AM Online

Fiat plans growth with own dealers and sponsored sites

Fiat plans to create a network of eight wholly-owned dealerships in major metropolitan cities across the UK as it embarks on a three-pronged strategy to close around 35 open points, reports AM in its May 30 issue.

The carmaker already owns one showroom, its flagship site in Mayfair, London, which opened last year.

It expects to open at least one other, possibly two, by the end of this year. Likely cities include Birmingham and Manchester.

As part of its network expansion strategy, Fiat is also launching a sponsored retailer programme, expected to be ready by the end of the year.

It believes there are plenty of entrepreneurs currently in a general manager or dealer principal role who would fancy taking on a Fiat franchise.

The company would buy the site with the operator buying it back over a seven-year period.

The final piece of the jigsaw is to encourage current operators and some new companies – in particular larger regionals and plcs – to invest in the franchise.

Plcs will be lured with the offer of taking on Fiat group brands – Fiat, Alfa Romeo, Lancia and new Abarth – as a package.

Fiat hopes this combined approach will enable it to increase its network from 164 sites to 200 by 2010.

But this doesn’t simply mean appointing 36 sites; over the past three years, around 45% of the retail network has changed and that’s set to continue.

Only 70-80% of dealers will retain the franchise which means the carmaker could be looking for up to 85 retailers.

Andrew Humberstone, Fiat UK managing director since the start of the year, says the process of identifying future partners is already underway with the focus on dealers’ strategies and their ability to invest and grow.

“We have done an initial draft of the network. We have identified the hospital cases and whether we want to salvage them or not – some we will want to rescue,” he said.

“The restructure will involve significant investment. We will be increasing our standards – in service, aftersales and sales processes - and our expectations. We have to see an improvement in CSI.”

Humberstone, who is presenting his plans to Fiat global boss Sergio Marchionne, believes Fiat needs to step in to close open points in major cities because of the high cost of land and cites the Mayfair example as a case in point.

“The image from having Fiat Mayfair outweighs the cost – but it is hard to value for a dealer,” he says, suggesting the site is likely to lose money.

However, its own dealerships will not be flagship centres like Mayfair. “They will be somewhere in between Mayfair and a standard franchised dealership,” Humberstone said.

By 2010, Fiat expects to be selling 100,000 new cars, up from last year, equivalent to just over 4% market share.

Internally, the company talks about 5% market share - around 115,000 in a 2.3m market. This year’s target 3.5%, around 80,000 units.

Retailers will be pleased to hear that this growth will not be forced. They have had a torrid time – last year half the network lost money.

Year-to-date, that figure has fallen to 20-25% after Fiat took money out of fleet deals to put behind retail at the dealer end.

“We have very good dealers that have invested a lot and they have been very patient with us,” said Humberstone, a former dealer himself.

“We haven’t been the best partner in recent years, but the situation is improving. Now we have to deliver.”

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