Europe’s car dealers are deciding whether it’s worth investing to retain their franchises, or sign up with a new group.
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“There are a lot of divorces being planned and marriage brokering going on,” Alan Pulham, director of the UK National Franchised Dealers’ Association, told Automotive News Europe.
With only five months to go before new dealer contracts must be signed under the EU new distribution legislation, most car makers are still in talks with dealers about contract terms. October 1 is the deadline for new contracts to be signed.
The new block exemption allows dealers to subcontract service operations, sell multiple brands from one site and by 2005 will end carmakers’ ability to limit their sales territories.
Some big dealer groups are on the prowl. AVAG is a major German dealer group that plans to expand once the remaining constraints of block exemption lapse.
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By GlobalData“That’s an opportunity for us to take,” said Stefanie Suskind, an AVAG spokesperson in Augsburg, Germany.
AVAG has 29 dealerships, 19 in Germany and 10 in other countries. It operates franchises for Opel, Toyota and other carmakers in Austria, Croatia and EU candidates Hungary and Poland.
Reg Vardy, the UK’s fourth largest dealership network by number of outlets, sees this as an opportunity to grow.
“Our strategy is to expand,” said group spokeswoman Sara French. “The block exemption is helping us to do that. Currently we have 77 dealerships and hope to increase that amount to 100 by next year.”
Kroymans, a Netherlands-based dealer group that last year sold 17,262 new and 11,568 used cars, has changed its structure and begun an expansion drive to position itself for the new environment under block exemption.
“We strongly believe that a strong dealership network is crucial to anticipate the liberalisation of the automotive retail market in Europe,” said CEO Ton van Soest.
Kroymans recently reorganised its rapidly growing retail operations into a new organisation called the Kroymans Retail Group, which combines Opel, Saab, Ford, Aston Martin and Jaguar dealerships with the Perfekta Autoschade damage repair operations and the car rental businesses of National and Alamo. Kroymans Retail Group has 60 branches throughout the Benelux countries and Germany.
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At the other end of size scale, one option for individual dealers is to exit the new-car sales business. “Some dealers are thinking: ‘Why remain an authorised dealer?’ Why not sell used cars and be an authorised repairer for two or three brands?” Pulham said.
“Lots of dealers are selling new cars as a loss leader,” to attract service customers, he added.
In December 2000 DaimlerChrysler UK announced plans to terminate its dealer network by December 2001 and replace it with a smaller dealer network partially owned by DaimlerChrysler UK. One established family-owned Mercedes dealership that lost its franchise now hopes to make a go of it by selling used cars and repairing Mercedes.
“We were one of the casualties and are now making an application to be an approved repairer,” the owner said. He received Mercedes’ Approved Repairer criteria several weeks ago.
“Because we used be a Mercedes dealer I’m optimistic we will be approved. But if you are a small independent and don’t have the required six service bays I don’t see how you could do it.”
