1. Introduction
Dealer Portfolio Management is the process of managing a portfolio of dealers or distributors for an automotive company. This involves a range of activities, including portfolio mapping, governance, analysis, strategy, execution, risk management, and performance evaluation. The primary objective of Dealer Portfolio Management is to optimize the dealer portfolio in order to achieve the company’s objectives for revenue, profitability, and customer satisfaction.
In the context of an automotive company, a dealer portfolio typically consists of a network of dealers or distributors that are responsible for selling the company’s products to end customers. This network may be spread across different regions or countries, and may include dealers of different sizes and with different specialties.
Managing a dealer portfolio effectively requires a range of skills and strategies. The company must be able to analyze the performance of individual dealers and the portfolio as a whole, develop a clear strategy for managing the portfolio, and execute that strategy effectively. Additionally, the company must be able to manage risk and ensure that the portfolio is well-balanced and aligned with its objectives.
One important aspect of Dealer Portfolio Management is the use of Dealer Standards. These are a set of guidelines or requirements that a dealership must meet in order to maintain its status as an authorized dealer or distributor for the company. By setting clear expectations and requirements for dealers, the company can ensure that its portfolio is made up of high-performing dealers that meet its objectives. The use of Dealer Standards is an important tool for Portfolio Governance, which is another key aspect of Dealer Portfolio Management.
In the following sections of this article, we will explore each of these aspects of Dealer Portfolio Management in more detail, and discuss how automotive companies can use these strategies to optimize their dealer portfolios and achieve their objectives.
2. Industry trends
Recent years have seen significant changes in the motor industry, with new technologies, changing consumer preferences, and evolving regulatory requirements all impacting the landscape. These changes have had significant implications for automotive companies and their dealer networks worldwide.
One of the most significant changes in the motor industry in recent years has been the shift towards electric vehicles (EVs). As countries around the world work to reduce their carbon emissions and combat climate change, many are implementing policies and incentives to promote the adoption of EVs. This has led to a growing demand for EVs, and many automotive companies are investing heavily in the development of new EV models.
However, the shift towards EVs has also had significant implications for automotive companies’ dealer networks. Unlike traditional gasoline-powered vehicles, EVs require specialized knowledge and equipment for servicing and repairs. This has led some automotive companies to invest in specialized training and equipment for their dealers, while others have established dedicated EV service centers to meet the growing demand for EV servicing.
Another trend in the motor industry that has impacted dealer networks is the rise of mobility services. Increasingly, consumers are looking for alternative ways to get around, such as ride-hailing services, car-sharing platforms, and subscription services. This has led some automotive companies to explore new business models, such as providing vehicles directly to mobility service providers, rather than selling them through traditional dealer networks.
At the same time, the COVID-19 pandemic has had a significant impact on the motor industry and its dealer networks worldwide. Many dealers have been forced to close temporarily, while others have seen a significant drop in sales due to reduced consumer demand. This has led many automotive companies to explore new ways to sell and service vehicles, such as through online platforms and contactless service options.
Overall, the motor industry is experiencing significant changes that are impacting dealer networks worldwide. As automotive companies work to adapt to these changes, it is becoming increasingly important for them to have an effective Dealer Portfolio Management strategy in place. By optimizing their dealer portfolios and ensuring that their dealers are equipped to meet the changing demands of consumers and the industry, automotive companies can position themselves for success in a rapidly evolving landscape.
In addition to the trends towards EVs and mobility services, another trend in the motor industry that is impacting dealer networks worldwide is the growing trend towards direct-to-consumer sales. In recent years, many automotive companies have explored ways to bypass traditional dealer networks and sell vehicles directly to consumers through online platforms or company-owned retail stores.
While this trend is still relatively new and limited to a few companies in some regions, it has the potential to significantly disrupt the traditional dealer network model. If more automotive companies adopt a direct-to-consumer sales model, it could reduce the number and importance of dealers in the overall automotive value chain.
This shift towards direct-to-consumer sales could have significant implications for automotive companies and their dealer portfolios. Dealers may face increased competition from the manufacturers themselves, as well as pressure to adapt to changing consumer expectations and preferences. As such, it is becoming increasingly important for dealers to be able to offer a differentiated customer experience, such as through personalized service, convenient location, or specialized expertise.
At the same time, automotive companies will need to carefully consider the implications of a shift towards direct-to-consumer sales on their overall portfolio strategy. While direct sales can offer certain benefits, such as greater control over the customer experience and more direct access to customer data, they can also be more costly and complex to manage than traditional dealer networks. As such, automotive companies will need to weigh the potential benefits and drawbacks of direct sales and determine the best approach for their individual business models and market conditions.
Overall, the growing trend towards direct-to-consumer sales is yet another development that is impacting the motor industry and its dealer networks worldwide. As the industry continues to evolve and adapt, it will be important for automotive companies and dealers to stay informed and be prepared to navigate these changes.
3. Portfolio Mapping
To manage a dealer portfolio effectively, an automotive company must first map the portfolio. This involves identifying the key characteristics of each dealer, including those that are part of the current portfolio, as well as those that are potential new dealerships or in the process of being established. It may also include dealerships that are owned by the OEM in a particular country or region.
The mapping process typically includes gathering information on the location, size, product mix, and specialty of each dealer. This can help the company to identify which dealers are best suited to meet the needs of its target customers and which dealers may be underperforming or in need of additional support. Other factors that may be included in the mapping process include the dealer’s sales performance, customer service quality, facilities, compliance, and training.
In addition to gathering information on individual dealers, the mapping process may also include an analysis of the overall structure of the dealer network. This can help the company to identify potential opportunities for consolidation, optimization, or expansion, and to develop a well-balanced and effective portfolio strategy.
There are several key elements that should be included in a dealer portfolio map. These may include the dealer’s location, which can help the company to understand the local market and identify opportunities for growth or expansion. Other important elements may include the dealer’s product mix and specialty, which can help the company to match the dealer to the needs of specific customer segments. The mapping process may also include information on whether the dealer is part of an auto row, which can impact the level of competition and customer traffic in the area.
It is also important to include key indicators related to each dealer in the mapping process. This may include sales performance, customer satisfaction, facilities quality, and compliance with Dealer Standards. By tracking these key indicators, the company can identify which dealers are performing well and which may be in need of additional support or improvement.
Overall, the mapping process is a critical component of Dealer Portfolio Management. By gathering detailed information on each dealer and analyzing the overall structure of the dealer network, automotive companies can develop a well-balanced and effective portfolio strategy that maximizes revenue, profitability, and customer satisfaction.
One key aspect of Dealer Portfolio Management is the process of selecting new dealers to add to the portfolio. This is typically done to address gaps in the company’s market coverage or to improve overall performance in a particular region or market.
The selection process typically involves a thorough evaluation of potential new dealers, including their financial strength, experience, and alignment with the company’s values and objectives. In many cases, the company will invite new investors to bid for the opportunity to become a dealer in a particular area. This can help to ensure that the company is selecting dealers who are committed to the business and have the necessary resources and expertise to succeed.
To facilitate the dealer selection process, the company may include specific areas of interest in the dealer portfolio map. This may include regions or markets where the company is currently underrepresented or where it has identified potential opportunities for growth. By having this information upfront, the company can develop a targeted approach to selecting new dealers that is aligned with its overall portfolio strategy.
When evaluating potential new dealers, the company may consider a range of factors, including the dealer’s financial stability, track record of success, and overall fit with the company’s brand and values. It may also consider the dealer’s ability to meet specific performance targets, such as sales volume or customer satisfaction ratings.
The business case is an important element to include in the dealer selection process. By analyzing the potential benefits and risks of adding a particular dealer to the portfolio, the company can ensure that it is making a sound investment decision. This may involve conducting a market analysis, evaluating potential competitors, and developing a detailed financial projection for the new dealership.
Overall, the process of selecting new dealers is an important aspect of Dealer Portfolio Management. By identifying specific areas of interest and establishing a clear set of selection criteria, automotive companies can ensure that they are selecting dealers who are well-suited to meet their objectives and contribute to the overall success of the portfolio.
4. Portfolio Governance
Effective governance is a critical component of Dealer Portfolio Management. While dealerships may have a degree of autonomy in their day-to-day operations, there are certain standards and expectations that they must meet in order to be part of the automotive company’s dealer network. It is important for these standards and expectations to be clearly defined and communicated upfront, to ensure that there is consensus between the dealership owners and management and the automotive company.
Within the automotive company, there is typically a committee or steering group that is responsible for overseeing the dealer portfolio. This committee is often chaired by the CEO or head of sales, and is responsible for determining the allocation of new dealerships, the closing of underperforming dealerships, and the change of dealer standards. The committee is also responsible for monitoring the overall performance of the portfolio and ensuring that it is well-aligned with the company’s objectives.
To support the work of the steering committee, many automotive companies have a dedicated dealer development department. This department is responsible for administering the portfolio, preparing recommendations for the steering committee, and overseeing the effective execution of the portfolio strategy. This may include developing training programs for dealers, monitoring compliance with Dealer Standards, and identifying potential opportunities for portfolio optimization or expansion.
One key aspect of portfolio governance is the use of Dealer Standards. These are a set of guidelines or requirements that a dealership must meet in order to maintain its status as an authorized dealer or distributor for the company. Dealer Standards typically cover a range of areas, including sales performance, customer service quality, facilities, compliance, and training. By setting clear expectations and requirements for dealers, the company can ensure that its portfolio is made up of high-performing dealers that meet its objectives.
Another important aspect of portfolio governance is the ongoing monitoring and evaluation of dealer performance. This can involve regular reviews of dealer sales and service metrics, as well as audits of compliance with Dealer Standards. By monitoring dealer performance, the automotive company can identify potential issues or areas for improvement and take action to address them proactively.
Within an automotive company, there are often multiple departments that have different areas of responsibility and expertise. These departments may include sales, service, marketing, finance, and others. While each department may have its own set of goals and objectives, it is important for them to work together collaboratively to form a holistic view of the dealer portfolio and ensure that decisions are well-informed and aligned with the overall business strategy.
To address this challenge, many automotive companies have established cross-functional teams or steering committees that include representatives from each relevant department. This helps to ensure that all perspectives are taken into account when making portfolio decisions, and that the company has a holistic view of each dealer and its overall portfolio.
In addition, it is important for the company to have clear and consistent communication channels between departments, to ensure that everyone is working towards the same objectives and that critical information is shared in a timely and effective manner. This may involve regular meetings, status updates, or other forms of communication that keep stakeholders informed and engaged.
Overall, effective communication and collaboration between departments is critical to ensuring that the automotive company has a holistic and well-informed view of its dealer portfolio. By working together collaboratively and leveraging each other’s expertise and perspectives, the company can make better decisions and ensure that its portfolio is well-aligned with its overall business strategy.
Overall, effective portfolio governance is critical to the success of Dealer Portfolio Management. By establishing clear standards and expectations, developing a strong governance structure, and monitoring and evaluating dealer performance, automotive companies can ensure that their dealer portfolios are well-aligned with their objectives and are positioned for long-term success
5. Portfolio Evaluation
Effective evaluation is a critical component of Dealer Portfolio Management. By regularly reviewing and analysing the portfolio, automotive companies can identify emerging trends and patterns, evaluate the performance of individual dealers, and make data-driven decisions about the future direction of the portfolio.
One useful tool for portfolio evaluation is the use of heatmaps. Heatmaps allow the company to visualise key data points and identify patterns and trends that may not be immediately apparent. For example, a heatmap may show the relative performance of each dealer in the portfolio, or may highlight areas where the company is over or underrepresented in a particular region or market.
To create effective heatmaps, it is important to include a range of relevant data points. In addition to the criteria outlined earlier, such as sales performance, customer experience, facilities quality, compliance with dealer standards, and financial stability, other data points that may be included in the heatmaps could be:
- Location: This involves assessing the dealer’s location, including whether it is part of an auto row or other high-traffic area. This may involve analysing factors such as foot traffic, visibility, and accessibility.
- Management Strength: This involves assessing the quality of the dealer’s management team, including factors such as leadership skills, experience, and ability to execute on the company’s strategy.
- Digital Capabilities: This involves assessing the dealer’s digital capabilities, including their ability to use technology to support sales, marketing, and service efforts. This may involve analysing factors such as website quality, online lead generation, and social media presence.
- Strategy Execution: This involves assessing the dealer’s ability to effectively execute on the company’s overall strategy. This may involve analysing factors such as the alignment of the dealer’s goals with the company’s objectives, and the effectiveness of their implementation efforts.
By using a combination of these criteria and regularly evaluating individual dealers, automotive companies can identify areas for improvement and make informed decisions about the allocation of resources and overall portfolio strategy. Heatmaps can be an effective tool for visualising this data and identifying patterns and trends that may not be immediately apparent.
6. Portfolio Strategy
Effective strategy is a critical component of Dealer Portfolio Management. By developing a clear and well-aligned strategy, automotive companies can optimise the performance of individual dealers and the portfolio as a whole.
At the dealer level, it is important for the automotive company to work collaboratively with each dealer to develop a strategy that is well-aligned with the company’s overall business objectives. One useful tool for developing this strategy is the use of an OKR map. OKRs (Objectives and Key Results) are a framework for setting and measuring goals, and can be a useful tool for aligning individual dealer goals with the company’s overall strategy. By setting clear objectives and identifying key results, the company can help each dealer to optimise their performance and contribute to the success of the portfolio as a whole.
At the portfolio level, the company must develop a strategy for optimising the performance of the portfolio as a whole. This may involve defining an OKR map for the entire portfolio, and making choices about where to play and how to win in the portfolio.
It is important for the automotive company to develop capabilities that will strengthen the dealer network as a whole. This may involve making investments in areas such as logistics, branding, inventory management, and other key areas that can help to improve the performance of the entire network.
For example, one important capability for optimising the dealer network is the development of a shared parts distribution centre. By consolidating parts distribution in a central location, the company can improve efficiency and reduce costs for all dealers in the network.
Another key capability is optimising stock carrying across the network. This may involve decentralising the company’s stock to dealers, or implementing inventory management systems that help to optimise the placement of stock across the network.
Strengthening the brand in the country is also a critical capability for optimising the dealer network. This may involve investing in marketing and branding efforts that help to build brand awareness and equity, and that communicate the unique value proposition of the company’s products and services.
In addition, developing a central second-hand car inventory can be another key capability for strengthening the dealer network. By providing a centralised inventory of high-quality used cars, the company can help to improve the performance of dealers in the network and increase customer satisfaction.
By developing these and other key capabilities, automotive companies can strengthen the dealer network as a whole and optimise the performance of the portfolio. This can help to drive long-term success and ensure that the company is well-positioned for continued growth and profitability.
7. Portfolio Execution
Effective execution is a critical component of Dealer Portfolio Management. By implementing the right initiatives and tracking outcomes, automotive companies can optimise the performance of individual dealers and the portfolio as a whole.
To manage change effectively, it is important for the company to set clear outcome-based goals and track progress regularly. This may involve setting both quarterly outcome-based goals and defining a pipeline of initiatives to achieve those goals.
Quarterly goals are outcome-driven and focused on achieving specific outcomes over a defined period of time. This approach is useful for tracking progress towards long-term strategic objectives and ensuring that initiatives are having the desired impact on revenue and market share in defined areas.
Tracking initiatives, on the other hand, is more action-driven and focused on ensuring that the right initiatives are being implemented effectively and that they are having the desired impact on individual dealers and the portfolio as a whole.
By setting clear goals and tracking progress regularly, the company can ensure that initiatives are implemented effectively and that they are having the desired impact on revenue and market share in defined areas. This can help to drive long-term success and ensure that the company is well-positioned for continued growth and profitability.
In addition to tracking progress against goals, it is also important for the company to maintain open lines of communication with individual dealers and other stakeholders. This may involve regular meetings and check-ins, as well as ongoing training and support to help dealers adapt to new policies and procedures.
Overall, effective portfolio execution is critical to the success of Dealer Portfolio Management. By setting clear goals, tracking progress, maintaining open lines of communication with dealers and other stakeholders, and implementing the right initiatives, the company can optimise the performance of individual dealers and the portfolio as a whole, and position itself for long-term success
8. Portfolio Risk
Portfolio risk management is an important aspect of Dealer Portfolio Management. By identifying potential risks and taking steps to mitigate those risks, automotive companies can optimise the performance of the portfolio and position themselves for long-term success.
There are many potential risks that can impact the performance of the dealer portfolio. These may include changes in the economic climate, the emergence of new competitors in key markets, changes in consumer preferences, and other external factors.
In addition to these external risks, there are also internal risks to consider, such as the financial viability of individual dealerships, changes in management or ownership, and other factors that can impact the performance of individual dealers.
To manage these risks effectively, it is important for the company to have a comprehensive risk management strategy in place. This may involve identifying potential risks and developing contingency plans to mitigate those risks, as well as taking steps to make the portfolio more resilient overall.
One key element of portfolio risk management is building resilience into the portfolio. This may involve investing in key capabilities, such as logistics, inventory management, and branding, that can help to improve the overall resilience of the portfolio.
In addition, it is important for the company to be adaptable and able to respond quickly to disruption and change. This is particularly critical in light of some of the key trends shaping the automotive industry, such as the rise of electric and autonomous vehicles, shifting consumer preferences and mobility needs, and increasing competition from non-traditional players.
By building resilience and adaptability into the portfolio, the company can position itself for long-term success and optimise the performance of individual dealers and the portfolio as a whole, even in the face of these industry trends.
Effective portfolio risk management is critical to the success of Dealer Portfolio Management. By identifying potential risks, building resilience and adaptability into the portfolio, and taking action to mitigate those risks, the company can optimise the performance of the portfolio and position itself for long-term success, even in the face of changing industry trends and other external factors.
9. Portfolio Performance
Effective portfolio performance is critical to the success of Dealer Portfolio Management. By using real-time data, analytics, and other tools, automotive companies can monitor performance at the dealer and portfolio level and make data-driven decisions to optimise performance.
At the dealer level, it is important to monitor key performance indicators, such as revenue, market share, customer satisfaction, and service quality, to ensure that individual dealers are performing effectively. By monitoring these key indicators, the company can identify areas for improvement and develop strategies to optimise performance over time.
At the portfolio level, it is important to monitor overall performance and track progress towards long-term strategic objectives. This may involve using analytics and other tools to monitor development over time, and to identify emerging trends and patterns that can help to inform portfolio strategy.
In addition to monitoring performance at the dealer and portfolio level, it is also important to monitor for effective strategy execution in the portfolio. This may involve tracking progress towards key strategic objectives, such as improving dealer coverage, balancing the portfolio, or improving the overall resilience of the portfolio.
By using real-time data and analytics to monitor performance at the dealer and portfolio level, the company can make data-driven decisions to optimise performance and position itself for long-term success. This may involve making changes to the portfolio over time, such as adding or removing dealerships, and implementing new strategies to improve overall portfolio performance.
Effective portfolio performance management is critical to the success of Dealer Portfolio Management. By monitoring performance, tracking progress towards strategic objectives, and making data-driven decisions, the company can optimise the performance of individual dealers and the portfolio as a whole, and position itself for long-term success
10. Conclusion
In conclusion, Dealer Portfolio Management is a critical aspect of the automotive industry, and involves a range of activities, including portfolio mapping, governance, analysis, strategy, execution, risk management, and performance monitoring.
Effective Dealer Portfolio Management requires a comprehensive approach that takes into account a range of internal and external factors, including market conditions, consumer preferences, and emerging trends in the industry. By building resilience and adaptability into the portfolio, and by monitoring performance at the dealer and portfolio level, automotive companies can optimise the performance of the portfolio and position themselves for long-term success.
It is important to note that managing a dealer portfolio in isolation is not optimal, and that it is critical to consider the broader market, customer, and product landscapes when making decisions about the portfolio. By taking a holistic approach to portfolio management, and by working collaboratively with stakeholders across the organisation, automotive companies can optimise the performance of their dealer portfolio and position themselves for long-term success in a rapidly changing industry.
Overall, effective Dealer Portfolio Management is essential for the success of automotive companies, and requires ongoing attention, strategic vision, and a commitment to collaboration and adaptability. By taking a comprehensive approach to portfolio management, automotive companies can position themselves for long-term success in a dynamic and evolving industry.