The Changing Faces of Automotive Retail

The Changing Faces of Automotive Retail
1st November 2021 Emma Haynes
The Changing Faces of Automotive Retail.

The Changing Faces of Automotive Retail

When lockdown hit last March industries had to reinvent the way in which they operate in order to continue doing business. The Financial Times said in May 2020 that in the consumer market “changes in behaviour that usually take years are happening overnight” and this couldn’t be more true than in the retailing of cars.

Manufacturers appointing dealers dates back over one hundred years, and apart from the launch of Daewoo in 1995 that saw a policy of no haggling, and fixed salary customer advisers instead of a commission driven salesforce, the model at its core has largely remained unchanged.

Tesla had begun to shift the customer proposition prior to lockdown by pursuing a digital first retailing strategy supported by the opening of stores in shopping centres and high footfall locations instead of big out of town boxes and Cazoo were also beginning to change the retailing landscape.

Launched in 2018 by Alex Chesterman, founder of both Love Film and Zoopla, the online only dealer Cazoo was propelled to the forefront by the lockdown. It was launched on the premise that used cars were “one of the last remaining consumer markets yet to benefit from any digital transformation” and it set out to make “used car buying simple and convenient like buying any other product online today”. It is now on track for sales of over £700m in 2021 and currently has a valuation of over £5 billion. During lockdown one of our clients ordered a new Tesla Model 3 and had it delivered without ever sitting in or visiting a dealer so we think that they may be onto something.

In the auction space, Collecting Cars and The Market had already launched no contact business models and once lockdown struck these became one of the only ways to transact specialist cars. We have already examined the Collecting Cars business model (link below) in some detail and whilst these were initially thought of as second-tier offerings the online auction houses have come to prominence.

We believe that there will continue to be a march towards digitalisation in the retailing of modern cars, but for those purchases that for all intents and purposes are leisure driven, there will remain a demand for the dealer experience as it is the first step on the way to the realisation of purchase driven by passion rather than necessity.

Whilst the face of automotive retailing is no doubt changing, we don’t think that it is market wide. Whereas a modern daily driver may be a transactional experience, we think that specialist dealers will continue to be a major part of the specialist car buying experience.

In days gone by manufacturers did not build out multiple variants of each model – a Mercedes C-Class was either a four door saloon or an estate. Now it could be a saloon, an estate, a coupe, a cabriolet or an SUV. The breadth of model expansion across all manufacturers means it would be unfair to assume that dealership staff could be experts on every single model. In the advent of online research via YouTube, blogs and magazines consumers knowing more about the intricacies of the model that they are interested in than the person selling it to them is a very real prospect. When it comes to buying something that little bit special, we believe that consumers will want to know that this isn’t the case.

Nicholas Mee, the globally recognised Aston Martin specialist and part of our dealer network, launched a new destination premises in 2018 with the belief that for those purchases which are determined by the heart and not the head the dealership experience is part of the excitement around a new purchase.

Whilst online retailers are now present in the modern car market, Nicholas Mee are going to great lengths to ensure that the dealer interaction in the specialist sector is a positive one for buyers. Neal Garrard, Commercial Director at Nicholas Mee, said “we want everyone to enjoy visiting our facility, whether they are buying or not. For those that do buy, they are entering into a lifestyle which we are here to facilitate, supported by a level of aftercare that online retailers cannot match”.

During lockdown one of our clients ordered a new Tesla Model 3 and had it delivered without ever sitting in a Tesla or visiting a dealer. Whilst ordering a new car has become no more special than ordering weekly groceries, as consumer buying trends continue to change we think that there will continue to remain the need for passionate, knowledgeable and supportive dealers within the specialist sector to provide an analogue experience in a digital world.

For a comparison chart of the UK auction houses and online auctions, see:

Published for Historic Motor Racing News, November 2021.