As Chinese automotive manufacturers look to expand in Europe in larger numbers, Mike Pilkington (pictured), managing director of Paragon Automotive, explores how a new model of vehicle retailing may emerge.
"Europe has braced itself for the arrival of Chinese vehicle manufacturers for the last couple of years.
"The move seems inevitable as the companies look to diversify abroad, and early entrants have already begun to make their mark through acquisitions. Shanghai Automotive Industry Corporation (SAIC) owns MG in the UK. Geely owns Volvo and has a stake in Manganese Bronze, the maker of London's black cabs.
Others are gearing up for direct investments in the mass-production of their own marques within the European Union.Great Wall Motors was the first to arrive with the Steed, a small pickup truck that will be produced in Bulgaria.
As new entrants to the market, these brands have the opportunity to look at a retail model in new and innovative ways that allows a leaner business model and rapid expansion. A new model that is less dependent on a purely traditional dealer network and based around a central demonstrator fleet.
The dominance of the web in the car sales process is well documented, with 98% of vehicle sales starting online.
Online interest can now be converted into demonstrator bookings, and the vehicles can be delivered to motorists homes or place of work. Vehicles can then be collected and customer feedback gathered, with data fed back to the manufacturer, dealer or centralised sales operation.
Today’s technology allows national coverage to be generated with a relatively small demonstrator fleet.
This model will allow for rapid growth, unhindered by the brake of dealer open points.
This model can support and flex around marketing activity and provide a data led and customer focused solution.
Investment in the people who interact with customers across the various touchpoints will ensure the customer experience is aligned to the manufacturers brand.
From booking the demonstration to vehicle handover, sales follow up and delivery, a consistent level of service can be delivered.
The additional advantage of the outsourced and flexible model is that it allows the manufacturer to retail vehicles at a profit, even at low volumes that would be unviable for a dealer network.
The advantages for our volume manufacturers are obvious, both in this model’s ability to support franchise networks where open points exist and to support periods of peak demand.
As an industry we can be sure that new entrants to the market will be free to explore new retail models and the rest of the industry will be watching closely to assess their effectiveness."