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Mobility transformation in the car dealers industry

Augustin Friedel
Mobility Services Expert and Advisor
MHP - A Porsche company
Special series

For the fourth interview of our series, we have interviewed Augustin Friedel, a well known mobility service expert and advisor. 

Augustin also works as Senior Manager in Mobility Transformation and Services at MHP - A Porsche company, all views expressed in this interview are his own.

Augustin has been passionate about new mobility services for 10 years. He started at Uber where he launched the German market. He then spent a lot of time in the mobility start-ups ecosystem before moving to the corporate world. There, he worked on the ride-sharing project of the Deutsche Bahn and for the Volkswagen Group to develop their intermodality and corporate strategy.

1. A question we ask all our experts in this series, what are the key trends you see in the mobility sector?

If you look at the automotive sector, the first one is electrification. We see brands across the globe ramping up electric vehicles to meet the customers’ demand. In Europe, automotive OEMs are aiming to be in line with the green deal goals and the European regulations. 

The second big trend is software. It’s a shift we see in the automotive and mobility world where software is key. As we know from the smartphone and computer business, software will define the user experience. Cars will become more and more connected and software systems around the cars will be created.

The third one is towards autonomous driving. It will be the next big iteration and it will be even bigger than electrification.  The automotive sector and tech start-ups are both working towards a more efficient and sustainable transportation set-up. It could drive less emissions, less traffic and lower costs if we do it right. It could also give more access to mobility to minority groups or elderly who have more difficulties to move around today. 

The fourth trend is new business models for the automotive sector but also for mobility services, cities, infrastructure, etc. There are new business cases to create around shared services, user-base services, mobility services and bundling services together into mobility budget, subscriptions models, etc. 

2. What is the role of car dealers in the future of the automotive industry? 

Car dealers will always be an important step in the value chain to sell new options, new vehicle types or offer after-sales services. They have a crucial role in the whole brand to customer experience. Also customers are expecting support and guidance when selecting a car, dealers should prepare for these challenges.

Dealers need to be open to new channels and revenue streams. Online sales and direct to consumer business should not be seen as a threat - new opportunities along the value chain could be created. We need to create more links between the car brands and the customers, and the dealers are an important part of that value chain.

The location of the dealers also need to change as they need to be closer to their customers living in urban areas. It would be more beneficial if they had touchpoints in the cities where customers can go experience the brand. They can create pop-up stores in urban areas and keep maintenance facilities more in the city's outskirts. 

3. How do you think will evolve the new automotive distribution models (agency vs dealership)? 

I think we will have both in the future. 

However, it’s important for OEMs to be more in direct contact with the consumers to get more data, insights, feedback, etc. from the vehicle's end user to shape their products & services and bring more value. Traditional OEMs are challenged by new entrants that have a strong consumer access and the traditional players need to adopt if they want to compete. 

There are opportunities beyond cars. Tesla for example also sells solar panels, battery storage, etc. and that’s only possible if you have a B2C model. Or a Chinese brand like NIO has built a whole digital ecosystem around their brand and their vehicles where they share news on China, the brand and invite users to events to promote the brand. They have more users in their App than car owners. My guess would be that they have about 200K cars on the road today but they have 400K monthly active users in their App. Their dealerships are called ‘NIO houses’ and are real community centers where they not only sell cars but also offer extra services such as libraries, cinemas, or childcare.

4. In the current competition between OEMs and car dealers groups - who will get the biggest part of the value chain?

We will need to see who is getting the bigger part of the value chain in the future. At the moment, we are going through a double transformation from a dealership set-up to a B2C/agency set-up and from ICE to EV vehicles.

If you look at car dealerships today, they make most of their income on after-sales but electric vehicles are less complex and require less maintenance. So the after-sales business will change and some of the profit pools of car dealers will decline.

But there are also new opportunities to develop revenue streams in the services landscape like offering more services to fleet customers or maintaining fleets for the shared services. If you look at autonomous vehicles for example, we will still need someone to take care of those fleets. 

Car dealers can also look outside of the automotive and mobility sector. Another idea for the car dealer of the future is to go into the energy sector. They are in direct contact with customers buying electric vehicles and they could also require advice on an energy set-up at home (solar panels, energy storage, heat pumps, etc.). Car dealers have lots of credibility and trust from the consumers and they can use their image to promote a more electric mobility environment. 

There will be a shift in the profit pools but in my opinion there is enough business for everyone. However, a change of mindset needs to happen and car dealerships need to be more entrepreneurial.

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