The rapidly changing automotive environment, which has been building momentum over the past few years, has obviously had the OEM’s think tanks working overtime as to how best to handle the interface between customers and the dealer. Now we are starting to see and hear of the fruits of their labours.
Here in South Africa we already have Mercedes-Benz operating on a revolutionary business model where the dealers are now basically agents for the OEM, with the OEM holding stock. Honda has used this kind of system for more than two decades in New Zealand, while Toyota has set up a similar system in New Zealand this year, under the slogan Drive Happy.
Initial reports from the dealers were favourable after five months, but the latest edition of GoAuto News Premium (October 26 edition), indicate that a number of dealers are now showing concern about this new business model in terms of falling profits and the development of a “trade war” between Toyota and its dealers.
Meanwhile, here in South Africa, Toyota, on its way to be the leading new vehicle retailer in the country for the 38th consecutive year at the end of 2018, is certainly not resting on its laurels. It is taking a fresh and focused approach with the establishment of a special department, Future Toyota, to research all aspects of the motor retailing business going forward and to come up with proposals and projects to ensure the company retains its pre-eminent position in the local market.
Volkswagen, the major brand in the Volkswagen Group, which is currently the global sales leader, recently announced the way it is moving forward into the world of mobility with dealer meetings and a major media briefing in Europe taking place recently.
With its “Transform 2025+” strategy the Volkswagen brand has launched the biggest change process in its history. The mission is to ensure the brand plays a leading role in the new automotive industry by 2025 in setting up innovative mobility solutions to become the world leader in e-mobility.
There are three phases in the programme: new products, the ID. family of new generation electric cars that offer extensive connectivity possibilities, and new business models and mobility solutions.
Against this backdrop, Volkswagen is making its sales organisation fit for the future. The brand is to fundamentally realign its sales model together with its dealers. The new sales model is to be launched in Europe in April 2020. The company says its objective is to safeguard the long-term viability of the dealership network, which is facing considerable challenges in the wake of fundamental changes in auto-mobility: the transformation of sales must work hand-in-hand with the transformation of the VW model portfolio.
The company says it is well positioned with qualified sales and service partners, an established logistics network, a strong product portfolio and extremely loyal customers. The new sales model intends to combine the tried and tested infrastructure with the new elements that define business in the future, such as digital products and services as well as new online sales possibilities for products and services.
Now comes the crunch: Who actually owns the customer? Is it the dealer or is it the manufacturer? This has been an on-going battle that is sure to grow in intensity in the future.
For instance, Volkswagen says: “For the first time the new sales model gives us, as a manufacturer, the opportunity to make direct contact with our customers throughout the vehicle’s lifetime. Until now that has been the dealer’s privilege.”
In brief, Volkswagen is digitalising its sale organisation.
In future, the customer will be the key element in Volkswagen’s digital ecosystem, which is to link customers, vehicles, dealers, and the manufacturer. The company intends to introduce five million new customers a year, around the globe, to this new world of mobility.
Connectivity will offer customers decisive benefits such as reduced waiting times for servicing or the immediate availability of software updates and upgrades. Over-the-air updates similar to those that have been normal practice with smart phones for some time will be crucially important in the future. These will be carried out directly by the OEM.
Volkswagen says its online business will play a key role in building up the new sales models. This is now being massively expanded.
All these game-changing developments just serve to underline the fact that we live and work in a rapidly transforming automotive world, with many big challenges lying ahead, no matter what side of the fence you are on.
By Roger Houghton