April 2018 Large dealer groups development: the pursuit of scale

A core part of our research is to track the developments of the largest European dealer groups on a regular basis, which enables an understanding of long-term trends and drivers for the future.

 Against the backdrop of continuous network consolidation in sales and service, these players continue to grow nationally, benefiting from scale and a shared operating model.  In some cases, this has been boosted by further acquisitions – although we see that the number of large transactions has reduced for most markets.  The UK market holds a special position with a greater concentration of large groups, now facing a weaker market and Brexit uncertainty.  Combined with the burden and prospect of substantial facility investments required by the OEMs, this may lead to further consolidation and the entry of more foreign investors.

 We see groups following different strategies, influenced by their local market situation, and degree of evolution to date.UK groups can be seen to be further strengthening their position in used cars and aftersales, managing perceived risk in the new car market.  Continental groups continue to invest in new car sales channels, leveraging recovering markets, whilst also developing their used car businesses.  Overall, adapting to change and surviving will be easier for players with scale – but they cannot be complacent.  We think that there are still gaps to be addressed, mainly for Continental European dealer groups.