Presentation 1: Forces of change – Supply and Electric – Nick King AutoTrader

  • 2 million fewer car registrations by end of 2022 to severely impact the industry.
  • 31 million vehicles currently in the Vehicle parc

April 2021 – Used car prices started to increase

  • This has led an increasingly ageing number of older cars in the UK – This is only going to continue.
  • This is forcing franchised dealerships to stock more older models, competing with independent dealerships.
  • This has put up prices of second-hand cars.
  • Average age of stock has increased from 1.5 years to 3.

Supply Chain issues

  • There are fewer new cars into the market, this means there are less second-hand cars in the market – pushing up prices for all vehicles significantly.
  • 2 in 10 polled by the SMMT believe that the issues won’t be resolved until 2024
  • Future things to potentially impact Supply Chain – E.G. Gas shortages


This year alternative fuel vehicles have outsold ICE vehicles.

  • Autotrader estimate that EVs will account for 50% of sales by 2026 and 90% by 2030.
  • By 2030 a quarter of all cars on UK roads will be electric.
  • Used EV will be 4 times larger by 2025 than it is now.

Are dealers ready?

  • 80% of retailers responded don’t believe the 2030 ICE ban is viable.
  • Only a fifth of retailers think they need to be ready by 2025.
  • Significant number of dealers are planning for 2030 and beyond for ban of new ICE.
  • EV market is going to grow rapidly in next few years.
  • By 2026, 20% 3-5 years old year-old vehicles will be EV – Interesting for used car market.
  • Only 43% of retailers have a fitted charger.
  • 6 miles is the average range.

Presentation 2: Agency and Regulation – Steve Young - ICDP

  • Agency is now the preferred model for manufacturers
  • Manufacturers and dealerships will need to adapt
  • Regulation will impact what a dealership can do
  • Four main things driving manufacturers towards agency sales
  • Reduction in the cost of distribution
  • Enabling more effective omni-channel – (online and in person)
  • Direct access to the customer
  • More consistent brand experience
  • Automotive marketing, distribution and retailing represents approximately 20-30% of the value of a new car.
  • 75% of customers want to buy a vehicle through omni-channel means
  • Different customer base wants different things 7% want fully online, whilst 16% want fully in-person sales
  • These changes depending on age group and BEV/ICE
  • 17-34 age group want 8% entirely online and 8% want entirely in person
  • This changes for 65+ only 4% want it entirely online, whilst 27% want entirely in person.
  • For BEV, 15% want sales entirely online, whilst 4% want it entirely in person.

Customers still want in person sales; they will travel to do.

  • Customers are now driving further and also are going to a greater number of dealerships in the UK

Manufacturers moving towards Agency –

Ford and Mercedes are the two front runners in the movement towards the Agency model.

The process of moving towards agency –

Modified franchise model -> Genuine agency -> OEM direct

Regulation surrounding agency –

  1. Vertical Agreements Block Exemption Order (VABEO) – Came into effect on 1st June 2022 with a one year transition; expiring in 2028.
  2. Motor Vehicle Block Exemption Regulation (MVBEO) – Comes into effect on 1st June 2023; expiring in 2029.

Definition of agency - “Genuine agents must bear no or insignificant commercial or financial risk”.

Online platforms/intermediaries will generally not meet the agency definition.

Key areas of concern for dealers –

  1. Legacy investments
  2. Impact on used cars
  3. Scope of the dealer
  4. F and I impact
  5. Profit parity
  • Dealers’ greatest concerns relate to legacy costs, OEM capabilities and impact on used
  • Manufacturers will need a combination of attributes and capabilities to remain competitive.
  • Dealers will need to adapt their business models and yield some of their freedom
  • Key things dealers must do:
  • Transition from traders to retailers
  • Working with partners who understand the meaning of the word
  • Gaining scale advantages directly or through out-sourcing
  • Developing a balanced business, looking for new opportunities
  • Right-sizing the physical asset base, investing in digital capabilities

Presentation 3: - Agency Sales Model - Alastair Cassels - MHA

  • Over 62% of Manufacturers are interested in the Agency model; 35% aren’t.
  • Manufacturers see a 5-10% increase in the profitability through a change to agency.
  • They `believe that they will save money on distribution costs
  • Dealers must act soon in. It is recommended that they:
  • Invest time and resource into scenario planning
  • Optimise the key customer contact points
  • Enhance Online Capability
  • Use NFDA, dealer associations to lobby the OEMs and ask the difficult questions
  • What does this mean for dealers:
  • Lower margins or handling fees – Dealer F and I revenue is under threat
  • Fewer points of network sales representation - 30% excess sales points in the uk.
  • Complexity in the sales process
  • Systems integration challenges – Franchised dealer sales process would need a complete re-write.
  • Reduction in dealer business value
  • Used Cars sourcing exclusivity challenged?

60% of new car sales expected to be direct sales in Europe by 2030.

  • What should dealers be doing?
  • Plan Dealers should assess the impact of the potential changes highlighted so they understand how a future P&L might be structured. It's not all about Agency – the shift to EV is huge for aftersales
  • Re-imagine the property portfolio Whether it be assessing multibrand viability of a site or a mixed or alternate use development.
  • Develop Online sales/retention capability Not everyone will want to transact fully online, but dealers should not want to surrender any sales to a slicker online only competitor.
  • Reduce cost of logistics and fulfilment.
  • Assess their scale - Scale often brings the ability to reduce unit costs and the pressure of agency margins, loss of F&I and competition in the Used Car market.
  • Be excellent at sourcing and selling Used Cars.

Brand loyalty is dying in the automotive industry.

Key reasons for a manufacturer to go down the route of agency;

  1. Data sharing throughout the sales/aftersales process
  2. Profit