The document discusses the automotive dealer landscape in Europe, highlighting trends such as increased manufacturer control, the need for a broader business mix, and a heightened focus on customer satisfaction. It also addresses regulatory changes affecting franchise contracts and anticipates future competition dynamics in the industry. Key performance indicators and business management practices are emphasized as critical for dealer success in a saturated market.

1. Business Scenarios for
Automotive Dealers in Europe
Leonardo Buzzavo,
University of Venice - Quintegia / Italy
ROAD Conference - Moscow, 27.8.2008
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2. Studying the automotive industry
Research team at the University of Venice
International research network
Since 1994
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3. Projects developed
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4. Automotive Dealer Day
Verona, 6th year, in May
Information, strategies and tools for players of
automotive distribution
25 workshops (Italian + English)
Area expo with 50 businesses
2,000 participants
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5. Dealer networks
worldwide
Now 100 years old in Europe and USA
USA: homogeneity and relative strength
Japan: ‘original’ approach
Europe: high internal differentiation
Other countries evolving
– Brazil, and then Russia, India and China
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6. Trend in dealers and sales outlets
120000
100000 -30%
80000
-29%
-10%
60000
-6%
40000
20000
0
Dealers Sales outlets Dealers Sales outlets
Source: European Car
Distribution Handbook / 1997 2002 2007
NADA
= Change 1997-2007
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7. Growing importance of
Dealer Satisfaction
Total automotive performance is a combination of
– Manufacturer performance
– Dealer network performance
Dealer satisfaction has become as important as customer
satisfaction
Manufacturers paying more attention
Monitoring activity developed by Quintegia in Italy since
2004
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8. (Italy)
Dealers participating Manufacturers
(questionnaires): now >30% purchasing report
2004 2005 2006 2007 2008 2004 2005 2006 2007
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9. Overall ranking
2008 - Top10 Italy
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10. Regulation for Dealer-
Manufacturer Franchise Contracts
in EU
Block Exemption Regulation (BER) created in
1985
– To discipline contracts and limit anti-competitive
practices to stimulate free market competition
Renewed in 1995
– Small changes, mainly to favour multi-branding and
opening of parts markets
Renewed in 2002
– Greater changes, to stimulate more competition
 E.g. freedom of additional outlets anywhere in Europe
Expiring in 2010
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11. Prospects for 2010
Industry situation:
– Intra-brand and inter-brand competition is high
– Price differentials have reduced over time
So, there is less need for Competition authority to adopt a
“strong medicine”
We are likely to see
– General regulation (common for all industries)
– More delegation to authorities of national states
– More different choices by individual manufacturers
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12. Market share of Top25 Dealers
35
30
Market share (%)
25
20
15
10
5
0
USA UK FRA GER SPA ITA NED
2001 2003 2006
Source: ICDP (2007), Quintegia
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13. Performance indicators:
example of best practices
Vehicles sold with finance 50%
Gross profit from sources other
than new+used cars 50%
Ratio of used/new cars sold 1:1
Used car stock turn 10x
Customer follow-up 100%
Dealers becoming more concerned with KPI (Key
Performance Indicators) and benchmarks
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14. Automotive Dealers
Which main trends are
influencing dealer evolution?
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15. 1. More manufacturer control
Structural standards
Variable
Operational standards margins
Business Management
Dealer response / focus:
- Conflicts between dealers and manufacturers
- Development of businesses outside new cars
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16. 2. Broader business mix
Extended services
Used cars
Finance and insurance (F&I)
Dealer response / focus:
- Find the right providers and establish business relationships
- Develop competences and processes
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17. 3. Multi-branding
To complete the portfolio of offering
– Model mix
To reduce the overall risk of the company
Dealer response / focus:
- Exploit synergies across different brands
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18. 4. Business management
Managing by numbers
– Fast
– Accurate
– Relevant for decisions
Dealer response / focus:
- Develop adequate decision-support systems
- Develop competences
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19. 5. Customer focus
More attention to customer needs and segments
Greater focus on customer satisfaction and loyalty
Dealer response / focus:
- Develop appropriate databases
- Develop customer research and information technology
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20. 6. Organization / human
resources
Managing larger and more complex organizations
– multi-brand
– multi-business
– multi-site
Dealer response / focus:
- Human resource focus (selection / training / incentives)
- Focus on lean processes (reducing waste)
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21. Key points and perspectives
When markets become saturated dealer-
manufacturer conflicts become critical
– Particularly when dealer density is high
Dealer business highly entrepreneurial
– Manufacturer-owned dealers not a solution
Scale economies are lower than other industries
– Limited advantages in buying power
Distribution is a capital-intensive industry
– Importance of lean processes
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22. Change over time
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23. Business Scenarios for
Automotive Dealers in Europe
Leonardo Buzzavo,
University of Venice - Quintegia / Italy
ROAD Conference - Moscow, 27.8.2008
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