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Overhauling European auto distribution
Old regulations have helped European car manufacturers maintain tight control over their dealer networks while protecting those dealers from competition—resulting, predictably, in an ossified retail channel. New rules coming into effect in 2003 will loosen the car companies' grip on dealerships. To maintain margins, manufacturers will have to choose among three strategic options: increasing their sales volumes, preserving their brand premiums, or making the most of their dealer partnerships.
The take-away: In coming years, European manufacturers interested in moving large numbers of inexpensive cars will probably embrace alternative retail outlets, including supermarkets and the Internet. Some high-end brands that need to maintain their premiums may buy up dealer networks. Most European car manufacturers, however, will choose a less risky tack, optimizing their distribution networks and trimming the number of dealerships.
Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc
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