Threats to UK car dealers: China brands' tsunami, EV transition

LONDON: According to data experts ADS (Automotive Data Solutions), many UK car dealers may not be ready to meet threats on three fronts that pose the biggest challenge in a generation.

ADS identifies an unstoppable influx of Chinese automotive brands, profitability pressures from the EV transition and the arrival of more sophisticated customer retention strategies from the US as a ‘once-in-a-generation’ challenge.

Business as usual will no longer be an option for many retailers, says ADS, as the market transforms and could leave many dealers unviable without a shift in mindset.

"Dealers who continue to focus heavily on low-margin new car sales at the expense of higher-margin aftersales activity risk falling behind", says ADS operations director Jon Sheard.

ADS analyses the databases of dealers and routinely finds that fewer than one in three records on which marketing campaigns are based are accurate and up to date.

“So far, dealers have largely been sheltered from challenges from more sophisticated operators but that is changing fast,” Sheard explains.

“We are seeing a once-in-a-generation transformation of the market. The EV transition alone is a significant threat to dealer profitability, due to lower servicing requirements, but the tsunami of EV-focused Chinese brands entering the market will change the UK car market beyond recognition."

“And now, with US-owned dealer groups beginning to roll out American-style customer retention strategies, the gap will widen faster."

"These operators work from a foundation of high-quality customer data. Dealers that continue to overlook this, and carry on marketing to the wrong people, will lose ground rapidly."

“This is an unprecedented multi-front threat to incumbent UK dealers,” he adds.

Meanwhile US-owned dealers are quietly adopting the American model of splitting marketing focus equally between new car and aftersales campaigns.

Jon Sheard adds, “We saw in the financial crisis of 2008 how quickly the landscape can shift when multiple threats converge."

"Dealers who fail to grasp the nettle on customer data quality and who delay implementing clear segmentation and customer retention strategies, risk being quickly left behind as market change accelerates.”