Chinese car brands pose once-in-a-generation challenge

Chinese car brands are contributing to a once-in-generation challenge for dealerships, according to analysis from Automotive Data Solutions (ADS).

It has warned of significant dealer vulnerability in the face of rapidly changing landscape, with three key threats identified.

These include an unstoppable influx into Europe and the UK of Chinese automotive brands, profitability pressures from the EV transition, and the arrival of more sophisticated customer retention strategies from the US.

ADS believes that ‘business as usual’ will no longer be an option for many retailers, and many could become unviable without a shift in focus from the sale of low-margin new cars to higher-margin aftersales activity.

Changing landscape

Jon Sheard, operations director of ADS: “So far, dealers have largely been sheltered from challenges from more sophisticated operators but that is changing fast.

“We are seeing a once-in-a-generation transformation of the market. The EV transition alone is a significant threat to dealer profitability, due to lower servicing requirements, but the tsunami of EV-focused Chinese brands entering the market will change the UK car parc beyond recognition.

“And now, with US-owned dealer groups beginning to roll out American-style customer retention strategies, the gap will widen faster. These operators work from a foundation of high-quality customer data. Dealers that continue to overlook this, and carry on marketing to the wrong people, will lose ground rapidly.

“This is an unprecedented multi-front threat to incumbent UK dealers. We foresee major divergence in the fortunes between those dealers who act now and those who continue with business as usual.”

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