Miletić: Dealers of new and used cars will experience ‘Darwinian’ evolution

Although it may seem that the global economic situation is stabilizing, that inflation is easing, the business world still feels the ‘tails’ of the recent peak of the crisis in its operations, and the war in Ukraine continues.

We are in full swing preparing for the largest Lider conference, Day of Great Plans, which is being held for the 15th consecutive year, and this year it will take place on September 27 at the Westin Hotel in Zagreb.

This year, we expect leaders from various industries in Croatia, representatives of the public sector and state institutions on stage, from whom we will learn firsthand what awaits the entrepreneurial scene and the Croatian economy as a whole in 2024, how all economic stakeholders are facing existing challenges and preparing for upcoming ones, and what their forecasts and predictions for the next year are.

One of them is Tomislav Miletić, director of P Automobil Import and C Automobil Import, which operate within the Emil Frey Group. Miletić believes that the challenges facing the automotive industry are not just upcoming; they are already here.

What do you consider to be the key challenges for the automotive industry in the upcoming period and how will they reflect on your business?

– On one hand, they are of a technological nature when we talk about the production of electric cars, as the increasing demand for this category of vehicles puts pressure on manufacturers to develop new technologies and improve their products. This requires significant investments in research and development, as well as the construction of infrastructure for charging electric vehicles, which ultimately results in higher prices for finished products that importers and distributors place on the market. At the same time, automation and autonomous vehicles are changing the way cars are used and affecting business models. There are also technology companies like Tesla, Google, and Apple that are increasingly entering the automotive industry, bringing new innovative products and services. Adding to this is the growing presence of Chinese car manufacturers, all of which creates greater competition for traditional car manufacturers and poses challenges in terms of maintaining market share and attracting consumers.

What is currently the focus of consumers when choosing a car?

– At the same time, some consumers are increasingly seeking environmentally friendly options, broader availability of connected technology, and new mobility services such as ‘self-service’ cars or ride-sharing services. However, another segment of consumers is skeptical about the technological transition, especially the shift to electric vehicles, particularly if prices and usability (primarily referring to practicality) remain limiting factors.

It is undeniable that manufacturers and distributors will have to adapt to these changes in demand and develop products and services that meet the new needs of consumers, which will further be defined through increasingly stringent legislation and regulations regarding emissions, safety, and consumer protection. Both manufacturers and the distribution sector will have to adapt to new trends and change their business models to remain competitive in the market. If they do not, new players will emerge in the market that will push them out if they do not adequately respond to the challenges that come with these changes.

In which segments and during what period do you expect the greatest growth and decline in sales, and what will this depend on the most?

– First of all, there is the Internet, where an increasing number of consumers will seek not so much the possibility of purchasing a car, but the ability to compare prices and features. This segment can experience significant growth, especially if secure and transparent online car purchasing services are provided and if the distribution sector adequately adapts to new demands. Then, there are ride-sharing services, such as self-service cars, ride-sharing services, and on-demand transportation services (e.g., Uber) that are seeing a rise in popularity. With the increasing demand for electric vehicles, the distribution segment for electric cars may experience significant growth. A greater selection of electric vehicles, the expansion of charging infrastructure, and the removal of barriers such as price and range of vehicles can influence sales growth in this segment. Traditional dealers or distributors selling new and used cars will experience ‘Darwinian’ evolution as their sales growth or decline will depend on their ability to provide quality service, adapt to new trends, and successfully manage their business.

The growth or decline in sales will depend on various factors, primarily the economic environment (GDP growth, interest rates, and employment levels, etc.), then technological advancements (electrification, automation, and vehicle connectivity) that can provide new driving experiences and affect sales in certain segments. Regulatory measures, such as subsidies for electric vehicles or additional taxes on harmful vehicle emissions, should also be considered, as they can influence demand and sales in certain segments. Changes in consumer preferences towards electric vehicles, autonomous driving, ride-sharing services, or online purchasing can also have an impact.

Do you expect stabilization of procurement prices and supply chains and the impact of falling inflation rates on your business in the coming year?

– The stabilization of procurement prices and supply chains depends on many factors, including global economic circumstances, political (in)stability, natural disasters, and regional market conditions. It is difficult to accurately predict when stabilization will occur, as these factors are very dynamic and variable. Regarding inflation and its impact on business next year, it is also challenging to provide precise forecasts as it depends on many factors, including monetary policy, demand and supply, input costs, and external factors such as energy prices and trade policies.

However, we can cautiously announce the stabilization of procurement and consequently sales prices, primarily under the influence of competition, as best illustrated by the example of Tesla, which has recently reduced prices on some of its models, thereby forcing the rest of the competition to ‘wake up.’ The brake on inflation, as well as faster growth, will likely continue to be the rise in interest rates, which increases financing costs and makes it more difficult for companies to access credit for financing purchases. All of this can negatively affect consumer demand, resulting in reduced sales and revenues for many companies, including car sales.

What are the plans of the companies you manage and the Emil Frey Group that will mark the next year?

– New, technologically advanced models from the brands Peugeot, Citroën, and DS Automobiles that will enter our market next year will certainly mark the upcoming year, as well as the years to come. The stabilization of supply chains should enable timely and market-acceptable positioning of new as well as existing models. Investments in digitalization in the past period are showing increasing results, and the synergistic effects of developing the distributor network will enable better service quality for end customers. As for the Emil Frey Group, next year we will celebrate the 100th anniversary of the founding of this Swiss family company, which has actively positioned itself not only in Western European markets but also in Central European markets in the past period.

Do not miss the opportunity to network with the most successful entrepreneurs; register in time to participate in the 15th Day of Great Plans, which will be held on September 27 in the crystal hall of the Westin Hotel Zagreb. More information can be found at the link.