Until now, the relationship between manufacturers and the dealer networks has been based on mutual interdependence.

However, this new technology allows the manufacturer to have in-depth knowledge of both the product and the customer. The question is how will that knowledge be utilised and what impact will it have on the existing dealership networks?

Are manufacturer-owned car dealer groups the future?

There are currently a number of manufacturer-owned dealer groups. While some have been successful, others appear to have been used by manufacturers to shift unwanted stock or have been used to fill open points in metropolitan areas with high operating costs, which both impact on profitability.

One scenario could see the rise in importance of these types of groups, offering a full range of services provided by the manufacturer. The downside of this would obviously be the expense of developing such a network, not only from a physical presence perspective, but also the cost of holding stock within the network. However, in the long run, manufacturers that have existing dealer groups may hold an advantage over those that do not.

At the moment, being heavily involved in the retailing of cars is not very appealing for many manufacturers. It involves dealing with thousands of customers as opposed to a few hundred dealers. There is also the potential lack of expertise in running a retail outlet compared with a manufacturing plant.

The biggest driver for change in any society is technology – we only need to look at what has happened with mobile communications in the past 10 years. As I looked around the Geneva Motor Show, I saw the continued emergence of new powertrains and the increased connectivity of the car to its environment. Continuing experiments with the driverless car will provide additional challenges to the status quo.

The future is uncertain and a number of scenarios could develop. One certainty is that embedded technology will shift the balance of power away from the dealer to the manufacturer. What the manufacturer will choose to do with that power is as yet unknown. Another thing I am sure of is that there will be no shortage of research projects at Loughborough exploring this issue.