Volume networks feeling the pressure from luxury brands and supermarkets
- March 18, 2020
- Posted by: Kirsty Sidley
- Category: Automotive Industry
Volume dealer networks are feeling the squeeze by luxury brands in the new car market and rapidly expanding car supermarkets within the used car sector.
Speaking on the situation, APC’s managing director Bill Bexson said:
“The motor retail market has become increasingly segmented with both the so-called prestige brands like Mercedes-Benz, BMW, Audi, and Jaguar Land Rover and used car superstores like Motorpoint both gaining traction and market share.
“The result of this is the creation of a squeezed middle tier of brands. These brands that cater to the middle of the market are seeing their market presence diluted at both ends.
“Some with established reputations, extensive networks and the ability to innovate will survive and ultimately thrive but it is unlikely that all of them will survive in their current guise”
Bexson said that the automotive industry’s retail sector has been in a state of flux, with dealer networks impacted by several factors within the industry such as increasing trends in connectivity and shared mobility and electrification, and the arrival of autonomous vehicles to the market.
He went on to say that he believes the current model will prosper in the foreseeable future despite these changes, although he believes will begin to move towards a ‘hub and spoke’ model in the future. In this model, traditional showrooms would act as sales hubs whereas aftersales services will operate from supporting facilities.
Speaking on changes the industry has faced in the past, Bexson went on to say:
“The franchised car dealership network forms an established route to market for manufacturers and from a consumer perspective will remain the provider and maintainer of this evolving product package
“Though not all motor retail entities will be equally successful. the long-term trend of reducing car dealership numbers is likely to continue, albeit slowly.
“In 2002 there were 5,734 franchised outlets in the UK, this is compared to 5,052 in 2019, a nearly 12% reduction in numbers.
“Some additional modest shrinkage can be expected as a result of natural attrition, competitive forces and the appeal of alternative uses.”
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