If an OEM owned their networks, how many showrooms would they have?

Would the OEM make the same level of investment costs as they make the dealer spend on their showrooms to create the latest brand experience? The simple answer is no.

The average new build cost for a car dealership is somewhere between $2m to $10m and refurbishment to a new brand standard at $0.5m to $2m, depending upon where in the world and size. The average brand has at least 5000 showrooms spread across the globe; the investment costs would be unaffordable if they owned their networks. The investment cost would run into $ billions.

The OEM drives the style of new dealerships as they look to continuously improve and change the experience of buying a car, separating themselves from their competitors. Almost certainly this will include modern exterior brand architecture, interior design changes, digital tools and customer engagement roles as they move from a car dealership facility to the retail experience.

The approach and changes are understandable as OEM’s compete for sales in a highly competitive marketplace and want to differentiate themselves. It is also understandable that dealers are resistant to change as they cannot see the return on their investment within a reasonable period. In other words, they will not make enough money to justify the investment in these changes. It’s a fair argument which the OEM’s need to address if they want to see the speed of change they desire.

So back to the question, would the OEM invest the money required using their own money? No, they would look to drive down the investment costs while retaining the brand experience.

They would also consider that technology and social mobility has changed the way we see and buy things. Most OEM no longer needs the same traditional dealerships model approach. They need a different combination of retail network and e-commerce solutions.

So why do they make the dealers invest such large sums of money? They do not do this intentionally; they are looking for the best concept to move the brand forward.

By focusing on the primary core elements of the experience and engaging with National Sales Companies and Dealers at the earliest stage of a new concept or initiative, it is possible to make significant cost savings without impacting brand-experience, design or quality. Compromise is always required, but if the brand wants the right brand-experience to drive more sales, then it needs facilities that showcase this, and not half its network looking outdated or not providing the right brand-behaviour.

All of this is possible in a coherent and non-disruptive way without diluting your brand. Circle4x can help you focus your investments to where it matters and where you can develop a link to your customer that creates fantastic experiences, emotion and loyalty.