Dealerships to ignore expert’s insights at their own peril

Not only ‘if’ they respond to seismic changes, but also how rapidly, will determine whether dealerships find themselves in a utopian or dystopian landscape, according to Australian expert, David Lowrie.

David Lowrie group head People Products MSXI Australia

Lowrie was a key speaker at the National Automobile Dealers Association (Nada) 2023 Conference held in Sandton on 15 March where the running theme of all the speakers was the future-proofing of dealerships in the current often perilous seeming times. By his own account, he has “30 years’ experience in the business-implementation game” and is currently the Group Head of Learning Solutions at MSXI Australia. He is touted as a “global thought leader on unlocking company performance through Employee Engagement”.

Lowrie’s address at the conference was engaging, sometimes stark and often controversial, but dealerships will ignore his insights and observations at their own peril. Lowrie explained that he used his ever-cumulating experience to help OEMs and other companies in the automotive retail industry to help them set their people and retail development strategies.

David Lowrie in conversation with the MC at Nada 2023 Conference, Fifi Peters.

At the conference, he expounded on “how things going on in the world trickle down and impact the industry at dealership level”. He did this loosely at the hand of a PEST (political-economical-social-technological) analysis.

Political

According to Lowrie, in some markets like the Netherlands, Switzerland and Norway, it is already cost-prohibitive to buy an internal combustion engine (ICE) vehicle owing to tariffs and legislation. This has spawned a whole market in said countries of importing used hybrid and electric vehicles (EV), and governments in these countries have driven the EV structure to such a degree that you are hard-pressed to find an ICE taxi when you get off the plane. “This is all good and well, for these governments to push the EV agenda in order to be “seen-to-be-green” but already a huge problem has raised its head. In both the Netherlands and Switzerland, the impact of this was too significant a burden on their power grids and both countries must now import electricity from Germany. Keep in mind these are mature markets. God forbid if that should happen in South Africa,” said Lowrie. He went on to relate a now real situation straight out of a conspiracy theory. “Both countries recently told their citizens that in the case of a national state of emergency, they would switch of the national power grid and you will not be able to charge your car,” warned Lowrie. He said that dealerships should be alarmed at the rapid rate these changes are taking place and see themselves in this broader context.

Economics

According to Lowrie, stakeholders have to take a step back and look at the bigger picture of alternative fuels and not only at EVs. He said in countries such as Germany a lot is being invested into synthetic fuels. “VW is a good example of a company that is investing heavily in synthetic and alternative fuels,” said Lowrie and praised the virtues of advances being made in the field of turning everyday carbon into vehicle fuels. “Maybe, just maybe, EVs are only a bridging technology,” he teased. He also threw the spotlight on Japan where they are fully focused on hydrogen as a fuel source. “Big truck companies in Europe, like JCV, are also turning to hydrogen since EVs are just not practical in that industry,” Lowrie explained. “All these different types of fuels will change the way we think about what a service station is for example. From a dealership perspective, we have to ask how are we going to upskill our EV and alternative fuel technicians? How will this impact our after-sales business? What does my after-sales department do with an EV? We will now be asking a guy who is really good at rebuilding engines and gearboxes to suddenly become and electrical or electronical engineer. How and where do we find the people to do what needs to be done? But it goes even further. What does my after-sales area need to look like? Do you, as a dealership, know for example that you will need a dedicated fireproof room for your EVs in case one of them spontaneously combusts? In that case you take a forklift and push the burning vehicle into the fireproof room and wait for it to burn out,” explained Lowrie.

Socially

Lowrie said that a lot of the pressure around EVs were driven by the social need of being “seen-to-be-green” and then sobered conference goers with the following. “If you look at an EV in a bubble, it is great. No emissions, nothing compared to a dirty old ICE vehicle. But what people don’t do is isolate the factory that makes the EV in a bubble and look at the emissions and waste from that over and above of what is produced in the course of manufacturing a regular vehicle. Research has shown that in order to offset the negative impact of such a factory, the EV has to drive 450 000 km!

“Then there is also the question of what are we going to do with all these batteries when we are finished with them?” asked Lowrie.

He also urged dealerships to seriously start thinking about how they were going to address the change in their customers desire to drive the retail experience, something he refers to as ‘me-tailing’. Lowrie added he has already seen OEMs confusing customers with too many different retail models.

Technological

For the audience to understand the magnitude of the technology they would have to deal with at dealership level, he explained it in terms of ‘lines of computer code’.

“A F22 fighter plane is powered by 1.7 million lines of computer code. A F35 Raptor, in turn, is operated by 5.7 million lines of computer code and a 787 Dreamliner has 6.9 million lines of computer code operating it. Now, if I buy a vehicle with reasonable specifications such as all the safety gear, a nice infotainment system and satnav (satellite navigation) there are a 130 million lines of computer code in that car – 20 million lines in the satnav alone. When we look at hybrids and EVs, there are 330 million lines and then we are not even talking about autonomous vehicles yet. The question at dealership level is how are our people supposed to deal with that in terms of fixing and repairing it, explaining it and selling it to customers? Currently, the fastest growing part of my portfolio is customer education. OEMs are realising that they are struggling to educate customers on what to do with the stuff in their cars. And just as the customers manage to wrap their heads around it, it either changes or is upgraded,” said Lowrie.

Lowrie concluded this segment of his talk by saying that “forewarned is forearmed. We need to think about it. The speed of change is phenomenal.”

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