Working with fewer, larger dealer groups ‘increasingly attractive’

The latest ICDP: European Top 50 Dealer Groups 2022 has concluded that carmakers are increasingly attracted to working with fewer, larger dealer groups who are more process driven with superior IT systems.

The report detailed the consolidation taking place across Europe with larger groups acquiring smaller owner-operators.

Report authors Steve Young and Peter Bailey said: “A decade ago, OEMs generally preferred working with smaller owner-operators than large groups, but this attitude has changed. At a time when the pressures to introduce omni-channel (either in a modified franchise environment or agency), adapt to electrification, work with connected cars and cope with an uncertain economic environment will put extreme pressure on dealer networks, working with fewer, larger, more process and IT driven partners looks increasingly attractive to OEMs,”.

But the report also points out that there is room for smaller groups who can optimise their performance to compete.

“For other dealers who lack the scale of these large groups, they can cherry pick the best of both worlds. They need to match the larger players in terms of being an effective part of omni-channel networks and a more digital environment. This will require scale, but smaller players can still access some of the resources and capabilities through third parties, so they will not be excluded.

“In parallel, they should exploit the closer personal relationships that they can have with customers and staff to offer a differentiated experience. Scale is not an automatic route to success,” they said.