As Ireland's car buying population increases, so too does the car selling business - Daniel Attwood looks at developments in our new motor malls
Ireland's growing car buying population is leading to an increasing number of vehicles on the road. So much so that many motorists believe the motor trade is reaping the profits - a perception that is reinforced by the plethora of new multi-million euro showrooms being built throughout the country.
But the country's motor dealers say that they have been forced to build these new showrooms, and the carry the debt that comes with them, because of new EU rules. Indeed, they say, competition has never been fiercer, margins tighter, nor overheads higher.
And, to cut marketing costs, many are seeing the wisdom of creating multi-franchise motor parks to attract large numbers of car buyers into a single selling area.
Already hugely successful in Britain and the US, motor malls now dominate retailing in these countries. And they are set to become an increasingly familiar sight in Ireland.
In an attempt to meet strict EU-wide standards, many Irish dealers have been forced by planners to look for cheaper, more accessible out-of-town sites to purpose-build their new showrooms. As Michael Herbert, president of the motor industry's representative body, SIMI, and managing director of the Windsor Group - a Dublin-based multi-franchise motor group - explains, the emergence of Irish motor parks has more to do with cost and planning difficulties than an attempt to mimic the success of such enterprises abroad.
But as Irish dealers realise that motor parks bring substantially increased numbers of car buyers through their doors, they are now regarding them as the preferred option. "The availability of sites and good locations initially dictated the emergence of these motor parks," explains Herbert. "But now dealers have seen that it does work, they will become the norm."
In major urban areas such as Cork and Dublin newly established motor parks are already attracting a large number of customers. And additional motorists are being tempted by joint advertising campaigns funded by the competing dealers. "Group advertising is fine because it means each dealer gets a larger slice of the cake, but they must still convert that into sales," says Herbert. "Buyers will vote with their feet and will look for the best deal." This will be easier, he says, with several competing dealerships standing side by side.
Dublin has seen the greatest number of motor parks spring up. On the Sandyford Industrial Estate on the city's south side, there are now seven marques competing in one area, with a further four on the way.
According to its managing director, Ian Macneill, since the Foster Motor Company opened its new VW and Audi showrooms in the Sandyford Motor Park last June, the number of its customers has increased by 50 per cent. "And Sandyford Motor Park as such has not yet been officially launched," he says. When it is, the dealers will combine forces to draw in motorists from across south Dublin with cinema and press advertising and a dedicated low-cost phone number.
North Dublin is also awaiting the completion of the 10-acre multi-franchise Airways Motor Park in Swords. Costing up to €40 million, the project is the biggest of its kind in Ireland. Eight marques - Ford, VW, Nissan, Daewoo, Renault, Fiat, Land Rover and Hyundai - will have a presence when the park is open this time next year. And there may be more dealerships when phase two of the project commences.
In west Dublin, the Liffey Valley Motor Mall has four popular marques - Renault, Nissan, Peugeot and Opel - vying for business in the one area. Waterford already has its own motor mile, and a new motor park for Cork city is also planned.
But as the number of these motor parks increase, so the stand-alone dealerships, especially those that sell volume marques, will find it increasingly difficult to compete, as customers are drawn to the motor parks' competitive one-stop shopping experience.
Indeed, the environment is set to be even more competitive when the Block Exemption location clause is removed in October 2005. This opens up the possibility that dealers from abroad can cherry-pick profitable marques and establish themselves in Ireland's motor parks.
Alternatively we may see Ireland's car dealers become Europe's market predators. According to Michael Herbert: "It's more practical for Irish dealers to go abroad [than foreign dealers coming here], as the entry costs are less for the Irish going abroad, and yet the experience needed to sell cars is the same."