Car manufacturers and the iPhone generation

433 More

Earning the right to be successful

432 More

Knowledge is power

476 More

Selling cars – it’s all about timing

714 More

Truemag

  • Home
  • About
  • Advertise
  • Archives
  • Contact
  • Subscribe

Carmageddon – The beginning of the end?

Dramatic title isn’t it? Well it’s certainly been a tumultuous time recently in the world of car manufacturing and retailing and we should not underestimate just how much things have changed. When the dust settles there is no doubt that the automotive industry will be leaner, meaner and definitely greener and that can only be a good thing. Take a look at dealer groups; there used to be so many of them with a diverse portfolio of franchise agreements, and manufacturers enjoyed holding all the cards and having all the power. With no dealer group having more than a handful of branches representing each franchise, the manufacturers could enforce their trading rules at will. Now, however, some of the more powerful groups often have as many as 20 branches representing a single brand, giving them far more leverage to reject manufacturer decrees that are unpopular, unprofitable and which involve expensive investments to enhance the brand at the dealers expense. The amount of representation in each brand will have reduced dramatically in the last decade and if you were to look at how many dealers the top 5 car makers had say 5 years ago to what they have now you will be amazed at the difference.

The reasons are varied, the manufacturers in their quest for greater market share and brand growth imposed greater dealer standards and dealer investment and the profits which traditionally were earned by the volume of cars sold, soon became dependant on a variety of other hoops the dealers were asked to jump through in order to qualify. This left them selling lots of cars for their brand partner and helping their market share in the process but often at the expense of decent profits. This situation, coupled with the showroom improvements required to comply with brand standards which could cost thousands with little or no chance of ever recouping that investment, it is no surprise that smaller players with less clout were forced out. With only major dealer groups having survived and as we are seeing now not without a struggle, it has to be said the car makers have bought much of their current problems on themselves. In their desperation to increase market share they have embarked on disastrous pre-registration exercises which proved non-profitable for everyone involved. But they just kept producing cars at a rate of knots in their blind quest for market share, not stopping to consider whether they were creating an oversupplied false market.

This global attitude has finally caught up with them and will inevitably lead to the demise of the worst offenders with the least effective cars. What we have been seeing in the dealer network will probably happen in the manufacturer network, with the fittest and leanest surviving to make the next generation of cars and serving a true market by building the correct amount of cars to the right amount of customers. Hopefully when things do pick-up they will not be tempted into the wasteful, demented folly that has led us to where we are right now – Carmageddon!

The only questions left will be who will survive and why?

May 25, 2009In51der
  • Car Servicing
  • Add-on Products
  • Manufacturers will turn the screw on their dealers
  • It’s car sales Jim, but not as we know it
  • Will the green buzz lead to common sense?
  • Selling direct may not be the answer for car makers
  • Fiat improves bid for General Motors EuropeSMMT already calling for scrappage scheme extension
    You Might Also Like
     
    Saab requests creditor protection
     
    Mind the gap – used car prices hardening further
    In51der

    Motor Trade Insider - Bridging the gap between the customer and the Motor Trade

    10 years ago Blog, Manufacturerscar makers, car manufacturers, economy, motor trade recession, new car buying, new car sales, profit36
    Most viewed
    Top 100 UK Dealer Groups
    29,710 views
    The car sales process and the “9 point plan”
    8,857 views
    webuyanycar review – They will buy any car but beware of the asterisk
    3,976 views
    Most commented
    Car sales and the power of silence…
    25 Comments
    Car dealers still not prepared to play the “we buy any car” game
    23 Comments
    A Traders Tale – Part Four
    22 Comments
    Win a pre-loaded Ipod Shuffle!
    19 Comments
    Bargain of the Week – StreetKa 1.6i Luxury
    14 Comments
    Bridal Hair Berkshire
    Fox Body to 2018 Mustang Parts
    and Accessories
    oil change grand prairie
    About MTI

    Motor Trade Insider
    is written by people working actively in the motor trade for people on the inside and people on the outside.

    Our aims
    Build a bridge between consumers and the trade, create Interesting and informative content, break down barriers and create better understanding, expose bad practices and rip-offs and promote outstanding products and service.
    Have something to say?
    We are always looking for experienced writers who can write good original quality posts on motor-trade-insider.com. Please contact us if you would like us to consider you. Make sure you give us details of your own blog or a link to some articles you have written.
    2017 © Motor Trade Insider
    Truemag theme by StrictThemes