Fleet News

Quo vadis, dealership?

FRANCHISED dealers find themselves in uncertain times, with almost every car manufacturer or importer updating or revising its dealer network.

Ford, for example, has restructured its market areas of responsibility and forced neighbouring dealers to start joint businesses, while Volkswagen has compelled its dealerships to create separate showrooms for Audi and VW.

BMW brought Rover into its group to promote the marque's acceptance (only to sell the British company) and Renault/Nissan are working on integration with the intention that in future customers will be able to buy both marques at Nissan/Renault dealers. There are also fears for the future about the development of online selling.

Expert studies believe that only half of the 24,000 franchised dealer businesses will survive - due to the huge insecurity created by immense investment pressures, and because of the far-reaching restructuring.

Developments at Honda are particularly extreme - and because of that, provide a good example.

Last autumn Honda cancelled all 520 of its franchised dealer agreements, and the Japanese importer only intends to give 250 of these dealers a new contract. While selecting and reorganising its network, Honda has made it clear that it does not intend to allow discounts.

In the meantime, a fierce argument has arisen between the importer and the national dealer association. Hiroshi Kobayashi, president of Honda Europe North, has visited the Federal Chancellery to attend a crisis meeting with the dealer association, where tensions ran high. Behind the scenes, the dealer association had complained to Honda about its unwillingness to discuss the changes adequately with its dealers.

And in the forefront, Eastern dealers have invested more than DM200 million (€110 million) since reunification - DM80 million (€44 million) of which came from the public purse.

The latest argument is about the planned changes to the dealer contracts, which according to insiders contained regulations that Honda dealers, under the current valid discount system (between 10 and 14.5%) would not have a chance of survival.

In the meantime, Honda's fleet business is still off the agenda.

  • Hans Mag is publishing director of Autoflotte, Germany's top fleet magazine. (April 2000)
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