The Future of Car Dealerships in Ireland

Car dealerships, like most businesses in Ireland, have been badly affected by the devastated economy.

For those fortunate to have remained in employment,increased taxes and reduced wages have taken a huge slice out of disposable income. Austerity has been imposed on house hold budgets such that replacing the car has become an unattainable goal on the list of consumer priorities.During 2009 and 2010 it is estimated that 120,000 new cars sales per annum were lost. Having suffered their anni horribilis car dealers are still struggling. Lack of finance for consumer credit, unemployment and the continuing recession means turning the corner is still a good distance away.

According to an in-depth report on the Automotive market in Ireland, produced by Saleslynx, a UK based motor industry marketing consultancy, the combination of several factors including the credit squeeze and falling incomes for the majority of consumers will continue to dampen demand making viability an issue for at least 100 and possible 150 of the current 450 dealerships operating in this State. In addition, the influence of manufacturers on the distribution structure has increased considerably over the past number of years, as opposed to independent importers or franchisees.

While consolidation and concentration may favour their interests it is yet to be seen how independent dealers and consumers will ultimately benefit by this trend. The 450 Motor Dealerships are now operating in a most adverse environment, only 206 sales were achieved per dealership in 2011 which poses questions as to the viability of capacity available while economic devastation continues and what will remain when Ireland emerges from its current crisis.

Citroën changed hands from the independent Gowan Group in 2010 and their distribution chain is operated under the direct control of the Manufacturer. This has been accompanied by a 16% increase in volume sold in 2011. Citroen say that they along with their dealers they are investing heavily into their new corporate identity and state of the art showrooms to improve the Citroën customer experience. Louise Murphy, Marketing Manager said “For the five year period from 2010-2015, €10m will be invested in their national growth programme, including the opening of a new retail division and Head Office in Airside Motor Park, Swords and the recent appointments of four new dealerships since October 2011. This network development will continue with the intention of appointing three more dealerships during 2012.” Citroën Motors Ireland dealer network have a target of 5% combined market share of the Irish market by 2016.

Similarily the VW group have witnessed a significant increase in overall market share since the hand over from MDL in 2009. According to Simon Elliot, MD of Volkswagen Group Ireland, VW reviewed the future potential of the car and commercial vehicle market in order to establish a viable network “Once we identified a slowdown in the market and only steady growth forecasted we moved to proactively reduce the numbers of dealers to ensure strategic locations were covered for all of our Group brands but also ensuring customers could be well served our market shares achieved and the dealers remaining had long term future”.

Renault too have witnessed significant growth in 2010 and 2011 since the handover from the GlenCullen group. Following the market collapse in 2009 by 70%, Renault’s main objective, said Eric Basset, MD Renault Ireland “was to enable dealers to reach the highest standards in terms of customer satisfaction, being rewarded with the best level of productivity per site in both cars and vans”. And this has proved to “be a key element of our past 2.5 years of great success in Ireland. The Renault network is now performing better and more, attracting more customers and potential network partners to improve our territory coverage”.

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