Evolving the Automotive Manufacturer/Dealer Relationship

The dealer-manufacturer relationship in the automobile industry has faced major challenges in recent years as:

• consumers increasingly demand both online and offline ways to research, buy and arrange service for their vehicles.
• there has been a steep rise in demand for electric and hybrid vehicles (and the changes needed to both the service and operations sides of the business required to meet that demand)
• there is an industry rethink over who “owns the customer relationship” when much more of the buying relationship in a car-buying transaction happens online and dealers can be relegated to more of a fulfillment role (or, conversely, be the place where manufacturers expect dealers to close a deal that started online). At a minimum, this means that dealers and manufacturers have to work closely and collaboratively together to meet customer needs.

The January 2021 “Finding a New Balance in the Automotive Industry” report from Capgemini provides a great overview of this (and a number of other key changes) in the sector. Capgemini suggests that the manufacturer/dealer relationship will likely evolve to be more like a “agency sales model” in the future.

“The agency sales model can be viewed as an evolution of traditional three-tiered sales towards an integrated online/offline sales model,” the report said. “OEMs (i.e. automotive manufacturers) interact directly with customers and take responsibility for the sales transaction. The dealer remains the face that the customer sees, but acts as an agent rather than a contractual partner. Especially with activities that require physical interaction, such as coordinating and executing test drives and handling service appointments, the agent plays a decisive role by managing the customer experience.”

A more detailed exploration of these changes form part of our recent Automotive After Sales AR Insights Webinar with Daniel Davenport, Client Partner for North America Automotive at Capgemini.

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In our Webinar, Daniel Davenport pointed out that alongside other changes happening at the dealer level, dealer service departments are also grappling with a shortage of skilled and experience staff – partially driven by “baby boomer” retirement.

This chronic shortage of technicians in the car industry has meant that there was already on-going and pressing need for better Training and Technical Support at dealers even prior to the challenges of the last year.

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According to a September 2020 report by the auto industry non-profit TechForce Foundation, increasing demand for professional techs and a declining supply of new techs entering the industry has meant that the on-going technician shortage is increasing in severity despite a slight uptick in new post-secondary degrees and certificates for future diesel technicians – with 642,000 auto/diesel/collision techs forecast to be needed between 2020 and 2024.

Daniel Davenport also pointed out that as dealers hire new technician staff to address these shortages, they will also have new expectations.

“It's a real problem,” he said. “It's a problem from a recruitment and an education standpoint - and then just the working tools and systems that the technicians need to use. It's a younger workforce out there and you can't expect them to use green screen computers to look up data and information. They want to have a computer system that works like the other computer systems that they're used to using - so that can be a big lift for a dealership or from an OEM (manufacturer) that's providing those systems.”

In the Webinar, we also covered the use of front line productivity platforms (such as Atheer) and mobile devices – including smart glasses, smartphones and tablets – to address this and many other challenges.

For the full story, take a listen to the Webinar!