Carmakers fight for `shelf space'
Since the end of World War II, the number of new auto dealerships has steadily declined, yet over the last few years, the number of new auto nameplates has been on the rise. As a result, auto manufacturers are finding themselves in an unusual position: Not only must they compete for the hearts and dollars of American consumers, they must, like companies trying to get their soap and cereal into grocery stores, battle for dealer ``shelf space.''
``Nameplates that are not profitable may find themselves [doubled up] with another nameplate, moved to a showroom of less importance, or even dropped from a dealer's portfolio,'' notes a report from the market research firm J.D. Power & Associates.
A recent Power study found that 8 percent of the nation's dealers may discontinue at least one franchise during the next year. And among the nation's top-volume dealerships, those so-called ``mega-dealers'' carrying numerous nameplates, the figure climbs to 20 percent.
Though profitability is a central issue, the Power study found many reasons that a dealer would be ready to drop a nameplate. More than a third of all Alfa-Romeo dealers are ready to abandon the nameplate because of weak sales and lagging profits, while similar concerns may cost Yugo 20 percent of its dealers. About 21 percent of all AMC/Renault dealers may quit, in part because of concerns about the products they're getting from the factory.
West German carmaker Audi may lose 10 percent of its dealers, in part because of the continuing controversy over an alleged safety defect.
Though Subaru has been a strong and profitable seller, relations between dealers and factories have been strained severely in recent years, and 17 percent of all Subaru franchisees have said they may drop the nameplate.
Subaru and Audi are clearly the exceptions, in that most dealers are generally content with their German and Japanese franchises. Among the Japanese, less than 1 percent of Toyota, Acura, Daihatsu, Honda, and Suzuki dealers have said they may drop the nameplates.
Mercedes-Benz and Porsche dealers are equally likely to maintain those franchises.
Among the American nameplates, Ford and Chevrolet have won the strongest dealer loyalties, with less than 1 percent of their dealers considering dropping those nameplates during the next 12 months.