Dealerships may not be entirely ready for the volume and the complexity posed by the numerous Chinese electric vehicle (EV) brands hitting the UK market.
Speaking at the China-Britain Business Council roundtable event at the Institute of the Motor Industry on 14 September, Jason Cranswick, chief operating officer at Marubeni Auto Investment, welcomed the prospect of more diversity but warned that it came with challenges.
“We do see that Chinese brands are going to bring some great opportunities to us so we are keen to collaborate. Likewise, we’re very mindful that we may not be ready yet for the volume and the complexity of what’s coming so we’re working really, really fast to create this as our vision and to deliver this for our shareholders.”
Marubeni Auto Investment is an £800 million-turnover business with around 1,300 employees across 40 locations across the UK, selling around 50,000 cars and motorcycles each year.
“I know there are ships on the water about to dock any day with one of our Chinese brands – MG – with 7,500 cars about to hit the UK market,” he said. “As one of their large dealers, that means I’m going to get a few 100 cars arrive any day now.
“I’ve got to fund them. I’ve got to move them. I’ve got to prep them. I’ve got to get them out to the customer. And then I’ve got to recover the debt. Now, when money was at 1-1.5-2%, that was okay, we can absorb that. Now, money costs are up on the back of 5.75-6.5% interest rates, suddenly on £10-15-20 billion worth of inventory, that has put real pressure on our business.”
He said the business’s bid to become a connected dealer at scale with electric vehicles at the vanguard meant new skills were needed throughout the dealer network. “I now need system architects. I need product managers. I need data experts. I also need the technicians that can deal with batteries. I also need salespeople that can perform that in the omni-channel. It’s a very complex world but how do I make things easy, useful and surprising because in a connected, digitised, omni channel world, theoretically, things should be easier?”
He said the business wanted to pursue both online and offline relationships with customers. “We want to put the control back into the customer’s hands but likewise I have colleagues employed across 40 bricks and mortar businesses and we still see a place for the dealer – although it has to be omni channel.”
“Digitization should make things more efficient but I have to tell you that it’s very hard to deliver easy, useful and surprising outcomes. A lot of car dealers are run on hand-me-down knowledge. Everybody wants to be seen as innovative, but in an unstructured, uncodified, hand-me-down knowledge world, innovation is a challenge.”
He said OEM partners shifting to agency agreements and manufacturing partners selling direct to the consumer were further challenges. “I’ve got to work out how do we fit in to that ecosystem of disruptors so what we are doing is learning fast from disruptors, shifting to omni channel retailing where we’re raising our bar in terms of customer service.”
He said the business had therefore adopted a collaborative mindset with its business partners. “We hold many franchises, mainly with Asian brands: Japanese and now Chinese brands. Our philosophy is to collaborate and again, it’s interesting that for some of our OEM franchise partners, the concept of collaboration is a challenge or a new philosophy. We certainly don’t see it as a parent/child, or a captive situation though.”