Up to half of all car dealerships could disappear in the UK and European vehicle manufacturing could fall to as low as 5%, if automotive executives’ predictions come true, according to KPMG’s Global Automotive Executive Survey 2018.

Up to half of dealerships could disappear if predictions by automotive executives come true

75% of UK automotive executives felt that between 20-50% of car retailers may no longer exist by 2025, while 61% of respondents believed issues around vehicle financing may become a concern due to lower residual values. With millions of consumers taking advantage of financing options, such as contract hire and personal contract plans (PCP), the end is nigh for traditional dealerships, the respondents felt, and the way for them to survive would be to adapt to new retail concepts and business models.

In addition, the report found 63% of respondents believed vehicle manufacturing in Western Europe will reduce significantly, to less than 5% by 2030.

“Whilst it sounds dire, the truth is that sustainable growth can only be generated in Asia, based on current market forecasts, and this is reflected by the opinions of UK automotive executives, and Western Europe is home to numerous premium brands.

“So European carmakers need to make use of the technologies offered by Industry 4.0, the Internet of things; and data analytics to take advantage of opportunities to manage costs and continue to be globally competitive,” said Justin Benson, UK head of automotive at KPMG.

The report was conducted on 907 respondents occupying a leading position of CEO, president, chairman or C-level executive and includes upstream players (product-driven), automakers and suppliers, and downstream players (service-driven), including dealers, financial services providers, rental companies, mobility services providers as well as information and communication technology (ICT) companies.