses the need to actively promote a digital and recruitment transformation in the areas of technology. Additionally, the need to train people who can understand how customers can take advantage of personal data in real time to customise their cars and advise them on this.

The challenges of electrification are already on the retail agenda. However, beginning to build the pillars to successfully embrace predictable future scenarios is crucial. Deloitte warns of the need to start making choices. Where to compete and what are the vital means to be successful in the selected area are compelling issues.

The recognised resilience of auto retail will be put to the test again.

Reference:

** Opinion article originally published in Fleet Magazine paper edition /September 2017 **

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