We’ll begin our journey with KPMG’s Global Automotive Executive Survey (GAES), published in January. GAES is well established – this is the 19th edition – and surveys the views of 900 automotive executives, 50% of whom are CEO or C-level executive status, as well as over 2,000 consumers. Sat behind the report is an interactive platform that allow you to drill into the data to your heart’s content.

The report is thorough and covers a lot of ground ranging from drivetrains and remanufacturing to mobility and retail. 

The headline closest to home is the – controversial to many - assertion that the retail landscape will undergo wholesale change over the next seven or eight years. Three-quarters of the UK executives surveyed (versus 56% when looking at the overall global sample) said they are highly confident the number of physical retail outlets as we know them today will be reduced by 20% to 50% by 2025. The driver of this change is, as to be expected, the exponential rise of digital services and the shift to buying and selling of cars through online buying models and platforms.

Talking to Motor Trader at the report’s launch, KPMG’s UK Head of Automotive, Justin Benson put the cat amongst the pigeons when he said: 

The majority of UK automotive executives are convinced that the only means for dealers to survive is by restructuring into a service factory or a used car hub in the future.

“This is certainly a warning sign for physical retailers and presents a need to rethink retail concepts and business models, particularly with customers purchasing more of their goods and services at the touch of a button.”

This statement has fuelled much debate amongst the dealer community (no doubt the intention of KPMG’s PR team)… it’s worth treating the actual projections with a pinch of salt, but what’s in no doubt is the retail model is evolving.

The report also touches on the idea of ‘mobility on demand’ – how we choose to own (or not) vehicles: “Almost half (43%) of the surveyed respondents show confidence that half of the car owners they know today will no longer want to own a personal vehicle by 2025.” Changing living circumstances, urbanization and total cost of ownership are cited as the key drivers behind this change.

Looking towards drivetrains and infrastructure, the report suggests over half of industry executives think infrastructure must come before vehicles: 55% think pure battery electric vehicles will fail due to the challenge of setting up the required infrastructure. The consensus is also that there will not be a single dominant powertrain technology, and 50% of execs think diesel is still a technologically viable option.

When asked who they think is leading the e-mobility sector, BMW comes out on top, followed by Tesla. And look out for this name: BYD. The Chinese manufacturer has charged up the rankings to knock Honda off the podium for third place. That two of the top three perceived e-mobility leaders are non-traditional automotive companies is telling: another theme highlighted in the report is the concept of ‘co-ompetition’ – ICT and automotive companies working together rather than competing – to create competitive advantage. Certainly, the view is “OEMs will never succeed with all the other features not directly linked to the vehicle and which are far away from their home turf…”. 
 
The report concludes with the boldest of statements: “Nothing will stay the way it is today.” What do you think? Sensationalist or reality?

Strategy& - part of PwC

Next up is The future of the UK used car market: trends and opportunities, compiled by Strategy& - part of PwC, the multinational professional services group. This report takes a detailed look at the make-up of the UK’s used car market, analysing how it will evolve in the future and the opportunities and challenges that will be generated. It’s a couple of years old now but the analysis and key message remains true, so it’s worthy of inclusion in this round up.

It opens by setting the scene: the UK used car market is the largest in Europe and, despite its size and maturity, it’s undergoing considerable change as buyers and sellers alike move online and greater information and pricing transparency make it increasingly efficient. 

Over the next several years, the report observes how the aging of the used car supply, the increase in online transactions, greater price transparency, and the growing value of convenience will all impact to disrupt the market’s current supply and demand balance. 

The authors observe that increased transparency will put pressure on the margins of traditional dealers, forcing them to move online, while providing a more convenient end-to-end buying experience. It predicts transaction facilitators — online sales platforms, online matchmakers, and auction houses — will likely see their market share grow, but competition among them will increase, as will the pressure to consolidate. 

Across the board, Strategy& suggest that better access to all kinds of information will ease the process of finding and buying used cars, making it more difficult for channel participants who have long depended on lack of transparency to prosper.

The report also observes that the ratio of used-car to new-car transactions is growing, and information about individual cars and prices has become widely available. Yet, it goes on to suggest the UK used car business is by no means entirely stable, identifying four key drivers:

• Changing supply: The supply of used cars is changing: there is a lack of younger used cars in the market, because the market for new cars is still struggling to recover from the 2008–2009 recession and its aftermath. Meanwhile, owners are holding on to their cars longer: the average age of cars on the road increased from 6.8 years in 2007 to 8.0 years today. The improved quality of cars and declining interest in driving among younger, urban dwellers may put a further damper on new car sales. 



• More online transactions: Buyers of used cars are turning to the Internet to research and buy cars. Consumers are arriving at dealerships armed with more information about specific cars and a better understanding of market prices, and they are visiting fewer dealers before buying their chosen car. The rapidly increasing use of mobile devices is boosting this trend: at the time of this report being published, more than 20 percent of all web searches related to “used cars” was conducted on these devices; this figure is higher still today.



• Increased transparency: The availability of information on the Internet has already increased the efficiency of the used car market significantly, providing greater transparency into prices and even the condition of specific used cars. Growing use of online transaction platforms will only boost market efficiency further and will reveal the disparity between the most efficient buyers and sellers and the laggards.


• Growing importance of convenience: customers are willing to pay more for convenience in buying or selling used cars. In a recent survey, a quarter of all private used car sellers said they would be willing to lower the price of their cars by more than 10 percent in exchange for a more convenient sales process. Private sellers of newer used cars value convenience the most, most likely because the opportunity cost of their time is greater, given their higher incomes. This will favour the development of online facilitating platforms, particularly if they manage to increase their level of trust among consumers. 

The conclusion is the changes overtaking the UK market will have consequences not just for private individuals who make up the majority of buyers and sellers of used cars, but also for the independent and large operators — and participants must respond if they are to thrive.