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Interview on the Corona situation

In this interview, our consultant Tobias Grün talks about the current situation in the automotive industry and about the measures that manufacturers and dealers have already taken to overcome the crisis.

Tobias, you have been working from home for about ten weeks now. How are you coping with the situation and above all, how are you doing?

I have to say, I was able to get used to the situation relatively quickly. Sure, it was a bit strange at first, but after a week or two things had settled in very well. The cooperation within the team works well, too. Team meetings now take place daily so that everyone is always up-to-date and knows about upcoming projects. We also meet once a week for a virtual coffee and tea break. That really is a nice way of bridging the physical distance.

You are in direct contact with many manufacturers. How would you describe the current mood?

My contacts are mostly optimistic. They remain realistic, of course, and know exactly what this massive cut means for the industry. But everyone is trying to make the best of this exceptional situation and to look ahead. The contact itself has become much more personal, as everyone is struggling with the same problems.

How do our customers deal with the situation? What do the dealers focus on?

Dealers are primarily concerned with the question: How can they sell vehicles despite the massive restrictions? Because even vehicles sold before the start of the pandemic can only be delivered late due to the temporary halt in production, and this puts further pressure on retail. Many dealers have used the shutdown period to analyse their sales areas and to make plans for the future with us. But of course there were also dealers who, for the sake of caution, stepped on the brakes and put projects on hold for the time being. Most dealers are aware that it will be a long recovery process and that it will be difficult to reach the pre-crisis level. Nevertheless, most traders are optimistic about the future.

And what do manufacturers focus on?

Manufacturers are naturally concentrating on the massive global slump in volume and have accordingly focused on the dealer network. How badly is the global dealer network affected and which dealers may not survive the crisis? After all, the supporting pillar of sales is still the stationary dealer. Sure, there are a few pioneers who are already doing online business, but the large established manufacturers are almost one hundred percent stationary. I do believe that the current situation will accelerate the process towards online sales and that the dealer network will change massively, depending on the country and the brand. The crisis is perhaps also an opportunity! If a dealer network is thinned out by possible insolvencies, it can be optimised by a new dealer strategy and sales strategy. Nevertheless, there can only be one common path, because only through a personal approach can emotions be made tangible during a car purchase.

You already mentioned that we are currently increasing our support for both retailers and manufacturers. What exactly does this support look like?

Right, we started with the manufacturers. For this, we took a closer look at the sales channels, since the stationary trade, as mentioned before, is the pillar of sales. In other words, we analysed which retailers are essential in a dealer network in order to be able to guarantee the most comprehensive distribution possible. On the other hand: Who is particularly endangered by the crisis, but important for the existing dealer network? That is why we have offered our customers a stress test to answer these questions using key figures and data from our MIS system. With the help of a coverage analysis and specified customer parameters, such as drive-time, we were able to provide many customers with an important tool for identifying locations that they should pay close attention to right now. We also provided our customers with a new report collection in their MIS account. This gives manufacturers as well as dealers a transparent overview of current developments at a glance and allows them to realistically assess the situation on a monthly basis.

The stress test was mainly carried out for European customers. Were there different results between the countries?

Actually there were no big differences at all. Sales in European countries have slumped considerably, regardless of the measures taken by the respective countries. Of course, the general uncertainty in society and the economy, but also the interrupted production can be felt throughout Europe. Furthermore, it is evident that markets and dealer networks consisting of smaller and more closely-knit dealers are having much greater problems managing the slump. Even so, it is still too early to fully assess the impact of the crisis in individual countries. I assume that we will not be able to draw the first conclusions before the end of the year at the earliest. Corona is a marathon that we will have to deal with for a long time to come. And that is precisely why it is important for manufacturers to recognise early on which dealers are particularly important for their own network but could get into trouble. Fortunately, we have received a lot of positive feedback on the stress test. It has provided our customers with an important basis for prioritisation in their dealer networks.

What is the situation in the after-sales business? Do you see effects similar to those in the sales sector?

Right now, we see more short-term effects regarding after-sales. The current situation is like this: Although many vehicles are being moved noticeably less and driven fewer kilometres, the normal workshop business continues. After all, some workshop issues cannot be postponed and we therefore estimate the short-term dent that will arise there to be significantly less than in sales. But here too, the question is how the after-sales business will develop in the long run. Given that sales figures will decline significantly and that the largest volume of orders in after-sales is generated with new vehicles, we will probably see the effects of the crisis here with a time lag and perhaps only in the years to come.

This brings us to the last question: What advice do you have for manufacturers and dealers to better prepare for the future?

I think it is essential to continue approaching things with the same optimism as before. The resulting opportunities should be used by both manufacturers and dealers alike. Even if the classic sales channel changes, contact points for customers will still be needed. For this reason, dealers will always remain important strategic partners and only together can a sales model be created that will prove itself in the long term, even in times of crisis.

Many thanks, Tobias, for your interesting insights and see you again soon in person at the office.

Last updated May 2020

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