Dealership Management - Driver Seat

The human experience is central to the future of automotive retail!

In the changing landscape of automotive retail, there is a move from traditional, product-focused to more human-centred approaches.

Understanding human behaviors and expectations is crucial in navigating this transition.

• Digital-first, but dealers stay strong.

For all car buyers interested in ICE or EV vehicles, the buying journey increasingly begins online. Initial research and information gathering online, including the use of social media, third-party apps, and dealership and OEM websites, is preferred by 83% of ICE buyers and 90% of EV buyers. Digital channels are also favoured for pre-sales activities such as using online car configurators, virtual reality car viewers and booking test drives.

Source: EY Mobility Consumer Index (MCI) survey

Adopting a digital-first approach does not mean abandoning the dealership entirely. As the buying journey progresses, consumer preferences shift to include visiting dealerships to interact with salespeople, experience the vehicles in person and obtain in-person quotes.

• Automotive retail Next Generation

Finding a successor is essential when a management team's era ends due to age, health, or personal circumstances. There are also strategic reasons for taking over another company. However, many entrepreneurs often need help with day-to-day operations and tend to push succession planning aside. Additionally, when they sense a good opportunity for a takeover elsewhere, they might rush into it without allowing the appropriate amount of time to prepare for the takeover process.

However, a regulated company succession or takeover offers security for the entrepreneur, his employees, and all relevant stakeholders.

• Meaning of mergers & acquisitions

The term "mergers" describes the merger or fusion of two companies into a legal and economic unit. The term "acquisition", on the other hand, refers to the acquisition of business units or entire companies. The abbreviation M&A, therefore, covers both mergers and successions and takeovers.

Students of CARS student consulting, e. V. of the Nürtingen-Geislingen University of Applied Sciences found that these issues have not been sufficiently discussed in the car trade industry, and subsequently examined the market conditions.

• Automotive retail transition

Mobility and the environment are closely intertwined, and hardly any market is undergoing such a transformation as the car trade in the face of current social challenges, such as the climate crisis. Customers' requirements are changing and are influenced by many factors. Digitalisation also plays a role: on the one hand, through the increasing power of online trading; on the other hand, through digital elements in the vehicles themselves.

• Company successions are complex.

The changing market conditions are as complex as the preparation process for a company's succession or takeover.

Anyone who thinks that setting the purchase price and finding a buyer or the company to take over is enough is wrong.

The success of an M&A process depends mainly on the preparation of this process. After all, car dealers want to know that their company and life's work are in good hands and that their employees have a secure employment relationship. On the other hand, car dealers who want to expand through a merger wish to avoid risking their success.

However, an M&A process always entails risks. Possible outcomes include the loss of customers and employees, failure to integrate the takeover process into the original company, and lack of acceptance of the new management in the event of a successor.

• The study divides a complete M&A process into three phases:

In the preparation phase, a long-term strategy for the M&A process is developed that includes the business goals of the transaction. So that you know, car dealers should be involved in this point to avoid irritation and explore possible support offers.

The transaction phase itself is characterized in particular by securing financing. The house banks are regularly involved here.

The integration phase, however, takes the longest. Especially in the case of mergers and amalgamations, it is sensible to appoint an integration officer who ensures that all relevant stakeholders are sufficiently involved and that the so-called change process is successful. The transaction can only be completed successfully if everyone is on board.

On average, a company takeover in the car trade takes six to nine months. The integration phase takes the longest.

• Company succession as a way of starting a business

If you want to become self-employed as a car dealer, you can do this in the form of company succession instead of starting a new company. For most entrepreneurs, however, the prerequisite will be that the applicant has experience in the car trade and can offer extensive commercial know-how.

In addition to the seller, the bank, as a capital provider, will also have corresponding requirements for the buyer: In addition to desirable equity, the bank will emphasise the potential car dealer's suitability.

To finance such a company succession, a business plan, including a financial plan, is usually necessary.

With this, the applicant demonstrates his industry knowledge and business skills and explains the company's status quo and future change plans.

As market dynamics have shown, agility and the desire to modernise are indispensable in automotive retail.

With automotive regards,

Steffen