Investors in the automotive retail sector next decade will be attracted to companies spending on technology, differentiation and new business models.
Progressive retailers, start-ups and ‘disrupters’ will be well placed to secure growth funds as the industry continues to change, according to Mike Allen, head of research at investment banking consultancy Zeus Capital, who will speak at the Automotive Retail Congress on May 21.
Allen will inform delegates gathering at Coventry’s Ricoh Arena about the investment sector and how dealer groups can continue to make themselves attractive to shareholders.
Zeus Capital expects the sector to host more start-ups, he said, particularly around ‘AutoTech’.
“While the industry is cyclical, structural change is coming and investment in new technology, infrastructure and new business models to engage with consumers, suppliers and other parties will be required.”
One key message from Allen at the Automotive Retail Congress will be that whilst change is afoot, the days of the dealer are far from numbered but a reduced franchised network is inevitable and groups will focus investment in even more digital assets and resources. That may favour larger companies with the most resources.
“Retailers have already invested significant sums in real estate to create the large brand centres required by OEMs. We would not be surprised to see retailers look more at their digital assets and capabilities and possibly invest more here to create a more enriched omnichannel or ‘bricks with clicks’ experience for consumers.
To make shareholders happy they will need to be differentiated, have scale in a controlled and profitable way showing strong capital discipline,” said Allen, who is also a board advisor to Carwow and Auto Service Finance.
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