Post Block Exemption 2002, manufacturers laid down some stringent controls over showroom requirements in the UK using the excuse that they wanted to prevent new entrants from selling their cars. Most have since conceded that they went too far and several have begun to soften their demands.
However, these softer approaches are directed at processes and administration functions and usually do not extend to the showroom. When I joined AM in 1998 (Automotive Management back then), showroom investments were measured in hundreds of thousands of pounds.
Nowadays, they are measured in millions, sometimes tens of millions.
In addition to the size of the dealership, with five or six car showrooms not unusual, costs have risen due to dealers having to use manufacturers’ preferred suppliers.
Those suppliers can be more than five times the cost of using an alternative. And the alternative is just as good quality and sometimes, in the case of lighting, better.
The situation is not the same in continental Europe. Yes, there are examples abroad of showrooms that match UK standards – the problem is a lack of consistency. Every dealer in the UK has to meet set standards – on the Continent, unless in a big city, you don’t.
UK dealers are being forced to build gin palaces on wafer thin margins. European dealers profit from a more relaxed attitude.
The question is, why? Surely markets on the mainland are susceptible to the same potential new entrants as in the UK? Why hit the UK dealer with tough standards if you are going to be lenient elsewhere?
I’m not aware that UK consumers are more demanding than those elsewhere in Europe – in fact, I’m not aware that any of them demand dealers operate out of opulent showrooms. All they want is to be treated well and offered value for money.
Manufacturers should focus more on this and consign the gin palaces to history.