The Internet and the transport revolution will herald major changes for car dealerships

The Internet and the transport revolution will herald major changes for car dealerships

A large majority of car dealers and auto repair shop owners expect changes in the transport sector and the rising significance of the Internet to inflict massive changes on traditional car dealership structures, even causing some to disappear completely. For example, car dealers expect the Internet to replace car showrooms as the number one car presentation area. These are the key results of a representative survey for the IAA 2011 conducted by TÜV SÜD among over 300 car dealerships. Under the title "The Future of Car Dealerships", TÜV SÜD will discuss the survey results with industry experts at TÜV SÜD's trade fair stand A 19, Hall 8 from 11 am on Thursday 15 September 2011. "Use our know-how. Shape your future." is the motto under which TÜV SÜD will showcase its services at the flagship trade fair in Frankfurt am Main from 15 to 25 September.

The weighting of different business models, the new and used car markets, vehicle models, fuel technologies – what lies ahead for car dealers up to 2020?

To examine this question, TÜV SÜD and market research institute Technomar surveyed a total of 304 car dealerships throughout Germany. The representative survey showed that in future most cars will be offered and sold on the Internet. Alternative business models including leasing, car sharing and mobility contracts are moving into the foreground and alternative fuels will become increasingly important. These results are significant for TÜV SÜD, permitting the service provider to keep its service portfolio up-to-date with the latest developments in this sector. "The results of the survey supply us with important information for the further development of our services in fields including used-car strategy, fleet management and electromobility. Given this, we can offer our clients optimum support, helping them to cope with structural change", says Bernhard Kerscher, CEO of TÜV SÜD Auto Service GmbH.

Leasing and car sharing are becoming more significant

Respondents expect drastic changes in areas such as distribution channels. According to 55 % of the car dealers interviewed, the Internet, individual websites and social networks will play an increasingly important role, sidelining car showrooms in the long term. Business models are also changing, with mobility contracts and car sharing rising to a total of 18 per cent over the next five years. Leasing business will also rise in significance: In five-years' time, leasing will account for a total share of 38 per cent compared to its present 22 per cent. By contrast, 17 per cent of respondents expect dealers' focus on a single car brand to decrease. Almost 9 per cent of the car dealers interviewed fear that the drastic changes across all business areas will result in the eventual disappearance of conventional car dealerships from the automotive landscape.

Positive development in used-car business

Respondents view the development of the used-car market as positive. TÜV SÜD recognized these trends at a very early stage and has significantly expanded its portfolio of used-car services. "The survey confirms that our experts' assessment of the future requirements of car dealership management was correct. Thanks to focusing our services, including pronounced strengthening of our activities in the used-car segment, vehicle fleet management and the leasing business, we are excellently prepared to face new challenges", says Kerscher.

The future of car dealerships: larger, but fewer

The number of mergers and acquisitions in this sector of industry will rise. Over 80 per cent of respondents confirm that the number of car dealerships will have dropped significantly by 2020 and that the dealerships still existing at that time will be larger. 11 per cent of respondents expect car dealerships to become more specialized. Only eight per cent believe the retail landscape for car dealers will remain unchanged.

Car dealers see a clear shift in the weighting of new and used vehicles. 48 per cent of them expect the used-car business to expand, and see major potential for development in this field. Five per cent even expect major growth in this sector. Only 13 per cent predict a drop in used-car business, while 37 per cent expect used-car business to continue unchanged over the next five years. When asked for an opinion on new car sales, a very different picture emerges: 43 per cent of respondents expect sales of new cars to decrease over the next five years. Almost seven per cent actually expect sales figures to plummet. Only 24 per cent believe the new car market will develop positively. 30 per cent assume that there will be no changes in this area.

Industry experts expect the influence of alternative fuels to rise, with 21 per cent of new, first-time registered cars boasting hybrid drive technology by 2020. Experts anticipate an increase in the share of bi-fuel vehicles to 14 per cent as early as the next five years. A similar level of growth is expected over the same period for all other alternative fuel systems taken together. In accordance, purely electric cars, gas-fuelled cars and fuel-cell cars will together account for a 14-per-cent share of new first-time registered cars by 2016. Only four years later, by 2020, electric cars and hydrogen-fuelled cars together will have reached a market share of as much as 20 per cent. Alternative-fuel cars including gas-fuelled cars will then account for 47 per cent of new cars, thus overtaking petrol-driven and diesel-fuelled cars.

New fuel technologies playing an increasingly important role

The figures show that the transport revolution will leave its mark on the auto dealer industry. Yet the majority of respondents are staying calm in the face of these developments: 56 per cent do not expect any impact on their business. However, over 40 per cent think that hybrid cars, electric drive systems and fuel cells will have adverse effects on their business. As a leading technical service corporation, TÜV SÜD offers optimum support in helping car dealerships and auto repair shops to cope with these changes in the transport sector. But the future of car dealerships is not the only central theme at TÜV SÜD's stand at the IAA 2011. Another area of focus is electromobility. Together with E.ON, the experts present a plug-in charging system developed by E.ON and certified by TÜV SÜD, as well as wireless charging solutions.

In 2011, TÜV SÜD Auto Service – the largest subsidiary of TÜV SÜD AG in the mobility business segment, generating revenue of approximately EUR 430 million per year – launched an aggressive programme of leasing, fleet management, vehicle reconditioning and valeting and used-car strategy services, in which the company prioritized new services and co-operations. The merger between the TÜV SÜD subsidiary FleetCompany and Fleet Logistics, for example, created Europe's largest provider of fleet management services, currently with 100,000 vehicles under its management. Together with Sixt, TÜV SÜD established TÜV SÜD Car Registration & Services (CRS), which specializes in the management of complex registration procedures for vehicle fleets. Early this year, TÜV SÜD also acquired used-car specialist Christof Gerhard und Partner (CGP). Consulting services on used-car strategy are an important element for TÜV SÜD in its function as a one-stop service provider for car dealerships and auto repair shops – including international business relations.

The full survey can be downloaded at www.tuev-sued.de/iaa2011(only available in German).

TÜV SÜD events at the IAA 2011 at a glance:

• 14 September: Press conference on "Safety in Wired and Wireless Charging of E-Vehicles" – presentation of recent results from a joint project with E.ON AG, 11:30 am – 12 pm, Hall 8, Stand A19
• 15 September: Presentation of the representative survey "The Future of Car Dealerships", discussion with industry experts and trade journalists
• 19/20September: Fleet Management Strategy Forum

"Use our know-how. Shape your future." is the motto of TÜV SÜD at the 2011 International Motor Show IAA in Frankfurt am Main from 15 – 25 September. The central themes of TÜV SÜD's presence at the trade fair in Hall 8, Stand A19 are innovative services for the automotive sector and electromobility. Visit us at the IAA. Further information can be found at www.tuev-sued.de/iaa2011

Contact: Frank Volk