Current models are the way out of financial predicaments
10 May 2019
Almost a quarter (23%) of people would focus on boosting sales of current models to improve finances, if they ran an automotive manufacturer, according to the results of the latest Autovista Group survey.
With Q1 and year-end financial results from carmakers coming through, many are finding that tough trading conditions are affecting their profits. However, the view of those who answered the survey is that concentrating on sales of current models, more so than investing in new vehicles and technologies, is the way to improve results.
This would allow companies to make an instant push for better results, using existing technology and designs to entice more customers. However, a downside to this is the stalling of development, which could also put the industry back as it looks to make vehicles safer, more autonomous and environmentally friendly.
The top two answers to the survey were separated by just 2%, with 21% of respondents selecting the powertrain development option. Investing in this area will keep carmakers relevant, help them to avoid potential pitfalls associated with CO2 emissions and keep consumers happy as trends start to move towards ultra-low and zero-emission vehicles.
This is, however, a big budget area, with the development and lead times likely to eat into profits. For many carmakers, electric vehicle (EV), hydrogen and even hybrid technologies are new areas, with research starting from scratch alongside internal combustion engine programmes. The move into these areas, therefore, may be profitable in the future but comes at a cost today.
The next most popular answer moved away from the vehicle side of things and into the platform of sales themselves. 18% said that should they be in charge, they would focus on dealership models and online sales portals to improve finances. This is a move adopted by PSA Group, which is streamlining its Opel and Vauxhall dealership portfolio to improve profits, while many others believe that opening sales to web buyers will make the process easier and attract more customers.
16% felt that concentrating on new model designs would bring in more revenue; refreshing model line-ups boosts sales as customers and fleets look to acquire the latest models. It is also often cost-effective, as this means building on what a company already has available while adding new technologies that many see as ‘upgrades.’
Just 8% felt that focusing on autonomous cars was the way forward, with one comment even suggesting that the technology is ‘a waste of time’. This is perhaps the most expensive route carmakers are finding themselves going down, with the development not just of the vehicle, but also the sensors and technology within, taking vast amounts of resources. Many carmakers are partnering with others, or with technology firms, to make this happen. However, the need for testing and development, together with publicity, means this is a drain on finances. Again, it can be a winner in the long term, so concentrating efforts here will pay off eventually, while not studying the benefits now could leave companies struggling later.
Following this, 6% of respondents felt moving into mobility services would benefit finances, attracting more customers through different revenue streams and futureproofing against changing ownership patterns. A further 5% felt that cutting workforces would be the area to focus on, with some manufacturers already doing this.
The final 3% chose the ‘other’ category, with many comments in this section saying that concentrating on parts and aftersales, keeping customers engaged with the brand and ensuring that they come back time and time again based on the quality of service, was the main area to be focused on.