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This stream is supported by

AGENDA

Retail Stream: Tomorrow’s Drivers

Models of Ownership

13:30 – 14:10

- Sarwant Singh, Practice Director, Automotive, Frost and Sullivan

- Martin Leach, Chairman, Magma Group

- John Leech, Head of Automotive, KPMG LLP

Chair: Steve Cropley, Editor-in-Chief, Autocar

3

Urban Mobility

Market Trends, New Business Models and Opportunity for

Industry Stake Holders

Draft proposal

C10ATVER01, Version 2

12 April, 2010

4

Future Innovation in Mobility to Focus on The “Wild” Side

Known

Solutions

Met Needs Unmet Needs

Unknown

Solutions

Technology Innovation

Traffic Prediction system

Parking Search assistance

Cashless Payment

Product Improvements

Micro cars

Electric Cars

Electric Bikes

Application Innovation

Car Sharing

Car Pooling

Bike Sharing

Wild Innovation

Mobility Integration

New Mobility Products

Motorized Mover

Source: Frost & Sullivan analysis.

5

Opportunities in Carsharing 2020 26 Million Members Expected Globally by 2020 With Around 500k vehicles in Fleet

Carsharing Vehicles & Members (World), 2010-2020

Worldwide nearly

26.2 Million

subscriptions

expected by 2020

Me

mb

ers

(M

illi

on

s)

Ve

hic

les

(T

ho

usa

nd

s)


6

Traditional Carsharing in Europe – A Snapshot Germany has around 130 traditional CSOs, the U.K. with 30 CSOs and France with nearly 20 CSOs

in 2011

Market for Carsharing: Regional Snapshot of Traditional Carsharing, Europe, 2011

80,000 – 150,000

15,000 – 80,000

<15,000

EU Carsharing Members in 2011

EU 2020 Potential

Nearly 15 million

members in

network

More than 240,000

vehicles in

carsharing fleet

> 150,000


• Gocar

Mob Carsharing

• Sunfleet

• City Car Club

7

P2P Carsharing in Europe – A Snapshot From One Operator in 2003, we now have over 24 Operators in Europe

Market for Carsharing: Regional Snapshot of P2P Carsharing, Europe, 2011

> 80,000

15,000 – 80,000

<15,000

EU Carsharing Members in 2011

EU 2020 Potential

Nearly 0.75 million

members in network

More than 300,000 cars

in P2P carsharing fleet


Inactive

Operations

from 2012

8

Voice of Customer Study —Top Findings

I year old

Majority of the current Car Sharing customers adopted the service less than one year ago

UK has the majority of long term members (over 24 months).

Gen Y

Car Sharing Services members are between 25 and 34 years old, mostly males (54%) and

travel for business purposes (58%) on a regular basis.

Non-Owner

Car Sharing Members have a significantly high number of non car owners (51%) and heavily drivers

Educated Most of the members have higher education level

and are employed full-time (More than 35 hours per week).


9

Current and future Car Sharing Members are young,

highly educated, travel on business, no kids

N= Current and Future (respondents who considered likely (4) or extremely likely (5) to adopt Car Sharing Services in the

future).

Q17. Are you currently a customer or a member of a car sharing service?

Q32. How likely are you to sign up to a car sharing membership service in future? Source: Frost & Sullivan analysis.

Current Car Sharing Members

(n=181)

Future Car Sharing Members

(n=489)

Age 53% up to 34 years old

41% in the age group 25 to 34

49% are up to 34 years old

36% in the age group 25 to 34

Gender Male

(54% male)

Both

(56% female)

Business

Travel

Heavy business traveller

(58% travel at several times or more per month

for business)

Business traveller

(50% travel at least once per month for

business)

Car

Ownership None car owner

(51% do not own a car)

None car owner

(50% do not own a car)

Education High education

(67% with university or post graduate degree)

High education

(61% with university or post graduate degree)

Household

Size 2 Members

(64% with 2 or less members in the household)

2 Members

(65% with 2 or less members in the household)

Marital Status Married/with a partner without children

(High proportion without children in the

household)

Married/with a partner without children

(72% without children in the household)

10

Study Shows Car Sharing to Affect Car Ownership Model

Decrease in Car Ownership

• More than 40% of the Owners of 1 vehicle likely to become members of a Car

Sharing Service, consider the possibility of selling/getting rid of the current

car

• More than 60% of the Non-car Owners interested in becoming a Car Sharing

member would NOT consider purchasing a new car in addition to the

Membership


11

Emergence of Mobility Integrators

12

Convergence of Competition in Mobility In addition to dedicated CSOs and OEMs, leasing companies as well as transport operators eye the

growing Mobility market

BMW

Daimler

VW

Renault

Mobility

Greenwheels

Stadtmobil

Cambio

Autolib

Zipcar

Avencar

Helsinki public transport

Swiss National Railway

Amsterdam City PT

Brussels STIB

ALD

LeasePlan

ING Lease

Arval

Vehicle Manufacturers (OEMs)

Transport Operators

Leasing

Companies

Dedicated

CSOs

Point of convergence


13

There are Three Positions Companies are Taking

Mobility

Integrator (MI)

Mobility

Player

(MP)

Mobility

Aggregator

(MA)

• MI is an entity which enables the existence of mobility programmes through its current offering and providing door-to-door integrated mobility solutions e.g. Daimler with Mooval

• MA is an entity which offers a selection of mobility services as core business either as stand-alone providers or through partnerships with other stakeholders to expand its mobility offering under a single packaged solution e.g. Fleet Leasing companies, BMW

• MP is an organisation that provides limited mobility products and services beyond its core product, and leverages its existing core business to expand into related new offerings e.g. PSA

Image source: Peugeot Mu, Frost & Sullivan, autorentalnews.com

1

3

2

14

Mobility Integrators and Existing Product Portfolio

Company Name

Car Leasing and Car-Sharing Public Transport Parking

Management

Long

distance

travel

Others Service

Platforms

Car Sharing

(Traditional)

Car

Leasing

(Long-

term)

Car

Rentals

(Short-

term)

Bike

(Cycle)

Renting

Scooter

Renting Intra-City Inter-City Taxi

Bike

Sheds

Car

Parking Trains Flight

Refuel/Te

le-

conferenc

ing

Others

Infra-

structur

e and

Chargin

g

Apps, Journey

Planners,

Scheduling,

Re-routing

Tra

nsp

ort

Op

era

tors

NS Business

Card

Connexxion

Car

Co

mp

an

ies µ by Peugeot

Multicity by

Citroën BMW/

Daimler

Leasin

g C

om

pan

ies

MobilityMixx

(LeasePlan)

ALD

Alphabet Athlon

Arval

Tra

nsp

ort

Co

mp

an

y

Siemens Veolia-

Transdev Source: Frost & Sullivan analysis.

17

Urban Mobility 3.0 Event – 19 and 20 June 2013 2 Day Event with First Day hosted in House of Parliament as a Parliamentary Debate

http://www.urbanmobility.gilcommunity.com/

18

Research Team

Sarwant Singh Partner & Practice Director, Visionary Innovation

Research Group and Automotive &

Transportation

(+44) 2079157843

[email protected]

Martyn Briggs Programme Manager, Mobility,

Automotive & Transportation

(+44) 2079157830

[email protected]

http://www.linkedin.com/companies/4506

http://www.slideshare.net/FrostandSullivan http://www.facebook.com/FrostandSullivan

http://twitter.com/frost_sullivan

http://twitter.com/FS_Automotive

http://twitter.com/BriggsMartyn

mailto:[email protected]


http://twitter.com/Frost_Sullivan


supported by


Confidential

SMMT INTERNATIONAL AUTOMOTIVE SUMMIT

June 13th 2013

Clifford Chance

Confidential

Martin Leach Executive Chairman

22

THE PRIZE

23

GLOBAL AUTOMOTIVE VALUE CHAIN 2012

$5.4 TRILLION

R&D 2.2% $116Bn

ADVERTISING AND DISTRIBUTION 8.5% $456bn

New Car Sales $2.2Trillion Fuel / Oil $1.4Trillion

Repair & Maintenance

$473 Bn Finance $454 Bn

24

MACRO TRENDS

25

MACRO TRENDS

Complexity of Life, rate of change

Price Transparency

Online Reputation

Ubiquitous Connectivity

Exponential Growth of Disruptive Technology

Explosion of Data

Proliferation of Automotive Choice

Urbanization

Global rebalancing of Wealth and Influence

Increase in Systemic Risk

27

ONLINE REPUTATION

29

CUSTOMER JOURNEY

TRADITIONAL SALES FUNNEL

CONTEMPORARY CUSTOMER JOURNEY

94% of car buyers now research online 73% of prospects visiting the showroom buy within 2 months In the UK, the dealership and the dealer website are the 2 most widely used information sources for buyers (58% & 53% respectively) 68% of UK buyers say positive comments will affect their purchase decisions 50% of UK buyers say negative comments will affect their purchase decision

UK ONLINE BEHAVIOUR 2012

SOURCE:-2012 CAP Gemini Online Paper

//Users/laurajohnston/Documents/Magma/9. Presentations/130411 iPad Keynote presentation GENERIC.key?id=BGSlide-52

33

ACCESS MODELS

34

AUTOMOTIVE ACCESS ALTERNATIVES

Outright purchase

Financed purchase private loan

Financed purchase captive finance loan

Depreciating lease

Balloon lease

Contract hire

Fill and Go

Daily rental

Car club

Drive now

Taxi

Financial

Commitment

User Financial

Productivity

35

Product Centric to Service Centric Connected Transportation Solutions Click and Pay and Exist and Pay Increased Asset Sharing

AUTOMOTIVE ACCESS ALTERNATIVES

Confidential


supported by


Models of ownership

and use

13 June 2013

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved. 39

Your presenter today

• John Leech, UK Head of Automotive Sector, KPMG

• 22 years experience of advising automotive companies

on financial matters including strategic reviews, M&A,

financial turnaround, operational excellence.

• Secondment to UK Government in 2001 to project

manage the Automotive Innovation and Growth Team

• Clients include JLR, BMW, Aston Martin, Hyundai, Kia,

Sumitomo, Sytner amongst others

Agenda

• Factors impacting drivers’ attitudes to car usership

• Emerging mobility business models

• Likely future development

Tel: +44 121 232 3035

Email:

[email protected]




Growing urbanization: coping with the narrow streets of the big city The usage of the

car will change, especially in megacities

Moving towards new urban mobility concepts

Respondents

agree that cars

will become a

part of a wider

mobility solution

and 72 percent

see MaaS as a

genuine

alternative to car

ownership.

59%61%

58%

All TRIAD BRIC

Liklyhood of a car as integral part of a overall mobility concept

Note: Percentage of respondents rating option as extremly likely and very likelySource: KPMG’s 2013 Global Auto Executive Survey

72%

17%

11%

Mobility-as-a-Service as an alternative to car ownership in urban areas

Yes No Don’t know

Likelihood of a car as an integral

part of a overall mobility

concept

Note: Percentage of respondents rating options as ‘extremely likely’ and ‘very likely’

Source: KPMG’s Global Auto Executive Survey 2013

Mobility-as-a-service as an

alternative to car ownership

in urban areas



Growing urbanization: coping with the narrow streets of the big city Growing

numbers of urban inhabitants offer immense opportunities

Mobility services usage among city dwellers by 2027 (in million people)

people not using mobility

service xxx

expected range of

mobility services

urban population

A majority believe that

6-15 percent of urban

inhabitants will use

MaaS in the next 15

years. The market for

MaaS could be as high

as 245 million people.

38

42

21

22

5

35

8

4

5

7

7

13

56

63

32

32

7

4

12

6

8

11

11

8

19

626

698

352

358

78

79

141

136

63

85

117

117

211

208

100 200 300 400 500 600 700

Source: KPMG’s 2013 Global Automotive Executive Survey, United Nations World Urbanization Prospects



Growing urbanization: coping with the narrow streets of the big city Making mobility

solutions profitable

Likely sources of profitable business from MaaS (for OEMs)

77 percent agree

that brand

reputation can

help to boost

OEMs’ mobility

services.

Note: Percentage of respondents rating options as ‘extremely important’ and ‘very important’

Source: KPMG’s Global Auto Executive Survey 2013

68% 66% 66%62%

58%63%

68%71%73%

70%

59%

51%

Added-value services (e.g. apps for mobile payment,

location-aided services)

Introducing Mobility-as-a-service in emerging market

megacities

Usage of electric vehicles to boost e-car sales

Resale of shared cars after a short period of time/with low

mileage

All TRIAD BRIC

Source: KPMG’s 2013 Global Auto Executive Survey

Note: Percentage of respondents rating aspect as extremly important and very important



Issues facing policymakers

Rapid urbanization, congestion and parking space

Urban air quality and GHG emission targets

Social inclusion

Stimulate economic growth through more efficient

transport



Factors impacting drivers’ attitudes to car usership

City restrictions on car ownership – parking spaces, tax, vehicle quotas

Smartphones and apps, M-Commerce

Multi-modal transport developments

Generation Y – high debts, high insurance costs and the social media experience…..is leading to a shift from being asset-heavy to being asset-light eg. Music; Apple



Emerging models of car usership

Car clubs – traditional, one-way and peer-to-peer

Multi-modal mobility service

Taxi 2.0



Likely future developments

City car design – smaller, electric, networked, m-

commerce enabled, damage-aware, stackable,

autonomous

Urban city car clubs will continue to grow membership and

become more diverse – potential for approx 10x growth in

London over the coming decade

Rethinking of brand by car companies and interaction with

drivers

© 2013 KPMG LLP, a UK Limited Liability Partnership and a

member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (KPMG

International), a Swiss entity. All rights reserved.

The KPMG name, logo and ‘cutting through complexity’ are

registered trademarks or trademarks of KPMG International

Cooperative (KPMG International).


supported by




AGENDA



Dealership of the Future

14:20 – 15:00

- Tim Smith, Commercial Director, GForces

- Paul Fielden, Global Lead Automotive Centre of Competence, IBM Global Business Services

- Hugh Dickerson, Senior Industry Head Automotive, Google

Chair: Chas Hallett, Editor-in-Chief, What Car?

SMMT Automotive Summit 2013


Tim Smith, Commercial Director

@ g_forces @ tgforces

DEALER STRATEGY IN A COMPETITIVE WORLD

Improving service online

TREND IN RETENTION OF ROUTINE SERVICING Dealer strategy in a competitive world

~25+ % GAP

WHERE DO YOU TYPICALLY HAVE YOUR CAR SERVICED? Dealer strategy in a competitive world

33%

57%

4% 6%

62%

28%

1%

9%

0%

10%

20%

30%

40%

50%

60%

70%

Franchised dealer Fast Fit / Independent DIY No view

All

New

Source: GForces Service Survey, Oct 2012

Where do you get your car serviced?

38% of new

car owners won’t use a franchise dealer

29%

45%

22%

49%

26%

22%

0%

10%

20%

30%

40%

50%

60%

70%

Franchised dealer Fast Fit / Independent No view

All

0-3 yrs

COMPETENCE IS NOT ASSUMED Dealer strategy in a competitive world


Who provides the best service?

51% of new car

owners don’t think franchise dealers do a better job

Pricing transparency

PRICING IS SIMPLY NOT CLEAR IN THE DEALER SPACE Dealer strategy in a competitive world


33%

53%

22%

39%

25% 22%

0%

10%

20%

30%

40%

50%

60%

Franchised Dealers Fast Fits & Independents Not Sure

All

New

61% of new car

owners don’t think franchise dealers are clearest on pricing

1. TOOLS

2. CULTURE

3. TRANSPARENCY

PERCEPTION

TOOLS Getting in the game

GForces EIS – February 2013

Less than 1/3 of Top 200 dealers

have an online parts and

accessories shop


Only 25.5% of Top 200 dealers

currently enable customers to book in

for a service via their website


6% use their website to promote

service plans online

WHAT IS WRONG WITH THIS PICTURE? Dealer strategy in a competitive world

What do people actually search for?

3165 9298 21842 22950 24920

55771

283307

699709

823802 845972

Source: Google, Aftersales, why new entrants are eating your lunch, 2013

Dealer strategy in a competitive world


52% of respondents aren't aware

main dealers offer tyre

replacement services

NECESSITY RULES Dealer strategy in a competitive world

3165 9298 21842 22950 24920 55771 283307

699709 823802 845972

6114028

When it comes to aftersales, necessity rules

CULTURE The importance of altering attitude

GForces – AM Aftersales Conference

Heat Map –

how much of your marketing

budget is assigned to

aftersales?

A Story of the Tail Wagging the Dog


Heat Map –



aftersales?

“I don’t want to re-key data in to the workshop loading system so until a perfect system is created, we shouldn’t take bookings online”


Heat Map –



aftersales?

“It’s too complicated to produce web friendly pricing”


Heat Map –



aftersales?

“I am worried we will lose margin publishing pricing on the internet”


Heat Map –



aftersales?

“Tyres are commodity and we can’t compete with Black Circles, Kwik Fit etc…”

TRANSPARENCY

Generate the online currency of trust

SURVEY FINDS INDEPENDENTS CHEAPER Dealer strategy in a competitive world

Source: Motor Trade News, 2013

• Service and maintenance work carried out by independent garages costs an average of £40 per hour less than franchised dealers

• Labour cost is slightly over £40 for independents compared to the national average of £95 for franchised dealers

REEVOO – KIA MOTORS CASE STUDY RESULTS Dealer strategy in a competitive world

300% increase in test drive bookings when reviews are read

280% increase in time spent on site for Reevoo conversation users

REEVOO – SMC PAID SEARCH IMPACT AND PERCEPTION Dealer strategy in a competitive world

• CTR improved from 1.08% to 3.90% • Used car campaign completely

smashed it with a ctr of 15.58%

1. TOOLS

2. CULTURE

3. TRANSPARENCY

PERCEPTION


supported by


© 2013 IBM Corporation

The Dealership of the Future SMMT Summit, June 13th 2013

Paul Fielden – IBM Global Leader, Automotive Centre of Competence

© 2013 IBM Corporation 54

Mega-Trends - Key Drivers of Change

Urbanisation

Generation Y Technology

Regulation


Those changes have created a proliferation of customer touch points in the Automotive industry

Retail

Purchase History

Warranty History

Service History

Finance Packaging

In just a few years, the industry has begun

moving from limited, infrequent transactions

with consumers…

…to a rapidly developing network of information enabling auto

companies to know and understand their customers in new ways

Online In Vehicle

Retail

Connected Services

Mobility Services

Portals

Social Networking

Viral Marketing

Search Optimization

Blogs / User Communities

E-mail/Text


Source: www.truecar.com, 2012.

• Buyers are given easy access

to comparison shop for similar

vehicles from competitors

• Comprehensive vehicle

information, localized for

prospective buyers

• Forces same-brand dealerships

to compete for business

…without differentiation, the dealer’s value is removed and consumer’s

research becomes a search for lowest price among similar vehicles

Vehicle Searches

New business models are emerging and growing

http://www.truecar.com/


There are numerous statistics which demonstrate the profound changes in customer behaviour and expectations:

Internet is the dominant research tool Customer

comments are

highly influential

User Content is

becoming more

important

Willingness to

purchase on-line

is increasing

Willingness to travel to a dealer declines

The vehicle buying cycle continues to contract

© 2013 IBM Corporation 59 Transforming Retail: Engaging customers through information,iInfluencers and interactions | Summary v4.2

After sales and Service

59

What parts of the automotive value chain will change the most over the next decade?

32%

38%

40%

52%

Product Development

Sales and Retail

Marketing

Vehicle Design

Manufacturing

Supply Chain Management

Finance

Customer Management

…innovating approaches to connect and interact with consumers is a critical ingredient to succeeding with new retail models

Source: Transforming Retail Survey (n=110), 2011. 2010 Global CEO Study, 2011 Global CMO Study, 2012 Global CEO Study (Automotive Editions).

2010

2011

2012

CEOs indicated their #1 focus area

was to get closer to customers

CMO’s #1 priority is to

improve customer loyalty and advocacy

CEOs stated their #1 improvement goal was to draw greater insight

from data about customers

Understanding customers in new ways is gaining increased attention in the Automotive C-suite…

94%

70%

77%

66% for OEMs

The need to address Customer Management is recognised in the industry

© 2013 IBM Corporation 60 Transforming Retail: Engaging customers through information,iInfluencers and interactions | Summary v4.2

Interest in automotive brands is strong, but vehicles are increasingly competing with other activities for consumers’ attention and money

Fashion Dom. Travel

Dining Out Reading

Music Movies

Cars

Online Fashion

Cell Phone Dom. Travel

Music Dining Out Int. Travel

MP3 Device Reading

Cars

Online Fashion

MP3 Device Cell Phone

Dom. Travel Music

Reading Animation

Video Games Dining Out

Movies Photography

Int. Travel Television

Learning Cosmetics

Cars ..

10

17

……

Ranked Consumer Interests

by demographic age groups

15-21 20s / 30s 40s / 50s 1 2 3 4 5 6

7

brands on the Interbrand 100 are Automotive

12 of top 100

The top 100 global brands Summarized by Industry

14

14

12

11

Financial

Electronics

Automotive

FMCG

most popular brands on Facebook are Automotive

5 of top 12

#1 #3 #4 #10 #12

The top brands on Facebook?

Source: Interbrand Top 100 Brands, 2011. Facebook IQ: Prestige 100, 2011. JAMA (Market Research on Personal Vehicles, 2008.

…however the many who remain engaged

about vehicles are highly passionate

Automotive brands are strong and valuable…

…but there is also a decrease in overall interest in cars…


What do customers really want?


Reality gap………….based on primary research

Perceived current

Desired

“Convergence isn’t on consumers’ minds. They just want a consistent

experiences from a business no matter when, where, or how they

transact with that business.” – Innovation Exchange White Paper

Customer

Experience

Transition from virtual environment to

physical dealership


Dealerships of the future are going to have to manage the Online-Offline convergence

Transition from virtual environment to

physical dealership

Perceived current Desired

Customer

Experience

A marriage of digital and physical where customer experience is seamless across all the touch points


5 year view…………..

• Tighter integration with the OEM to deliver E2E brand experience

• Adoption of digital technologies within the dealerships

• Virtual Showroom – for all brands

• Tablet sales tools – enables self service

• Test drives will not die………but might become virtual

• New business and revenue models

• Charging points for EV’s

• 24 x 7 service

• Usership based sales

• Dealers will continue to own the physical relationship with the customers

• But who will own the virtual one?


supported by


The Future of the

Dealership

Hugh Dickerson Senior Industry Head Automotive

In Store See, feel, service

Online compare, Read reviews

In Store See, feel, service

Online compare, read reviews

The Best of Online to In-Dealership

The Best of In-Dealership to

Online

3 CSC Proprietary and Confidential June 13, 2013

Customer Intimacy — the New Battleground …

1 Day

.5 Day

1 Hour

10 Minutes

1 Minute

1 Second

1975 1985 1995 2000 2005 2010 2015

Retail Store/Branch

Fax Email

Call Center — Voice

Call Center — IVR

Website

SMS/Mobile Data

Comparison Engines

Web Chat Consumer Web Services

Social Mobile

Source: Gartner Operational

Excellence

Product

Leadership Customer

Intimacy

Value

Disciplines


The Connected Customer’s Decision Journey Requires New Capabilities


Inclusion

Contemplation

Evaluation

Reality

The Connected Customer’s Decision Journey Requires New Capabilities

Advocacy

Purchase

Transaction Pre-Transaction

Post-Transaction Consideration

Loyalty

Customer Journey Influencers

Brand

Interruption Discovery

Expert

Social Engagement

Sentiment

Bond Commitment

Reconsideration Interruption

Post-Purchase Research

Validation Sentiment

Experimentation


Develop the Ability to Ingest, Analyze, Interpret, and Act Upon All the Data Needed — Anytime, Anywhere — to Operate Effectively, Make Insightful Decisions, Manage Risks, and Deliver a Distinctive Customer Experience

30B pieces of content shared/day

1B+ users/month

98,000 tweets/minute

>35M simultaneous online users

6B+ smartphones, 1.2B mobile workers

6K GPS apps @ iTunes

Annual satellite data = stack of DVDs 4x

Empire State Building height

Data doubles every 18 months

20 TBs of sensor data/hour

247B emails/day

$65B in telematics-enabled insurance premiums by

2020

The information hidden in big data can help organizations win in today’s environment — if the dots can be connected


Who Is Doing This Well?

“You have to be totally connected with everyone who touches your brand.”

“ The benefits of better insight and decision making based on customer lifetime value are tangible.”

“Combining structured and unstructured data effectively allows us to predict customer needs and drive value back to the dealer network.”


Key Customer-Centric Questions to Challenge Your Organisation with…

Can you measure customer lifetime

value?

Where are your data scientists, and

what are they doing?

What is the ownership experience for our

most loyal customers?

CSC Proprietary and Confidential

N o w i t ’ s o v e r t o y o u … T H I N K C u s t o m e r !


supported by


Join the debate ♯smmtsummit


AGENDA


Dealer Strategy in a Competitive World

16:20 – 17:00

- David Wilson-Green, Aftersales Director, Mazda UK

- Tim Smith, Commercial Director, GForces

- Steve Young, Managing Director, ICDP

Chair: Chris Mason, Managing Director, Motor Codes


supported by


SMMT Automotive Summit 2013


Tim Smith, Commercial Director

@ g_forces @ tgforces

DEALERSHIPS OF THE FUTURE

Combining digital product presentation with personal contact

GFORCES

Dealerships of the future

• GForces is Europe’s largest specialised automotive digital agency

• We also design and build our own software which is used by over 10,000

automotive professionals on a daily basis

• We build, manage and market websites and digital strategy for half the top

200 automotive retailers in the UK, representing 1/3 of all new cars sold


4% (4.5 million cars) of all new cars sold in future

could be sold completely online by 2020

(There were about 5,000 new cars sold solely online in 2011).

New cars will be sold via a number of channels, leveraging the

existing dealer network and new flagship stores, but also

through online and mobile channels, with sales staff even

travelling to customers to showcase the vehicles digitally

One of the key macro-to-micro implications of this mega trend

is that we will see shrinkage of dealership space by

about 20% and it will pave way for digitalisation of the

dealership stores.

(Frosts & Sullivan, 2013)

AUDI CITY – BRAND IMMERSIVE EXPERIENCE Dealerships of the future

Audi City Brand immersive experience

58% rise in car sales vs the more conventional retail space

Top 5 performing centres in the UK for sales in August 2012

• Fundamental shift in retail strategy

• Small footprint retail brings brand closer to customers

• People are placing greater emphasis than ever before on a direct and personal bond

of trust with their vehicle brand

• Staff hired were from Apple, John Lewis and Travelex – chosen purely for their approach to customer service and product knowledge

• Walk-in showrooms to replace the brochure aspect of the retail experience

GFORCES – EMBRACING THE INTERNET SURVEY Dealerships of the future

Top 200 Retailers – Digital Technology Uptake

PRE DIGITAL ERA AUTO RETAIL Dealerships of the future

DIGITAL ERA AUTO RETAIL Dealerships of the future


TOOLS OF THE TRADE – They are now available to car buyers

Valuations

Finance calculators

New car configurators

Credit checking

Interiors

Video

Consumer reviews

Expert reviews – What Car?

Parity calculators

Insurance

Trade of vehicles

Calls to action – Live Chat

Vehicle data

Service prices

Service plans

Tyre information

Parts & Accessories

Cost of ownership

Payment gateways

Deposit tools

DIGITAL DEALERSHIP TRENDS

The Journey to the Digital Dealership

DIGITAL DEALERSHIP TRENDS Dealerships of the future

1. Quality over quantity

• Experience and quality of the sale process will be imperative, not the sheer volume of numbers

• Less waste of leads managed by highly trained product specialists

• OEM assets will be managed effectively and be available to the network faster

2. Data ducks will be lined up

• CRM and ultimately DMS records will help to tailor content on websites – no longer be locked

• Digital tools will eventually tie consumer data and preferences to a much more personalised approach

• use of information to define products and lifetime ownership programs e.g. tyres often bought outside of network, so

produce replacement programs that lock customer in

• Mobile apps will be used to create longer term engagement and enable the individual to be identified when they enter

the dealership

DIGITAL DEALERSHIP TRENDS Dealerships of the future

3. The market will flatten

• the internet means suppliers can reach consumers easier than ever before

• less large points of presence, potentially more smaller metro style outlets

• Products will be shaped to account for this so ‘mobility’ and ‘all in one packages’ will make it easier for consumers to

transact online with confidence

4. OEMs will prescribe more measures and operational standards to reduce inconsistency

• OEMs can provide the tools at lower costs to their retail network than the majority can buy at themselves

• Increased pressure on retailers to utilise budgets effectively – online and blend marketing to reflect real-life


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Dealer Strategy in a Competitive World

Clifford Chance, Canary Wharf

Thursday 13th June 2013

103

ICDP is a cross-auto industry research organisation focused on improving automotive distribution

Collaborative research Bespoke events,

consultancy, and training Data services

Helping players within the sector to make structural and operational improvements, and to anticipate the impact of behavioural, regulatory and technical change

104

We believe that European car markets are now in a period of disruptive change

Customer research online reduces dealer visits

Vehicle data accessible and leveraged

through telematics

Online activity provides new opportunities and needs for

customer interaction

Extended period of zero growth and volatility

Online customers become less tied

to specific locations

Changing attitudes to car ownership in mature markets

Online channels increase price transparency for sales

and service

Lower, less frequent, repair and maintenance needs

Economic environment Digital world opportunities

Market potential Digital world threats

Disruptive change

105

Customer buying behaviour is changing with fewer dealer visits – the role of the dealership changes

Source: ICDP, Google, CapGemini Cars Online

51% of buyers change brands before visiting a dealership

Typical new car buyer visits the supplying dealer 1.8 times, plus 1 visit to 1 other dealer

25% would be prepared to buy a car from an online transactional channel

Dealer visit does not become the dominant research source until 2 weeks before purchase

Premium brand buyers: 50% only visit 1 dealer, and 50% of them only visit that dealer once

Customers are ready to buy when they first enter a dealership

106

Product improvements and lower car usage mean that aftersales visits are also declining

Source: ICDP

50%

55%

60%

65%

70%

75%

80%

Overhead absorption

Typical 1981 result: 96%

107

And online activity is blurring the traditional division of roles between manufacturer and dealer

Product search

Telematics alert

Service booking

Part exchange

Finance quote

Routine service

Product details

Repair Roadside assistance

Test drive

Vehicle handover

Accessories fitting

Order status

Clicks

Bricks

Either mode

Manufacturer, dealers, third parties

Handovers between channels

Handovers between modes

108

Quality and motivation of people remains a key challenge for dealers – complicated by new skill requirements

Recruitment process

Customer engagement

Induction Staff Profiles

Payment and reward Retention

109

Together, these define the strategic framework within which networks must develop in the next five years

Size, location and role of physical sites

Commercial relationship between manufacturers and dealers

Allocation of responsibilities within the network

Staff profile, location, measurement and rewards

Network and dealer IT design and integration

Requires a joint effort between manufacturers and dealers!

5, The Hen House, Oldwich Lane West, Chadwick End, Solihull B93 0BJ, UK

E-mail: [email protected] Web: www.icdp.net All requests to reproduce this material should be directed to the address above

Limited company registered in the UK, no. 2860398

icdp_strategyforum11_6_day1_conclusions.pptx


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