January 2019 Dealer contract changes: are they preparing the way for the dealer of tomorrow?
Is the ‘omni-channel network’ now a reality? This has been one of the central questions of this year’s ICDP research programme, as we have looked at the role played by online resources, dealerships, and the emerging range of new online and offline formats, to establish the state of progress, or lack of it, towards the omni-channel goal. In particular, we have fleshed out our vision of the ‘Dealer of Tomorrow’, which we see remaining as the physical backbone of networks in the years ahead.
But right now, a number of OEMs around Europe are taking their own decisive steps towards their future networks by amending, and in some cases replacing, their dealer agreements. The changes that OEMs are making will frame the future sizes and shapes of their representation, and will redefine the roles and responsibilities of their dealers. They are also likely to affect the financial rewards and demands.
We have been tracking the details of the current round of dealer contract changes as they emerge, and we reported on this at our Autumn Meeting in October 2019. This webinar built on this work and looked at the degree of fit between the changes we are seeing and our vision of the Dealer of Tomorrow. Does it look like the new contracts are laying the strategic foundations for an evolved dealer role within an omni-channel approach, or are they instead only addressing short-term tactical issues?
The webinar covered the following questions:
We see a future of fewer dealer investors and sites, but with more responsibility delegated to these investors to plan their coverage of broader market areas.? Are any of the new contracts planning radical changes to network structures or dealer numbers?
Physical outlet format variety is increasing (with pop-ups, retail mall outlets, etc.), but online channels are also continuing to develop rapidly. How are the new contracts handling ‘who should do what’ in an omni-channel network?
Customers are increasingly ‘acquiring’ not simply a car, but a package of car plus digital services. How are the dealer contracts preparing for this new world?
For omni-channel to function effectively, rewards need to be shared with different participants across the network. Are any of the contracts looking to reform dealer reward systems, or even to adopt?