Driving Change: The Inevitable Revolution in Automotive Distribution
An article by Jacques Chauvet and Damien Ferraro, TNP Consultants, published in the white paper “The Mobility Revolution”.
The European automotive sector is undergoing a multifaceted crisis. New vehicle sales are stagnating, while regulatory constraints stemming from the Green Deal and the rethinking of urban mobility are challenging traditional usage models. On top of that, the shift to electric vehicles, the growing strength of Chinese competition, changing consumer expectations, and aggressive pricing strategies have made cars significantly more expensive. At the start of 2025, the European market remains 20% below its historical peaks, while production capacity has only contracted by 5%. In this context, automotive distribution must adapt—and quickly. But what will it look like ten years from now?
The Consolidation of Dealership Networks: Towards Multi-Brand, Pan-European Groups
Consolidation is accelerating. Strong regional groups—often multi-brand—are taking the lead, many of them now distributing Chinese brands, either imported or manufactured in Europe. At the same time, manufacturer-owned branches are being phased out, retained only in major metropolitan areas. These groups, some of which operate across borders, are opening their capital to support growth and, for the most prominent players, listing on stock markets—much like what we already see in the UK and the US.
Dealership layouts will evolve too. Traditional brand-specific corners could give way to shared spaces, where competing brands coexist under one roof. We might even see the emergence of commercial malls where vehicles are presented through digital interfaces, adjacent to test-drive centers featuring various makes and models.
Evolving Business Portfolios
The share of new vehicle sales will gradually shrink in both revenue and profit, in favor of used car sales and value-added services. After-sales will remain a key revenue stream—at least for a while—as the electrification of the fleet progresses slowly. In 2025, two-thirds of vehicles on the road will still be combustion-powered.
New car sales will decline not only because automakers want to retain control over the customer relationship and data, but also because market contraction appears structural. The real battleground will be used vehicles, where manufacturers and dealers will compete fiercely—particularly for recent lease returns and even more so for older vehicles, typically over nine years old. This C2C-dominated market is now on the verge of transformation.
Tracking both customer and vehicle will become essential. That means offering financing that is quick, easy, and competitively priced. But residual value risk looms large: to keep monthly payments low, residual values are often set too high. This is particularly risky in the still-volatile secondhand EV market. Dealers may struggle to absorb this risk.
Vehicle reconditioning, often costly and low-margin, will pivot towards mechanical reliability over cosmetic perfection, conducted in dedicated facilities or outsourced to optimize logistics and costs.
Meanwhile, mobility services—such as flexible leasing, subscription models, digital showrooms, home test-drives, remote assistance, and bundled offerings like technical inspections—will become core business components.
Digitalization and Data: Strategic Levers for Distributors
Digital transformation and data exploitation will be crucial. While dealerships will still play a role in the customer journey, most of the process will move online – including financing. Automation will shape the customer experience, and proprietary IT systems will become essential assets for personalized marketing, dynamic pricing, predictive maintenance, and immersive virtual showrooms.
These data sets will include both vehicle and customer insights, collected independently or in partnership with the many startups now specializing in automotive tech.
A Renewed Customer Experience
The traditional price negotiation model is becoming obsolete. Going forward, three key factors will shape the customer’s decision-making process. First, brand loyalty is shifting: customers will prioritize the quality of the dealership experience over the prestige of the vehicle brand itself. The trust and service associated with a dealer will matter more than the logo on the hood.
Second, the rising cost of vehicles will heighten customer expectations. Automotive retail must take inspiration from the luxury sector. When a purchase can cost ten to fifty times more than a handbag or a watch, customers will expect a premium experience – personalized advice, fast service, intuitive digital interfaces, and seamless onboarding.
We’ll likely see a market split: high-end vehicles delivered with luxury service, and more affordable models paired with a standardized experience. But regardless of price point, every buyer will expect satisfaction proportional to their investment – and that expectation will define their loyalty.
Lastly, dealerships will need to embrace sustainability. Whether driven by regulation or consumer values, environ mental responsibility will become a key selection criterion for customers. A dealership’s carbon footprint may soon weigh just as heavily as its location or reputation.
Delivering on these new expectations will require serious in vestment in staff training. In a sector facing high turnover and ongoing labor shortages, sales and service teams must develop advanced knowledge of EV technologies, software interfaces, autonomous driving aids, and luxury-level customer service.
The automotive distribution sector has long been traditional, slow-moving, and conservative. But now, it faces a dramatic transformation. Fortunately, it has two key advantages. First, dealers are closely tied to automakers – who are themselves navigating these same disruptions. And second, mobility still relies on vehicles. Customers aren’t disappearing – they’re
simply becoming more selective and demanding. And they’ll choose the dealer who delivers the most seamless, trusted, and rewarding experience.
