An interview with Phil Stubbs
Phil Stubbs has more than 25 years of automotive experience and now runs CDK Global’s African operation, based in Johannesburg. He has given us an overview of the automotive sector and how CDK Global is adapting to changes in the market.
The automotive market is developing rapidly in Africa, presenting new opportunities all the time. South Africa, in particular, is a useful testbed for manufacturers, as it mirrors some consumer trends seen in Europe.
The agency model is already in place with some brands. This is where a customer contracts directly with the manufacturer to supply a new vehicle, leaving vehicle trade-in and aftersales service with the dealer to manage. There are pros and cons to this for the dealer, although if managed well, this model can help to maintain the residual value of used cars. Retailing used cars effectively can boost profit margins and help to build a dealer’s reputation for good customer service.
It is vital that dealers can differentiate themselves with excellent customer service in the aftersales arena. For example, dealers could be negatively impacted by expected legislation on ‘the right to repair’ – giving independents (more than 8,000) the right to service without affecting warranties. In aftersales great customer service is essential, so the dealer should do everything within their power to enhance the customer experience. To achieve this, dealers need to focus on adopting the right tools and processes. This is where CDK Global can support, with well-established tools that are truly industry leading.
To date, Africa has been slow to deploy high speed internet connectivity, but today, we’re seeing the roll out, which will revolutionise the attitudes of people, deliver new ways of working and mitigating the problems of distance and helping to enable long distance sales. Mobile is critical to solving this issue, as many African consumers have leap frogged traditional communications and moved straight to mobile. With 95% of South African’s using their smartphone more than any other device (according to Mastercard’s Innovation Survey 2016), the high level of penetration offers huge opportunities. More importantly, 73% of those surveyed clearly indicated their willingness to make payments using their mobile phone.
The buying habits of the millennial generation are very different to those of Generation X and the baby boomers. This has the potential to transform the way cars are bought in future. For all millennials buying goods has to be easy - 93% cite convenience as their main buying criteria, with search engines (98%), independent review sites (93%) and word of mouth from peers and on social media (88%) the biggest influences on their car buying choice, according to CDK Global’s research.
Millennials are time poor, so don’t want to test drive a number of cars. Instead, they prefer to take two test drives after meticulous research beforehand. They believe the process could be streamlined, with 75% highlighting the need for speed and efficiency. As they become mainstream customers, millennials will expect nothing less than an easy, quick way to purchase on-line, knowing exactly what they want to buy. The video confirmation of appointments, delivery of images of your chosen car and follow-ups will grow engagement and loyalty across the ever shortening sales cycle, which for this generation can last less than two weeks. It’s all heading towards distance retailing and learning how to do this well with technology, is vital.
Africa is a strategic region for CDK Global and we are investing accordingly. We will be moving to new offices and recruiting the best people in the industry – and those that can grow in their roles, to complement the team we have in place. I’d like to see us enter new geographical markets in greater Africa and partner with OEMs and their retailers inside South Africa and beyond.
We are a growing business and you’ll see us be more open with the arrival of application programming interfaces (APIs) allowing some third-party systems to connect into our products. This approach and ethos of openness gives dealers more choice - allowing them to decide if they want a different third party connection. Partnering is going to be increasing in importance in the industry in future.
Finding the right DMS partner is a vital decision for any dealer, as they need to ensure that partner provides the right technology solutions over the lifetime of the relationship. We are working with a number of leading dealer groups across the continent – to begin implementations between now and July 2018.
Today’s automotive industry is an exciting place to be, and at CDK we see ourselves as helping to shape the future. With presence in over 100 countries, we get early sight of trends in consumer, OEM and dealer attitudes and behaviour. In leading the African business, my role is to continue to build a team that takes global expertise, combine it with local knowledge to work with leading African dealers and OEMs to develop business plans to navigate the changes our industry will face today, tomorrow and long into the future.