Trend “Dying Car Dealerships”
How a German mobility start-up is looking to succeed with an innovative business model
The car industry - and thus the car trade - is undergoing radical change worldwide. E-cars or car sharing, climate change and digitalisation are putting manufacturers and car dealers under pressure. But there are solutions: the e-mobility start-up ElectricBrands is supporting vehicle dealerswith a new business model and, in doing so, trying to rehabilitate the traditional car trade.
The car is continuing to evolve against a backdrop of digitalisation and the climate crisis. Something that has received little attention so far is that the automotive trade is also changing. “The way we buy cars will change drastically in the coming years. Executives of international automotive companies are convinced of this,” writes KPMG in its latest study “Global Automotive Executive Survey”. The traditional method of purchasing a new car from a dealership is in decline. Carmakers are increasingly taking care of fleet business themselves. The used car trade is managed by online platforms. If car dealers want to survive, they have to realign themselves and meet changing customer requirements.
More and more vehicles are being sold online. According to KPMG, 70 per cent of those surveyed believe that by 2030 most cars will be purchased online and 40 per cent of cars in Europe will be purchased without any involvement from dealers. The German manufacturer ElectricBrands sells its light electric vehicles XBUS and Evetta online via its own website. The company also relies on a strong dealer and service network: The company has used its business model to establish a network of over 900 car dealers in 19 European countries.
Intermediary rather than seller
ElectricBrands is building on what is known as the “agency model”. The dealer no longer simply acts as the seller of the vehicle, it is an agent of the manufacturer. For a commission, it acts as an intermediary and remains an important link between the manufacturer and customer. In the agency system, the manufacturer sets the prices for its vehicles and not the distribution partner. The direct online sale of a vehicle costs exactly the same as at the dealership. This means full price transparency for customers and no more price negotiations with dealers. In future, car salespeople will advise customers, deliver cars, procure spare parts, perform test drives and provide services.
Berend Jan Hoekman, Sales Director at ElectricBrands, explains: “All of our distribution partners have both a brand dealership and an additional focus. They know the local market better than anyone else.” This means that ElectricBrands benefits from dealer relationships, relying on their expertise and proximity to customers.
The light electric vehicle category as the new mobility solution
In addition to the agency model, ElectricBrands offers extra added value for car dealerships: a new mobility concept. With its light electric vehicles, the company wants to redefine the car and make private transport flexible, sustainable and economical. The e-mobility company is responding to changing user behaviour in the field of mobility, and offering car dealers a new perspective for vehicle sales. To retain customers and attract new ones, you need original mobility solutions and diversity of choice.
The freedom that ElectricBrands gives its commercial partners in their marketing of the XBUS and the Evetta is also significant. The partner takes care of the delivery process and quality control, checks all of the vehicle’s functions and provides the customer with detailed information.
With the light electric vehicles in the mobility portfolio, dealers can serve and advise customers in the best possible way. “Our commercial partners immediately recognised the opportunity offered by ElectricBrands with the XBUS and the Evetta, and were delighted to join the network,” affirmed Hoekman.
ElectricBrands continues to expand its network. After concluding the export contract for the Benelux countries, intensive work was already underway for the setup of a distribution network in the Netherlands. With 19 representatives at 27 points of sale, the XBUS and the Evetta are easily accessible to everyone in the Netherlands. The English market will also be integrated to a greater extent. “The goal is to secure 1200 commercial partners across Europe,” adds Hoekman.
The automotive market needs new distribution models and has to respond to the rise of electric cars and new mobility solutions. ElectricBrands combines this with its agency model and the light electric vehicle category. With these innovative concepts, the company has presented car dealers with a new opportunity and aims to guarantee its customers the best service.