A new report says that European dealer numbers are continuing to decline, but also suggests the rate of decline is not fast enough to maintain viability in the face of the changes needed to accommodate new approaches to retail.
The latest European Car Distribution Handbook, produced annually by ICDP, says that European sales networks declined for the 11th consecutive year, in part contributing to a slight increase in average sales per main dealer to 331.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
It also says European service networks decline for the 9th consecutive year, with often low car parc per service outlet reflecting dense network structures
The ICDP also notes that while OEMs are supporting a range of new retail formats and online sales channels, these remain at the pilot level
The report also says structural change of established networks remains insufficient to address today's and tomorrow's pressures as 'customers look for omni-channel buying options'.
The number of main dealer sales outlets (direct and independent dealers, excluding indirect agents) in Europe has seen a drop in outlets of around -16% over 2009-2019, with declines slowing from 2014 onward as markets recovered from the last recession. There remain around 52,000 outlets, the report says. On that basis, ICDP continues to see a requirement for substantial network reductions and restructuring with fewer main dealer outlets, greater separation of sales and service networks, and more variety in format types for both sales and service.
Despite the overall decline, ICDP says it has seen a number of individual brands growing their sales networks.
Considering the EU-5 big markets, ICDP says Germany has been and still is significantly 'overdealered', accounting for the lowest sales per main dealer in EU5, whilst the situation is in stark contrast to the UK, with dealers averaging nearly double the amount.
Developments in service networks have been roughly similar – again with some exceptions on a by market and by brand level whilst the absolute number of service outlets (around 96,000) remains much higher than for sales outlets to serve the customer needs of a shorter acceptable drive time for service as opposed to sales. Across Europe, the decline in all service outlets is at around -17% over 2009-2019, whilst some established brands have seen change of up to -40% in the case of Fiat or -28% for Audi.
As a reflection of dense aftersales networks, the ICDP data often shows low numbers in the car parc per authorised service outlet, in addition to which there is competition from the independent sector for repair and maintenance work. This is at a time when ICDP research continues to show structural decline in the aftersales market to 2030. European volume brands in general tend to account for the lowest ratios with in many cases less than 5,000 cars in the parc per service outlet. The declining aftermarket volumes with these low numbers reinforces the need to transform service networks to an improved model that maintains availability and customer convenience but reduces the fixed costs of network coverage.
