How location strategy brings competitive advantage to the automotive sector
Written by Ángela ·
The automotive sector is undergoing a period of significant change; while sales in the United Kingdom and the United States are down, those of China followed closely by India draw global disbelief.
Thus, in 2016, the number of motor vehicles sold in the world exceeded 88 million, an increase of 4.8% compared to 2015, and should even reach the 100 million mark by 2019.
In this context, the automotive market is of paramount importance for national economies; for example, the automotive sector in France represents the second largest manufacturing industry after the food sector.
However, the solid growth in 2016 and the total revenues raised to more than 101.5 billion Euros should not make us forget the challenges facing the sector.
Indeed, the automotive industry is today facing many challenges, with the first new constraints and ecological objectives. Legislation is increasingly taking into account the need for a sustainable industry with reduced environmental impact, in particular by controlling CO2 emissions.
The technological revolution is not left out either; with demand for connectivity and growing consumer services, embracing digital transformation for this century-old industry is becoming a necessity for both competitiveness and survival.
In this uncertain context, players have less and less of a right to make mistakes and must rely on new tools to gain a competitive advantage and defend their market shares. These tools include those that to help implement effective location strategies
Why is location important for the automotive sector?
Location is a vital component for every player in the sector. Not only for dealers selling vehicles, but also for other services such as enema stations, garages and car parks. In addition, at a higher level, location decisions and strategies become essential for logistics, warehousing and distribution center issues.
What are the sector’s strategic needs with regard to location?
If for the broad issues previously mentioned, such as logistics or the management of distribution centers, a macroeconomic vision of the territory is preferable; for the rest of the industry, the need for contact with the customer requires more analysis on the smaller scale.
In the context of exacerbated competition, achieving its target effectively becomes paramount. Outside, for car sales, such as car stations or car parks, it is proximity that will play the decisive factor for the customer. Nobody or almost no one will travel a hundred miles to a dealership or to have their vehicle cleaned. Also, it seems crucial to choose a location close to its target customers.
However, the automotive sector knows a multitude of products, features and price ranges as varied in terms of offers as competitors. So how do you determine which locations to select for a dealer, and which models to sell?
How to ensure a location closer to its target customers?
First of all, it is necessary to determine its target based, on the one hand, on its brand and its values, which will allow an initial segmentation on a medium order scale, and then to carry out a second study by type of model, range and vehicle functionality to provide an economic and sociodemographic profile of each potential customer.
This analysis will be expressed in the form of criteria, in particular relating to the disposable income per household, but also to the composition of the latter.
In addition, there are consumer considerations, as the location itself must in absolute terms have the characteristics to ensure the success of the business: it must be in an area with high pedestrian traffic, with a high concentration of cars,etc.
However, once all the search criteria have been drawn up, it is still necessary to select the area grouping them. Nothing is easier thanks to Location Intelligence.
In what way can Location Intelligence find the ideal location?
Intelligence rental tools, such as the one offered by Geoblink, offer an analysis of a major performance and an instantaneous speed.
Based on the analysis of big data originating from partnerships such as public or paid sources, the solution aggregates this information to work and makes it intuitively viewable in the form of a map.
In practical terms, rental intelligence makes it possible to directly enter the criteria relating to a business’s target customers (age, income composition of the home, etc.) and its ideal location (pedestrian traffic, type of car, brand, road use, etc) in the application. From now on and instantly, the software will directly select the areas grouping all of its criteria but will also provide the opportunity to compare them to find the best possible locations.
Smart location allows you to find the best locations in one click and implement a new location strategy to ensure a sustainable competitive advantage that is critical to the success of your business.
If you want to learn more about how Location Intelligence can help you implement your strategy, do not hesitate to request a demo.