How difficult has it been for dealers to accept DaimlerChrysler SA’s new dealer network strategy? CARtoday.com spoke to Sandown Motor Holdings chief executive Roy McAllister about the involvement of DaimlerChrysler in his group and the reasons that other dealers are upset about “vertical integration” in the retailing market.
How difficult has it been for dealers to accept DaimlerChrysler SA’s new dealer network strategy? CARtoday.com spoke to Sandown Motor Holdings chief executive Roy McAllister about the involvement of DaimlerChrysler in his group and the reasons that other dealers are upset about “vertical integration” in the retailing market.
CARtoday.com reported recently that DCSA’s new strategy involved changes of ownership, realigned franchise territories and a single brand ownership concept in metropolitan markets, involving separate passenger vehicle dealerships for Mercedes-Benz, Chrysler and Mitsubishi cars in metropolitan areas, but a multi-franchise approach in country markets.
Retail Motor Industry organisation chief executive Jeff Osborne recently said: “the recent acquisition by DCSA of a 75 per cent shareholding in Sandown Motor Group and the subsequent roll out of DCSA’s brand centre concept had highlighted the intentions of manufacturers to become more actively involved in retailing”.
He said manufacturers would, through this, benefit from downsteam profits, which to date had largely been the domain of small to medium-sized businesses.
“At first, change was very difficult to fathom for DaimlerChrysler dealers,” McAllister said on Wednesday. “In terms of resources and infrastructure, multi-brand marketing is certainly more cost effective, but scores low in terms of customer satisfaction.
“Dealers were reluctant to embrace the brand centre concept, but after a process of negotiation a memorandum of understanding was signed,” he added.
“Because dealers realised that without customers there could be no business," said McAllister.
“It is true that Sandown Motors will, after the implementation of the new dealership strategy, have a small number of additional Mercedes Benz passenger car franchises,” he said, adding: “Sandown has traditionally been a dominant force in Mercedes retailing.”
To this DaimlerChrysler SA’s divisional dealer development manager, Theo Swanepoel, added: “In terms of passenger cars, the restructuring has not brought about a significant shift in ownership.”
With the acquisitions and swapping of dealerships that fall under the auspices of the new dealership strategy, certain DaimlerChrysler dealers will take over each other’s lease agreements and infrastructure.
The result is that there will be heightened competition between DaimlerChrysler dealers. The dealers will, in effect, be pitching the manufacturer’s different brands against each other.
McAllister is aware that there is concern from within the automotive retailing sector, especially rival dealers of DaimlerChrysler brands, that Sandown would be in a position to gain preferential treatment from the manufacturer.
“There are such concerns, but due to the DaimlerChrysler’s centralised supply network,” where deliveries are scheduled directly from the factory, “there is no way for Sandown to gain access to vehicles that are designated to other dealers, for example”.
“The supply of spare parts will work on the same system in the future,” he added. “Currently, we benefit from being partly owned by DaimlerChrysler, in that we do not have to keep massive spare parts inventories (which is costly to maintain).”
