Fleet News

Dealers' future in car makers' hands, warn the experts

MANUFACTURERS hold the future of small dealerships and the shape of the new and used car industry in their hands, CAP Motor Research has warned. As the Supply of New Cars Order 2000 begins to take effect, fears are growing that consolidation among car dealerships will be the only way they can survive.

In its September editorial, CAP Black Book warned: 'Perhaps the recent Government moves to reduce list prices could be taken as a wake-up call to the car-makers.

'If they are to maintain a favourable business relationship with their networks, it might pay well for them to help the smaller dealers maintain a significant place in the market. They have it in their power to help them and in doing so they could well build a stronger retail industry and help restore the goodwill of car buyers.'

The Order stated that dealerships must have the same volume discounts as fleets, effectively encouraging the dealership industry into the largest groups possible to achieve the highest discounts on new cars.

Small dealerships risk becoming uncompetitive on price and being forced to close or merge with a larger dealership. In turn, there would be less competition in the used car market, with the possibility that single large groups of used car buyers could force fleet's disposal prices down further to ensure they gain the maximum retail profit.

Already Trevor Finn, chief executive of dealership group Pendragon, has predicted consolidation in the dealership market: 'Scale will lead to efficiency and buying economies. We believe the scene is set for a significant consolidation of car dealership networks, with as few as three or four dominant companies emerging. We intend to build on our position as the largest dealer chain and be the leading consolidator in the industry.'

Adrian Rushmore, chief car editor of Glass's Guide, went one step further, saying: 'The legacy of the Supply of New Cars Order 2000 is confusion and uncertainty, which may not be alleviated for a further six months.'

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