DIRECT-TO-COMSUMER MODEL IN THE AUTOMOTIVE INDUSTRY The impact of transition to a direct-to consumer business model by an incumbent manufacturer on its retailers: a case study of Volvo Cars

Abstract

Digitalisation has enabled and shown the opportunity to car manufacturers. They are transforming themselves and a by-product of change is the transformation of their business model. Digital technologies have enabled manufacturers to connect directly with consumers. As a result, they can direct transact to buy a car from the manufacturer thereby bypassing the retailers. Several manufacturers have started taking steps towards the direct-to-consumer model. The study aims to analyse the impact of the transition to direct-to-consumer sales from the traditional dealership retail model by an incumbent car manufacturer. The study uses a case study design where retailers from the UK market were interviewed. The findings suggest that retailers find it hard to see the commercial viability of this model for themselves. They fear losing revenue and control over their entrepreneurial abilities. They also face various dilemmas during the process such as whether should they wait and watch and only reach the situation or should they proactively grab the opportunities in the agency model. They also see a tension between over and under-communication. However, they also observe opportunities in terms of saving in inventory costs, opportunities for samrt repairs and being a one-stop shop, such that the future of the retailer site will be that of an experience centre.