Virgin Cars

Revolutionizing the European car market, Virgin is selling cars supermarket-style.

As promised in our August edition, here’s another new business idea from Virgin (there’s no stopping Richard Branson): selling cars, supermarket-style. After selling 12,000 cars online in the UK at www.virgincars.com, Virgin opened the world’s first auto department store in Manchester last May. The 2,800 square meter ‘Megastore’ offers 25 automotive brands under one roof, at cut-throat prices, and without salespeople stalking customers. Cars include new and up to one year old models, and are not grouped by brand but by themes like ‘crowd pleasers’, ‘two wheels’, ‘thrills’, ‘all in one’, ‘first class’ and ‘adventure’. In their own words: ‘No hard sell, no promises that we can’t keep and no auto jargon. Simply great cars, a relaxing environment, and friendly, helpful and knowledgeable staff, all under one big, entertaining roof. Take your pick from over 200 vehicles in stock with many ready for delivery from just 2 weeks. Or we can find your dream car from a further 4000 cars available through our extensive network of suppliers.’ As always, clever anticipation (if not initiating) of changing rules and regulations is what encouraged Virgin to go after yet another poorly organized market: the EU’s antitrust commission is making it much harder for car manufacturers to keep dealers from selling competing brands, giving existing market forces a maximum of one year to get their act together. Virgin, in the mean time, continues to expand and hopes to open 12 Car Megastores in the UK over the next five to seven years.Besides Virgin, UK-based OneSwoop is making inroads into the lucrative multi-brand UK market, while German mega-catalogue retailer Quelle recently partnered with Carplus Online to sell discounted cars catalogue-style in Germany. With the EU region expanding and slowly but certainly becoming more open and competitive, the only question seems to be: ‘Who’s next?!?’ (Sources: Business Week)

Opportunities

If you’re in car manufacturing, car dealerships, or automotive marketing, you’d better start planning for a market that will become more supermarket than specialty store, starting with the low cost segments. And even if your business has nothing to do with cars whatsoever, may we recommend that you still study the Virgin Cars case? It all boils down to whether your business performs well because it offers customers the experience they’re looking for (like the ability to check out a type of car from various brands instead of a mono-product line) or whether you’re doing well because of some ancient, tired law that lets you get away with sub-par service. (No, we didn’t say European banks/telcos/state-owned airlines, that was your own association ;-)If the latter applies, beware that your customers may not only abandon you the moment the rules become fair, but that you will likely also have to overcome their scorn for decades to come. Have fun!