Strong sales of the Juke and Qashqai lifted Nissan’s average sales per dealer by 39 percent last year, the highest increase for any volume manufacturer in Europe.

Automakers are largely maintaining the size of their European dealer networks despite the region’s plunging car market, a study shows. The number of franchised dealers operating in the EU declined by just 3 percent last year to 51,070, according to the European Car Distribution Handbook published by the International Car Distribution Programme (ICDP) consultancy. EU new-car sales fell by 8 percent to 12 million in the same period.

Steve Young, ICDP managing director, said automakers want to keep their retail networks stable to maintain sales in Europe’s tough market. The slow decline in dealership numbers shows that “carmakers are desperate to avoid losing a single dealer – following the assumption that less coverage equals lower sales,” Young told Automotive News Europe. German and Asian brands have healthier franchised dealer networks in Europe than France’s PSA/Peugeot-Citroen and Fiat, ICDP’s study shows. Franchised dealers are those that have a contract with an automaker. Volkswagen, BMW, Mercedes-Benz, Audi, Hyundai and Nissan increased unit sales per dealer while volumes at Fiat, Peugeot, Citroen, Jaguar, Chrysler and Smart dealers dropped.

Consolidation

Young said the overall number of main dealers declined marginally in 2012 but this did not mean that dealerships are disappearing because family-owned dealers and small retail groups are being acquired by bigger operators. The number of dealers in countries that have been hit hard by the eurozone crisis fell by between 4 percent and 9 percent last year but within this there were many ownership changes. In some cases, original investors sold out to others looking to buy at what they hope will be the bottom of the market.

The number of car retail outlets declined by 8 percent in France and Spain last year and by 5 percent in Italy. Smaller countries hit hard by the euro-zone crisis suffered badly. The number of dealerships in Greece plunged 9 percent and fell by 6 percent in Portugal.

Average unit sales per dealer have been falling considerably because the car market is falling faster than the number of dealerships selling vehicles. Germany was the only market where average sales per dealer last year were higher than in 2002.

Germany’s average was up 19 percent over a 10-year period, while the UK declined by 12 percent, France by 19 percent, Italy by almost a quarter and Spain more than half.

Germany is Europe’s largest market but its extremely widespread territory coverage means that sales per franchised dealer is half of the figure for the UK and 70 percent of the number in France and Italy.

To keep good territory coverage, automakers are increasing the number of sub-dealers, which have a contract and are supplied vehicles by a main dealer. In some countries, these sub-dealers are also called agents. ICDP data shows the sub-dealers in the EU grew 2 percent last year to 23,514.

“Sub-dealers are not required to meet the same standards level of main dealer and often have other brands or business activities and so have more chances to survive in a more challenging business environment,” Young said.

The consolidation phase in the UK – where megadealer groups bought up many smaller rivals – is over, he said. The size of authorized service networks has remained stable overall, with falling numbers for established markets and brands, offset by growth in eastern European markets and with new brands. “This happened despite other ICDP research showing that overall repair and maintenance volumes are falling and will continue to do so for the rest of this decade as vehicles require less servicing and reliability improves,” Young said.

Volkswagen, BMW, Mercedes-Benz, Audi, Hyundai and Nissan saw sales per main dealer grow by 25 percent or more. Fiat, Peugeot, Citroen, Jaguar, Chrysler and Smart dealers had declines of 25 percent or more, according to ICDP. “At both ends, changes in the product range must be a significant contributor,” Young said. He expects the slow pace of change in Europe’s retail network will not last and that by the end of the decade bigger structural changes are inevitable as customers increasingly use new ways to buy cars such as the Internet and the improved reliability of cars means they need to visit a dealership less often. Young said: “This should lead to shrinkage in dealer networks, reconfigured facilities and potentially more multibrand dealers.”