CIVIC COMPANIES AND THE AUTOMOTIVE AFTERCARE MARKET - LOGBOOK SERIES 1 - RPM
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CIVIC COMPANIES AND THE AUTOMOTIVE AFTERCARE MARKET LOGBOOK S E R I E S 1
CONSUMER TRUST IN
AUTOMOTIVE BRANDS
HAS EVOLVED
We are in an era of mistrust. Each year, Edelman
publishes its Trust Barometer. The idea behind
the survey is to measure trust across a variety of
institutions, sectors and geographies. This year’s British politics
findings (January 2019) reveal a seismic trust gap has led people
between the informed and mass public, resulting in to seek new
what has been coined a ‘Disunited Trust in NGOs.’
leadership to
There are many reasons for this gulf appearing, but political uncertainty seems to address society’s
be the main cause. As many as three out of five Britons believe their views are not
challenges”
represented in British politics, which has led to people seeking new leadership to
address society’s biggest challenges.
Thankfully, businesses are stepping up to the plate and acting as forces for
positive change in society. This has seen the rise of the ’civic brand‘. Key
examples of this are the Uber Movement, which shares anonymised data
aggregated from over 10 billion trips to help urban planning around the world.
Another is the Facebook Café, offering patrons free drinks and a privacy check up
to help assuage consumer concerns about their privacy online.
While these are interesting movements, we wanted to understand more about
what the rise of the ’civic brand‘ means for the automotive industry. More
importantly – and for the purposes of this paper – what it means for the
growing aftermarket?
Civic companies and the automotive aftercare marketThe rise of automotive civic brands
Everyday, brands around the world come up with Renault is one automotive brand that has cemented
new ideas, products and solutions to address some its status as a civic brand in response to the air
of the biggest challenges faced by the automotive pollution challenge. The car giant rolled out a
industry. Topping the agenda is climate change and pollution-triggered billboard in Romania that drops
a global health crisis. Rising taxes and pressures the price of its electric cars when smog levels rise.
around the usage of fossil fuels have pushed many When air pollution in Bucharest goes up, the price
OEMs to make their mark through Electric Vehicle of Renault’s new electric model, the ZOE, goes
(EV) innovations. down on a DisCO2unt billboard.
Air pollution has always been a global sore spot This is very different from how automotive brands
for consumers. However, it was in 2018 that air used to operate, at a time when their main goal
pollution took on a completely new meaning to was to produce faster, more powerful marques –
consumers after associated health issues made regardless of the fuel consumption consequences.
newspaper headlines across the world.
Now we know how civic brands are applying this
Unsurprisingly, the automotive industry is taking movement to selling cars, it is time to find out how
responsibility and altering its behaviour to match the aftermarket can make its mark in the civic brand
the wishes of consumers. In 2019, the Society of movement.
Motor Manufacturers and Traders (SMMT) produced
its Automotive Sustainability Report with a focus
on CO2 and air quality. The report highlighted that
manufacturers have invested billions of pounds in
the engineering of cleaner technologies and now
produce the cleanest vehicles in history.
The automotive
industry is taking
responsibility
and altering its
behaviour to match
consumers’ wishes”
Civic companies and the automotive aftercare marketRemedying aftermarket pain points
Right across the automotive aftersales market, OEMs and Manufacturer Franchise Dealers have what we
call three key pain points. These are:
The aftersales
market is yet to
1. Parts and accessory sales
2. Customer satisfaction and/or experience
introduce the civic
3. Growth/loyalty brand movement
Reassuringly, OEMs are investing in ways to remedy these key pain points in order to remain sustainable
into their aftersales
as they steer their way into 2020, when they will have to find means of filling gaps in their falling margins marketing approach”
caused by a decline in car sales.
We know from doing our own consumer research that there are a myriad of reasons for people to choose
to either stay with their OEM franchise or Manufacturer dealership, or opt for pastures new with an
independent garage that does not operate in the car sales market.
The team at Stericycle Expert Solutions asked 1,500 UK motorists what would make them switch to
an independent garage. More than a fifth (22%) said they would make the switch simply because their
warranty had run out. The second highest reason, at 20%, was because the manufacturer franchise had
become too expensive for them.
Location and customer service were third and fourth on the list. While there was no option in the survey
which related directly to a dealership’s corporate social responsibility, only 2% stated that they had another
reason. No one in the survey specified social impact – in any way shape or form – as their reason for
switching or not.
However, that does not mean these same people would not be influenced by a brand’s civic behaviour
in the aftermarket. Quite the opposite actually. The aftersales market is yet to introduce the civic brand
movement into their aftersales marketing approach. We believe there is a gap to be filled by OEMs and
their counterparts, which would result in higher customer retention.
Civic companies and the automotive aftercare marketTurning aftersales civic
Motoring is big business, with the aftersales market in the UK today are done so via PCP deals. While convenience - including opening hours (16%) and At Stericycle Expert Solutions, we believe these
alone delivering £21.1billion of revenue to an the UK’s Financial Conduct Authority is starting
1
a better quality service at the independent garage ‘soft’ points are the key areas of opportunity for
industry with a combined revenue of £82billion. to question the surge in credit that’s swept the car (16%) - as some of the main reasons. In other words, the civic-minded dealership or brand. In an era of
While the forecourts are primarily geared towards market, they’re satisfied it’s not a problem at the if I’m paying more, I expect more – and the quality ‘political consumerism’ when consumers will change
driving car sales, the opportunity presented by moment. of service is top of that list. their buying decisions on how best that particular
aftersales can sometimes seem like an add-on rather brand fits with their beliefs, being able to help
than a core part of the experience customers should That in itself is a warning sign that this market From our survey, we also know that roughly 70% of customers identify more closely with their franchise
want to buy into. cannot last forever, and highlights the need to build motorists have a vehicle three years or older, and can present a greater sense of worth – with it
the aftermarket part of their business if PCPs are that more than half had no warranty on their vehicle. enhancing the customer experience, and therefore
This could be a missed opportunity, especially with questioned further and new car sales decline. And while a third of motorists said they wouldn’t satisfaction.
greater margins to be made in this area. switch from a dealership, these tend to be older
OEMs were perceptive enough to realise how drivers, with men narrowly more likely to stay with
We believe it is because OEMs are more public trust in NGOs could actually be beneficial to the dealership for aftermarket care (36%) compared
comfortable in the car sales market. As outlined their sales volumes. They absolutely must apply that to 25% of women.
earlier, big brands are going to enormous lengths to same approach to the aftercare market because it
For some time
keep their car buyers coming back for more. They is only going to grow if they act upon insights like On the other side of the divide, 40% of those who now, it has been
have quite literally transformed themselves into these. currently use an independent garage say they would
holistic social brands who are changing the world not consider switching to an official dealership –
widely accepted
for the greater good – but only in car sales. For some time now, it has been widely accepted meaning there’s an opportunity to influence 60% that OEMs and
that OEMs and their counterparts cannot compete of their customers. And with 34% saying they
The car ownership market has already significantly with the pricing offered by the independent would consider making the switch if prices were
their counterparts
changed in recent years thanks to the rise of the aftermarket. However, our research into the comparable, it’s clear that the tipping point is cannot compete
Personal Contract Plans (PCPs), which are now attitudes of 1,500 UK motorists confirmed that overall service – of which a major part is how using
favoured by most dealerships with the aim of selling while price is a major contributor to any decision to that service makes a customer feel.
with the pricing
cars to people who might not otherwise have the change garage, it is not the only reason. offered by the
finance to do so. For those motorists, convenience (17.63%), a better
Those who said they would consider leaving quality service (13.55%), trust (9.78%), friendly
independent
This has been sustaining new car demand for some their dealership for an independent garage cited service (9.35%) and customer service (8.82%) are aftermarket.”
time, to such an extent that nine out of 10 cars sold expense (20%), with poor customer service (17%), seen as the main reasons for switching back.
1
https://www.investorschronicle.co.uk/comment/2019/09/11/what-next-for-car-dealership-shares/
Civic companies and the automotive aftercare marketRealise your civic brand potential
The aftermarket presents enormous potential Consumer voices have never been so strong
and OEMs who have already mastered the art - and data has never been so readily available.
of being a civic brand should apply the ethos to OEMs must make their customer data work harder
their aftermarket products. There is more than so that they can create solutions that will drive
enough room for brands – outside the tech giants economic growth and improve society as a direct
– to take ownership of the civic business. With result.
brands like Suzuki, Skoda, BMW, Toyota, Kia and
Nissan all establishing themselves as responsible Responding to customers demands has always
civic businesses, the team at Stericycle Expert been a core function of any business. It’s why cars
Solutions expects to see more OEMs and now have Bluetooth integration and anti-lock
Manufacturing Franchises applying these core brakes, for example. Applying this same ethos
values to their marketing mix for aftersales. into the aftermarket is key to growing the market
– and ensuring that fluctuations in car sales need
not be a barrier to growth.
WHAT CAN WE DO FOR YOU?
We understand your pain points and have a permanent remedy
OEMs must make their for you. For more information on how you can use predictive data
techniques to improve customer retention and drive sales,
customer data work contact us today:
harder so that they can
E Info@RPM-CRM.com T 03333 000 901 w RPM-CRM.com
create solutions that
will drive economic
growth and improve
our society as a direct
result”
Civic companies and the automotive aftercare marketLOGBOOK S E R I E S 1 E Info@RPM-CRM.com T 03333 000 901 W RPM-CRM.com
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