The rise of the mega dealership

How the trend towards even larger, more customer-centric dealerships highlights the importance of increased incremental sales on every new vehicle

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At the turn of the millennium, a number of industry commentators speculated that the traditional model of retailing cars from dealerships would be consigned to history within 10 years due to the exponential growth in online sales. It didn’t happen …..

In 2000, Virgin caused a stir when it launched its internet-only business Virgin Cars in a bid to shake up the established order. Things didn’t go to plan, and within five years, the company ceased trading, even after opening a showroom. Similarly, in 2011 Tesco Cars spluttered to a halt after less than one year, citing lack of supply for its website offer. It was proven that even juggernaut brands with massive retail experience couldn’t disrupt the status quo.

New cars are often the second most expensive purchase we’ll ever make and buying one is an emotive experience. We like to get up close and personal, see what we’re getting for our money. Experimental ventures to date have shown that customers don’t yet want to do this at arm’s length. Vehicle retailing is very much a case of ‘clicks and mortar’, a combination of online research and showroom visit. Likewise, it presents the opportunity for sales staff to add value by demonstrating additional products, such as our LifeShine vehicle protection system. With the support of a dedicated LifeShine Business Manager, dealers have all the information a customer may need to make an informed decision and so can achieve increased sales.

LifeShine is a compelling proposition, not just because of its superior performance and ease of application, but also due to Autoglym’s unrivalled support for dealers and the assurance of a lifetime guarantee for customers.

According to some research, however, the way we buy and sell is about to change. Automotive video business, CitNOW, claims that car buying, selling and part-exchanging will be totally remote by as early as 2020, removing the need for a retail network. More than half of the nation’s 5,000 strong franchised dealers already use some form of streamed service. Further improvements in mobile phone software, such as super-fast 5G technology, will revolutionise the way consumers buy and sell vehicles, says the company.

The research shows that 75 per cent of people watch a video review of their next four-wheeled purchase before even setting foot in a dealership. It predicts that, within five years, the entire process will soon be taken over by live video calls using a smartphone. CitNOW believes that consumers won’t ever have to visit the showroom, except to pick up the car they’ve ordered.

Despite such research, as well as advances in bandwidth, video, comparative websites and all round access to information, such predictions could prove to be hollow. Far from reducing in size and number, the age of the ‘mega dealership’ has arrived.

inside showroom

Showroom at GWR Kia

In 2016, Kia Motors opened its biggest car showroom in Europe in the heart of ‘The Golden Mile’ business district in north London, along the elevated section of the M4. GWR Kia, operated by Norton Way Group, is a powerful example. It is built over four floors with a large LED screen displaying all its models to around 75,000 people driving past daily. Kia shares this stretch of road with Europe’s largest Audi centre, as well as super-sized VW and Mercedes outlets, representing a substantial combined investment.

These are not just brazen brand statements but significant commitments in infrastructure for at least the next 10-20 years. They are designed to work hand in hand with the innovations being made in ‘experiential’ areas, such as virtual reality. Manufacturers need to move metal and the increasing range of model permutations means that there needs to be outlets where the full spectrum can be showcased.

Such ‘brand hubs’ however, do come with weighty running costs and to help offset such overheads, the need for more profitable sources of revenue has never been more critical. We’ve seen some premium brand dealers boost pen rates to as much as 80% having switched to LifeShine. It’s a compelling proposition, not just because of its superior performance and ease of application, but also due to Autoglym’s unrivalled support for dealers and the assurance of a lifetime guarantee for customers.

In the meantime, you’re unlikely to move into a house you’d never set foot in, so it’s questionable that we’ll be seeing the demise of the dealership anytime soon. Let’s watch this space …..

 

[images courtesy of Norton Way Group]

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