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Will we lose 1,000 dealers next year?

The industry is abuzz about predictions of dealer numbers falling from around 5,200 outlets to 3,500-4,000 over the next year or so.
There's no doubt that we will see far fewer dealerships, and fewer dealer owners, but it's important not to get confused over outlets and franchise points.
While some manufacturers, including Peugeot and Renault do intend to reduce their retail networks in line with a lower market share in recent years, plenty of others are looking to grow - Kia, Hyundai, SsangYong, Fiat, Alfa Romeo, among them. When AM looked at this issue in detail a couple of months ago, we identified 10 manufacturers that planned to expand their retail networks by at least 10 franchise points.
The level of growth, therefore, far outweighs the likely reduction. But, the number of sites is going to fall. What we will see is far greater multi-franchising. Most of Kia's retail expansion recently has come through dealers adding the franchise to an existing franchised site, for instance.
The likes of Robert Marshall, chairman of the Marshall Motor Group, predict a rapid move towards dual and multi-franchised sites. So, while the number of solus outlets will fall, the number of franchise points will actually grow.
Key to survival for dealers will be 'sweating the assets' by adding a second or third franchise.
Added to this is the impact of the Chinese manufacturers which are expected to enter the UK market from late 2010 or 2011. They will be looking for retail points, although no-one knows whether they will be content with a dual-branded outlet or whether they will demand solus dealerships.
Ultimately, the prediction of a widespread cull of outlets is too simplistic an argument. Yes, we will lose a lot of sales points next year - we've lost a lot already this year - some of which will convert into used cars or authorised repairers. But the final figure may not be as high as the doomsayers are forecasting.

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