Is it scrappage time for the traditional car dealer?
While car dealers may not be driven off the high street just yet, car buying habits are changing, and we may soon see big local hubs displaying several different car brands. photograph: getty
The recession that has bedevilled us since 2008 has cut a brutal swathe through Main St, Ireland, taking with it the likes of HMV, Blockbuster, Habitat and Birthdays. While the retail sector has been bloody, it has equally been a bloodbath in the car world, with dealers closing up and shutting down in packs.
Yet, five years into a game-changing global recession, we still buy cars the same way. We still – the few of us buying a new car at any rate – make the trek to the palace of plate glass, with the branded coffee cups and the nice sofas. We test drive, we haggle and we finally sign on the dotted line. Out of that signature comes the money from which the dealer must pay their staff, overheads and make some profit, before passing the bulk of the money back up the chain to the carmaker and the Revenue Commissioners in the form of Vat and Vehicle Registration Tax. There must, surely, be a better way in this day and age to buy a car?
One man who thinks so is James Ruppert. Ruppert will be familiar to the readers of Autocar and Car magazines: a used car expert who cut his teeth back in the 1980s selling BMWs to yuppies, Ruppert is now firmly convinced that car retailing is going to have to follow the likes of HMV and Habitat and move more and more online.
“I think it’s one of those things that, if people had to invent how to sell cars now, I don’t think they would think that it’s a very good idea to build a massive piece of real estate that costs a lot of money in staff and time. I think manufacturers would want to take a lot more control of the whole situation, because what they’re doing is trusting dealer groups and individual garages to represent their brand, and they spend millions of pounds building their brand, and it’s all down to how everything is perceived. I think if manufacturers had the choice they would probably wipe the whole dealer system away and I think a lot of it would now be internet-based.”
Getting costs down
The point is well made. For a start, car dealers must all be thinking of how to get their overheads and costs down. A decade or more ago, all you needed to sell cars was a spacious forecourt and a shed for servicing, but once the block exemption rules were removed in October 2003, everything changed. All the major car makers began insisting that to be a franchised dealer, you had to represent the brand. The logos had to be right, the sofas had to be the corporate colour and the glass most certainly had to be plate. Dealers across the country made massive investments to bring their premises up to code. And then, just as they were settling into making the repayments on those investments, 2008 hit and everything changed again.
“I knew a garage a few years ago who had a visit from the manufacturer, one of these secret shopping things, and they were actually fined for having a lack of atmosphere,” says Ruppert. “So they had to pay a couple of grand for the fact that it wasn’t seen as being a fantastic experience. Maybe that was right, but I think it’s a sign of just how daft things have got. When you look at how much they have to spend on tiles, and plate glass, I think it’s wrong. You don’t need all that.”