Advertisement Feature: Finding the answers for dealers

Louis Rudd, Head of Motor Trade at insurer AXA, explores the challenges facing motor traders today, and explains how insurers can help provide some of the answers.

Q. How does an insurer view the dealership sector at the moment?

There is a huge amount of change taking place across the sector – zero emission targets, regulatory change, changes to buying behaviour, brands pushing for greater control, consolidation and supply chain difficulties – that is a huge amount of change for anyone to manage.

But dealers are adapting and they’re getting more engaged in risk than perhaps they were before the pandemic. I think that experience made everyone wake up to risk and dealerships are certainly much more concerned about being able to keep their business running and they’re looking for partners who can help them do that.

There is a lot of change, and it will continue to be disruptive for the sector, but we’ve been working in motor trade for over 40 years – dealers will be here in another 40, just in a different form.

Q. What do you see as the main issues affecting dealerships in the next 5-10 years?

The most pressing concerns for most dealerships are changes to the franchise model, supply of new and used vehicles, and supply chains in general.

Manufacturers are looking for more control over the distribution process and there are moves by some to replace franchises with agencies. Dealers are going to have to make some tough decisions – do they accept an agency model, push for a hybrid approach or cut ties and move fully into the used vehicles market?

But that’s not the only issue. Something like 40 million new vehicles weren’t built during the pandemic, and while that gave the used vehicles market a boost, after the world opened up again, that lack of new vehicles is going to bite in the used vehicles market eventually.

Which ties in with the broader supply chain issues – they’ve eased recently, but we work with many of the same supply chains and we know first-hand how challenging it is. I’d love to see if we can work with clients to ease that supply chain pressure for each other, as we can do much more for dealers than purely providing insurance policies.

Q. What kind of issues are your clients coming to you with today? What are their main challenges around insurance?

As I said, they are much more switched on to risk and that’s music to our ears because the more engaged they are, the more we can tailor their insurance. They’re concerned about theft, vandalism, and flood damage, and of course our policies are designed to compensate and clean up when these things happen.

But we’re also really interested in doing more risk management and so are dealers. They’re sophisticated insurance buyers and increasingly concerned about their ability to operate rather than simply focusing on potential compensation.

Risk management is a virtuous circle, because reduced levels of claims can support reduced premiums, so we’re both focused on the same thing – reducing their operating risks.

Q. And what do you think the future challenges will be?

I think electric vehicles (EV) and the move to zero emissions will have a bigger impact on dealerships than anything else. They are complex vehicles that require the management of complex supply chains, and dealers need to train auto-electricians as well as mechanics to repair them.

There is huge demand for these skills, it takes time to train them, and the used vehicles market is tricky at the moment as there are no standardised tests for battery life in these vehicles.

There are so many moving parts to manage but there isn’t really a choice for dealers – if they want to be major players in the future, they have to get into EVs. All that really matters is how they do that.

Q. Is there anything that AXA and other insurers can do to support dealers through all this change?

Our primary role is to protect and compensate with insurance, but as a global insurer that has been operating in this market for more than 40 years, we can bring extra support to dealers, particularly on the EV transition.

We’re doing a lot of work with the Government to lobby for battery health certification to help stimulate the used electric vehicles market. We’re also trying to urge the Government to reconsider the tax discount for investing in net zero plant and machinery, we’re suggesting this is extended to include people investment and training.

If we can do that, we can help breathe some life into the used EV market. And it’s early days, but we’re also looking at how we can help dealers train more mechanics on electric vehicles more quickly.

Q. Is there anything that dealers can do to secure better terms and rates from insurers, anything to keep the cost of insurance down?

Insurers operate on confidence. If they’re confident in a risk, this can enable them to offer preferential terms, if they have doubts or can’t obtain enough information, those terms are likely to be more expensive or restrictive.

Taking operational risk seriously and engaging in risk management with your insurer or broker is one of the key ways to keep premiums down. The more we know about a company and how it operates, the more we can understand the risks they are running. That’s where the confidence comes from.

Talk to your broker about AXA, be transparent about what’s going on with your business and we’ll support you in managing your risks. We’re not afraid of risk and there is nothing we haven’t seen already, so talk to us because we can help.

 

Q. What can dealers expect from AXA in the coming 12-18 months?

We’ll continue lobbying hard on the battery health certification and we have a whitepaper arguing the case for certificates coming out shortly.

We have a strong relationship with a company called Pod Point – they install EV chargers – and we’re working with them to offer discounts for dealers that partner with AXA.

For AXA, it’s all about partnership delivered through our expertise, from quote to claim.

Just ask your broker about AXA, they’ll know all about how we can help your business thrive today, and tomorrow.

Click here to check out the video of interview with Louis Rudd