In 2011, I sold my 5th generation car dealership: a painful process that was associated with emotions and financial loss.
10 years later, in a changing environment, I can now look more soberly at this situation at the time and ask myself: Would I want to hand over an automotive dealership to my children today? Would the value of my business at that time be higher or lower today than it was in 2011? And what would the business case for the next 5-10 years look like today? Would I continue to invest boldly in the business? Or put another way, would I in good conscience recommend investing in further growth to our automotive retail clients today?
First, the constraints of the future and the disruption in the automotive environment seem overwhelming:
Customer expectations have changed dramatically in recent years: services, products, information, and experiences must be available at all times in all analog and digital channels.
These 5 influencing factors mentioned above would today be referred to in New German as “disruptive”, i.e. in the true sense of the word “destroying the balance”. It can be assumed that without appropriate countermeasures, these developments will have a significantly negative impact on automotive retail profitability. Disturbing an equilibrium can provide an impetus for progress, but it can also destroy what already exists.
How exactly can the entrepreneur in the automotive trade defend himself against the destruction of his life’s work? What creative opportunities are hidden in the current development?
The number of automobile dealers in Germany has declined by almost 4% in the last 10 years (source: Statista, 2021). Businesses have exited the market, others have been “consolidated” through mergers or acquisitions. New vehicle registrations have remained virtually unchanged over the same period at the level of 2.9 million units.
How should automotive retail position itself in the future?
In this market environment, the key success factors for securing the company’s continued existence, but also for sustainably shaping the future development of the dealership, are the following:
Merging with other dealers can pool forces when it comes to making important investments and asserting themselves on the market. Here, too, it is important to overcome old paradigms and break new ground, for example when it comes to building an innovative service factory for commercial vehicles.
The distribution of automobiles and mobility will always be subject to high volatility and, taking into account the high investment requirements in the course of the transformation of the business model, the entrepreneurial risk must also be considered very high. Nevertheless, business owners can believe in the future of the following generations with a clear conscience and invest in the design of their business: In the future, customers will still want to know and use their local partner, but in a differently than we know from the past.
The path of the future in automotive retail does not lead to a dead-end, but opens up perspectives!
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