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

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

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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After the Arab Spring Part 3 – the outlook for car markets in the GCC

At the time,  the GCC markets seemed largely unaffected by the Arab Spring, apparently insulated by oil wealth and strong sovereign wealth funds, whose proceeds need only be shared among a small population. But, if you take a closer look there are two ‘blocs’ of states within the GCC measured by income per capita: the rich, UAE, Qatar and Kuwait; and the ‘relatively poor’ – Bahrain, Saudi Arabia and Oman. Those differences have great implications as each country deals with three important – and region-wide- market undercurrents: youth unemployment and renewed emphasis on employment nationalization programmes, accelerating modernization of the transport infrastructure and a changing landscape for personal consumer credit. Each will have an impact on the size and shape of GCC car markets. Moreover, the medium-term, region-wide political effects of the Arab Spring were also overlooked: the power struggle between Saudi Arabia and Iran; the split within the GCC over Qatar’s position; the struggle to control the entrance to the Red Sea at the Bab Al Mandab, which has underpinned the conflict in Yemen.

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The “Arab Spring” and car markets in MENA and beyond

Originally published in 2011. this paper was updated and re=-published in 2017   “Progress lies not in enhancing what is, but in advancing toward what will be”, Kahlil Gibran Only a few wise birds predicted the Arab Spring and its financial and economic impact. But, as it progressed, it didn’t take long for the immediate impact of actual regime changes in Tunisia and Egypt – and the threat of them in Bahrain and Libya – to become clear. Between the day the protests broke out in Tunisia in January, the price of oil (Brent Crude) rose from US$94.90 on the 4 January to US$116 a barrel in early March, its highest level since January 2009 when it traded at $40. Still off its $145/barrel peak of July 2008 but already worryingly high for European motorists and hauliers. Of course, while European governments wring their hands about the impact of oil prices, keep in mind that their taxes on oil consumption far outstrip the income to the oil producers. For example, in 2011 at current prices, the UK will generate about 1.8 times as much tax as the oil costs. In Germany it’s twice as much and in Italy 2.4 times in tax as the oil costs! But, if the price for long-term stability is only a few months of excruciating pump prices, many consumers might be willing to pay it. However, as we have seen, the human and financial costs turned out to be more expensive and enduring than that. 

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After the Arab Spring: Part 2 – the outlook for car markets in the Levant

The Arab Spring began in 2010 in Tunisia,North Africa and travelled eastwards. First, into Egypt and Libya in 2011. Then, in 2012, into Syria, in the Levant. And, in this part of the world, as governments, rebels, terrorists and infiltrators arrived, it has caused chaos. The modern Levant includes Lebanon, Syria, Jordan and the Palestinian Territories and – historically – Turkey as well. It has been described as the “crossroads of western Asia, the eastern Mediterranean and north-east Africa”. It fringes the eastern Mediterranean over a distance of 1,100 miles, with a population of 35 MN, excluding Turkey. The Levant economies share three common characteristics: they are net oil importers; they depend on other states or entities for their economic well-being – through remittances, exports or subsidies; and they share a politically unstable region. Consequently they are, more than usually, economically volatile and vulnerable. In addition, they share exposure to economic downside risks:global economic slowdown: the continuing Euro Area crisis, weakness of Advanced Economy Sovereign risks and the volatile oil prices.

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After the Arab Spring: Part 1 – the outlook for car markets in North Africa

The Middle East and North Africa (MENA) region has three distinct geographic and economic zones: North Africa, The Levant and the Persian Gulf. North Africa stretches over 2500 miles between Morocco and Egypt, has a population of over 150 MN and, excluding oil-rich Libya, has an income per head between $5,000 to $10,000.  Across the region between 15% and 25% of the population survive on $2 per day. The Levant fringes the eastern Mediterranean over a distance of 1,100 miles, with a population of 162 MN, including Turkey.  Income per head is higher at $6,000 to $14,000 and wealth is spread more evenly. Less than 5% of the population earn under $2 per day. The ‘jewel in the crown’ is the Gulf where a small population of nationals own two-thirds of the world’s hydro-carbon wealth. The population is around 70 MN, including ex-pats,  and income per head  – excluding Yemen  – ranges from $43,000 to $130,000. The 2016 average was $33,005. What is the outlook for vehicle markets in the MENA region? Faced with contrasting economic fundamentals – broadly, those who have oil and those who have not  –  the impact of the global financial crisis  has varied between countries and MENA zones. It  revealed structural weaknesses in both US dollar and Euro sovereign debt which increased the flight of investment funds into commodities, leading to higher prices  – in gold, grain, oil and many others.  In turn inflation, unleashed across the world, hit the poor hardest and North Africa has plenty of them. The relentlessly volatile oil price shows how bumpy the economic ride may yet be. It’s estimated that, just to meet the financial costs of social reform, Saudi Arabia –  and many other OPEC members  – need an OPEC price of $90 a barrel to avoid a […]

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