Hello Dear Friends,

I’m going to talk to you about something that will be of your interest this week. As you know, we do shopping mostly over internet. We go online to buy things frequently. From foods to holiday expenses, from travel to entertainment, etc.. But when it comes to buying cars, we persistently go to dealers’ physical sales areas, examine the car and buy it there.
According to an article published by Automotive News Europe dated June 30th, 2019 by Nick Gibbs, the internet environment now appears to be affecting car sales as well.
Ford plans to sell its new electric SUV vehicle, which is expected to go on sale next year, only through on-line channels. This sale would be a significant milestone.   
Similarly, VW is set to seriously change dealer and customer relations by going on-line with the new IT infrastructure. This will start to use simultaneously with the launch of the next generation electric vehicles line-up. 
Carlos Tavares, chairman of PSA Group, announced last February that as of 2021, the group wants to increase car sales through internet to 100 thousand per year. 
Several brands from Hyundai to BMW, Dacia to Volvo,selling in the European market have shared their similar plans with the press accordingly.
Of course, Automotive Dealers don’t stop either.  They are taking various steps to keep up with this development. For example, 60% of dealers operating in UK market are expected to get ready for on-line transactions within 2 years.
Customers who are going to buy cars are less and less visiting dealers as they have already done all their research almost entirely in internet. According to Ford’s research in Europe, the customer comes to the dealer only 1.2 times during the purchase process and makes his decision. 
There is a truth we must not forget. Although the customer buys the car from on-line environment, he has to go to the nearest dealer where he will take delivery of his vehicle. Then the business doesn’t end with just sending the vehicle to these dealers for brands. On contrary, a healthy relationship between a brand and high-tech car-buying customer emphasises the existence of a dealership.. 
Recent surveys have also reached interesting results. Toyota, for example, has taken a significant market share from its competitors in on-line sales of its Aygo model in Norwegian market. Also, the leasing-based finance model is known to have a big impact on these sales. In Norway, individual leasing solutions in electric car sales are growing rapidly. In UK, March data shows that 91% of the last 12 months of individual sales have been through financial models. The role of financial models in increasing numbers by on-line sales will be huge.
Volvo’s new on-line sales model, launched last April in UK, allows customers to choose dealers first. Volvo increasingly proposes private finance solutions through selected dealers trading with e-signatures.
We know that in the near future, mobility models will be sold instead of cars. This major change is about to begin, especially with electric and autonomous vehicles. Then how will the dealer guarantee its future? The maintenance costs of electric vehicles are falling dramatically. In this case, how much will dealers’ aftersales revenues decrease with electric vehicles?  How will the dealer organisation survive? 
All of this is yet to be answered for the future. Then, brands already need to prepare their dealers with new revenue-sharing models. For example, the dealer contract model, newly implemented by VW in the European market, may be treated as a reference for on-line sales.

My dear friends,

Early in the morning of last Friday, Prof. Dr. Ercan TEZER, who was retired in 2015 as a prominent name in our automotive industry after 23 years of serving as Secretary General of OSD has passed away. We will never forget his valuable contributions to our automotive sector as great automotive person, I have previledge as having worked shoulder to shoulder with him for years to develop automotive industry. He will always be alive in our minds with full respect.

See you in my next articles,

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