The Australian retail motor industry is enjoying boom times, with more new cars sold every year. Will this age of prosperity continue indefinitely? What changes and challenges lie ahead? And will you be ready for them?
It’s not that long ago that video rental stores were a staple of every shopping centre and main street strip. Blockbuster was worth billions. And then came Foxtel and – the killer blow – streaming services like Netflix and Stan. Almost overnight Blockbuster was broke and busted. It wasn’t that people stopped wanting to watch movies and TV series in the comfort of their own homes; they just found a more convenient means of doing so.
Kodak is another cautionary tale. The development and uptake of digital cameras followed by smartphones with inbuilt digital cameras, rang the death knell of the film industry. Again, people did not stop taking photographs – indeed, they took more – they just found a more convenient and cost-effective way to do so. A similar story is the case of newspapers.
So it will be with car sales; our industry is not immune.
Already some fundamental changes are taking place.
Morgan Research recently conducted a State of the Nation Breakfast focusing on the broader automotive industry and highlighting the differences between Baby Boomers and Millennials (the 18-34 age group).
Understanding these differences and adapting to the different needs of each group will be the difference between survival and extinction for many businesses.
Baby Boomers read newspapers and buy cars. Millennials use social media profusely, watch little television and are increasingly turning to bicycles and car sharing.
Car ownership by Millennials is falling. With the coming revolution on our roads that will be autonomous vehicles, the future of the retail motor industry is uncertain. What we can be confident of is that people will still use cars just as they still take photographs and watch movies. They will just change their usage methodology –so Dealers must change the way they provide them or go the way of the video store.
Morgan Research listed 16 motor industry-related fields, many of which are currently thriving, that are in danger of experiencing what it termed a ‘Kodak event’.
The industries named were automotive manufacturing, car Dealerships, auto insurers, transport companies, fuel companies, fuel retailers, grocery retailers, taxi/limo companies, accident repairers, auto financiers, discretionary retailers, parking garages, car classifieds, car rental companies, outdoor media and motoring associations.
The lesson these industries must take from former giants like video stores, newspapers and photography is that they need to use the current prosperous time to prepare and experiment with different business models. The Australian market is much more divided that it was 10 years ago and business models need to reflect that.
Marketing to Baby Boomers is totally different to marketing to Millennials, who have different attitudes to ownerships and different priorities in terms of lifestyle.
There are currently five million Millennials and 3.7 million Baby Boomers in Australia, so both are huge markets.
When it comes to technology, Morgan Research found that a third of Millennials are early adopters, while just 4.3 percent of Boomers can say the same. Almost a million (18 percent) Millennials have Uber on their phone or tablets (and they use it). Only one percent of Boomers have Uber.
Nearly 200,000 Australians are now using car sharing services and over half of them are Millennials. The Baby Boomers basically ignore the car sharing service.
Boomers, however, are driving more and are major buyers of new cars, particularly with the advent of additional safety features and driver-assist technologies. So they remain vital to the car ownership model.
The automotive industry is huge. It is not going anywhere. The challenge for those companies that facilitate the use of motor vehicles, namely car Dealers, is to adjust to the generational change in wants and needs, and adapt to the new ways in which consumers will use their products.