Navigating the Electric Shift: The Evolution of the UK’s Automotive Retail

The landscape of automotive retail in the United Kingdom is undergoing its most rapid transformation in history. This change is fuelled by the emergence of the agency sales model and a significant shift in vehicle technology—from traditional internal combustion engines to battery electric vehicles (BEVs). This evolution not only alters how vehicles are sold but also redefines the relationship between OEMs and dealers.

The UK’s automotive industry is witnessing a dramatic increase in the adoption of BEVs. According to the Society of Motor Manufacturers and Traders, BEV sales rose by 17.8% in 2023, with a total of 314,687 new registrations. This remarkable growth indicates that more BEVs were sold in 2023 than in 2020 and 2021 combined. However, despite this positive trend, BEVs still represented only 16.5% of the market share in 2023, a slight decrease from the previous year, highlighting the long road ahead for electric vehicles to dominate UK roads.

One of the notable trends is the rapid adoption of BEVs by fleets, encouraged by attractive tax incentives. For instance, the benefit-in-kind tax rates for BEVs will remain at a mere 2% until at least 2025. Out of all EVs registered in 2023, a staggering 242,235 went to fleets, leaving a small portion for private sales. This disparity has raised concerns about a two-speed market that could potentially undermine the growth of BEVs. Private buyers, lacking the substantial tax incentives offered to companies, face weaker retail demand for BEVs.

The high purchase price of electric vehicles and concerns about range anxiety due to the UK’s inconsistent public charging infrastructure are major deterrents for many private buyers. These challenges complicate the task of sales executives in promoting the benefits and available financial incentives of BEVs.

Embracing Innovation and Digital Adoption

To combat these obstacles, the automotive retail industry is thinking innovatively, particularly by leveraging after-sales services. Instead of relying solely on traditional sales tactics, dealers are now turning to digital self-service solutions to engage customers. For instance, digital check-in kiosks at service centres can prompt customers to consider switching to an EV, potentially generating leads for the sales team.

In 2023, digital check-in solutions proved their worth, with 95,000 customers requesting vehicle valuations during their interactions. This facilitated discussions about new and used vehicle sales, demonstrating the potential of digital platforms to assist retail teams. Moreover, as the influx of used EVs increases with the conclusion of fleet deals, self-service solutions can play a crucial role in advertising available EVs, helping to ease the transition for private buyers to electric mobility at a more affordable cost.

The maintenance cost of EVs is generally lower than their ICE counterparts, thanks to the reduced complexity of electric engines. Dealers can use digital check-in platforms to highlight these savings to customers, potentially swaying ICE vehicle owners towards electric options. Furthermore, for existing EV owners, dealers can promote additional services and products, such as service plans or charging solutions, to generate more business.

As the automotive retail landscape continues to evolve, embracing technology will be key for dealers looking to capitalise on the electric vehicle boom. By providing sales teams with innovative tools, dealers can not only streamline the purchasing process but also support the UK’s transition to a greener, electric future.

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