Emissions KPI’s: Which ones really count?

Like most business people, we’re familiar with key performance ratios such as production, sales and profit targets. But, when we’re told that our favourite calculations might be missing an important factor, we ask, “How can that be?” That’s where automotive production and distribution managers find themselves today. They measured production, sales and profits accurately, but not correctly. They missed one crucial item. They measured vehicle tailpipe emissions and watched them fall year on year. But, the calculation excluded the social costs of the vehicle’s contribution to air pollution and climate change, which have been evident for the last 50 years. Now, under the principle of ‘the polluter should pay”, vehicle manufacturers and distributors should expect some significant new policies,regulations and costs as governments try to clean up the environmental mess and avoid further damage. This post looks at what those policies and costs might be in the coming years for both vehicle makers and their distributors.

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Brexit: the impact on car retailers

Whatever your political preferences there is no escape from the impacts of ‘Brexit’ if you’re in motor retail. Retailers and repairers are the final link in global supply chains that are all likely to see disruption. These two blog posts highlights the likely effects on motor retailers and authorized repairers of three possible Brexit negotiation outcomes over two time horizons: immediate and medium and long term effects. This first post focuses on the immediate effects.

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Seven Global Car Maker’s KPI’s Part 2: Sales Revenue

This entry is part 3 of 5 in the series 7 Global Car Makers 2017

Every successful business likes to trumpet its sales revenue. None more so than car manufacturers. But, while year on year sales growth gives CEO’s a warm glow, experienced professionals know that revenue alone tells an investor or stakeholder very little. This post explains what you need to know to interpret the headline sales revenue figures using the published results of seven global car makers as examples. It illustrates what else you need to consider to decide if a car maker is really doing well or merely appearing to do so. It’s part of a series of posts assessing the KPI’s of these businesses – Daimler, BMW, VW, Toyota, FIAT-Chrysler Auto, Ford and GM – for the turbulent 10 years from 2007 to 2017.

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Seven global car maker’s KPI’s Part 1: Unit Sales

This entry is part 2 of 5 in the series 7 Global Car Makers 2017

  Few items of business news grab the headlines more than sales volumes and, whether you’re a consumer or an industry insider, that is never more true than when car sales results for a market or a car manufacturer are published. It’s not just the numbers themselves. Car sales volumes are used as key idicators of global and regional economic development, consumer confidence, consumer preferences and urbanization, to mention just a few. Two factors help to put global car sales figures need to be placed in context. First, the global car market is highly dynamic and is expected to reach 100 MN units by 2022. In that forecast the market in China doubles from it’s current size – from 28MN to 55MN units – and the US grows to around 22MN units. More surprising is that India moves into the #4 slot with sales of around 5MN just behind Japan. Second, the proliferation of modular platforms across manufacturers will reduce production costs and lead to significant model development. Carmakers are likely to produce a growing range of models in shorter production runs. Using the same platform should help them make more profits. But, this may not lead to a bonanza for shareholders. Most of the profits could be eaten up in the extra costs of developing new technology and rising raw material prices. As for dealers, if they’re to keep a role in the distribution chain at all, they will need to become savvy at reaching and trading with a wider range of segments. That will cost them more money too.

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How sound is your franchise? Seven global carmakers compared.

This entry is part 1 of 5 in the series 7 Global Car Makers 2017

Car makers are skilled at assessing the financial and operational strengths of existing or would-be dealers and, for forty years, dealers have been rating franchises in terms of how profitable they are to invest in and constructive to work with. But, so far, dealers have not assessed car makers on their financial and business viability. However, in a time of unprecedented change and potential disruption to car-makers and the retail dealer model, perhaps its time for a change. This series of posts complete a financial KPI and business analysis of seven global car makers from the viewpoint of a dealer or other potential stakeholder: Daimler, BMW, Ford, General Motors (GM), FIAT-Chrysler Auto (FCA), Volkswagen Group (VW) and Toyota. This first post gives an overall ranking of each car maker based on the data. The subsequent posts look more closely at specific issues such as unit sales volume, sales revenue, profitability, liquidity and debt and operating efficiency.

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The ‘economics of the box’: prospects for the dealer business model

While there’s no immediate cause for alarm, the business conditions for car dealers – especially small independents – may get more difficult if new engine technologies and changing attitudes to car ownership become more widespread. The big consultancies and researchers expect electric car ownership to grow fast, if the technological, cost and infrastructure hurdles can be solved. If so, the immediate effect for car dealers will be a fall in after-sales revenue as electric cars substitute for conventional internal combustion engine ones. Electric cars generate around 25% of the service and parts revenue of conventional ones. Their expectation is that, by 2030, EV cars may become mainstream in cities and in some countries, such as China. Following closely on that forecast are two more. First, that urban dwellers may be willing to trade car ownership for mobility. Put simply, they continue the transition from ownership to leasing – which has already happened – and take the next step from leasing to on-demand mobility packages. Firms like Uber and Lyft are betting that change will happen, at least in cities and suburbs with high congestion and car ownership costs. So too are Peugeot, Renault, BMW, Audi and Mercedes-Benz. If that took place, the retail new car market would shrink even faster from the 2030’s onward. Second, there’s the much vaunted arrival of autonomous driving cars. Most experts expect this is thirty years away at least but they are all convinced that personal car ownership will cease to be mainstream if it does occur. The future for traditional car dealers who think that existing franchise protection laws and manufacturer’s investments in dealer networks will act as a bulwark to change and do not consider and assess these trends will not be bright.

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Digital and Social Media for Car Dealers Part 1: The Digital Landscape

This entry is part 1 of 4 in the series Digital for Dealers

This article is the first in a series on the use of digital and social media for automotive retail managers in an increasingly dynamic world. This post is freely available. The rest in the series are Pay To View   Aren’t all motor dealers being disrupted by digital and social media? They’re not alone. Take newspapers. According to the 2016 Carat Ad Spend Report, more than 2.7 Billion people read newspapers last year – up on the year before – but fewer companies spend their advertising budgets in them and, those that do, spend less of the available money, which is the trend since 2005. Apart from a few regions such as south-east Asia and parts of the US the result is declining newsprint profitability, job cuts and a frantic search by newspapers to generate income online. Taking the UK as an example, in 2016 the national advertising spend was around £20 Billion with over half going to digital media. Print media took just over £1 Billion, and is declining by 10% (‘quality’ press) – 15% (tabloids) each year. The continuing closure of local newspapers makes year-on-year comparison impossible, but the trend is similar to the nationals. Advertisers aren’t spending because readers are declining and fewer readers means lower response to advertising. And that includes dealer ads. For car sales managers, both new and used, accustomed to press advertising and classified listings generating a reliable stream of enquiries, the problems faced by newspapers has become theirs. They have to learn how to invest and manage in the fast-changing digital media space but, few are convinced that it works for independent or small group franchisees. “Facebook doesn’t sell cars”. Mostly true. However, digital and social media is about selling your business values, awareness of its location and generating positive attitudes and […]

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Digital and Social Media for Car Dealers Part 2: Digital Strategy

This entry is part 2 of 4 in the series Digital for Dealers

The digital space is almost limitless but for motor dealers wanting to make an impact there are two key channels – each with many options: Digital – the Internet using a website; and, Social Media – a wide range of platforms for communicating and interacting with an audience of your choice. Making the decision about where to invest , why and how can be complex. This post simplifies it for a motor dealer or distributor in any market.

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