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Car dealers may be more effective in local markets next decade, finds McKinsey expert

Carmakers are seizing the opportunity that new mobility models and advanced technology offer but dealers are lagging behind, according to Cristiano Carlutti, expert associate partner at McKinsey.

“Most OEMs are investing heavily in the future of mobility and we can clearly see a widespread range of projects throughout data analytics and connectivity, autonomous driving, vehicle sharing and electrification,” said Carlutti, who will explore how the new car market will evolve over the next decade at The Automotive Retail Congress at Coventry’s Ricoh Arena on May 21.

“We believe it’s a very exciting time for the industry, not only because it’s going through a significant transformation, but also because all the major OEMs are investing and developing ideas and projects at an incredible pace. 

“Dealers are less advanced in thinking how this will impact their activity - but this is also partially due to the fact that there has been a limited number of truly innovative products and features on offer so far.

“However, this doesn’t mean they can passively wait for the disruption to arrive, but rather to ensure they are not the first to be hit by it. They have the opportunity both to anticipate what is coming and to think how this will change their business model.”

AM Automotive Retail Congress 2019 MPUOther presentations during The Automotive Retail Congress will include the used car market’s development, dealers’ opportunities ahead in mobility services, coping with Brexit, how motor retailers can attract investment next decade and likely trends in aftersales.

Carlutti expects a mix of mobility models will emerge to suit local markets as urban and metropolitan needs will be different for those living in suburban or rural areas, for example.

But Carlutti warns dealers in particular need to think way beyond the next quarter to maintain their market share.

He added: “The continuous pressure on dealers’ operational and financial targets can lead to a more ‘short-term’ focus which may impact their ability to think strategically about the impact on their business model of the new technologies and customer preferences.

"They can already anticipate some of the disruptions that will occur five-10 years from now, so they should not be caught off guard by the emergence of a new technology or a new customer behaviour.  However, this does require some immediate focus and effort in determining the best possible strategic direction.”

Other presenters at The Automotive Retail Congress include The ICDP, Zeus Capital, Tomorrow's Journey, Barclays, Manheim and Aston Business School.

 

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