Vehicle manufacturers, particularly in the premium and near-premium market segments, are trying to exert ever more control over their franchised networks in an oft-stated aim of achieving nationwide consistency for consumers. But for some motor retail investors, this could raise concerns of overbearing carmakers putting the franchisee’s own brand differentiation under threat.
As one dealer group chief executive, who asked not to be named, put it: “If they want every dealer to look and feel exactly the same, they should buy out the whole network.”
Yet it is accepted the manufacturer brands are mighty. A consumer poll by Motoring.co.uk asked 468 new car buyers and 832 used car buyers about their awareness of the dealer brand in their purchase process. Almost one in three of the new car buyers said the dealer brand was an important or very important factor in their purchase decision, although an equal proportion said it was not important at all. In contrast, 69% of the respondents said the manufacturer brand was important or very important to them in choosing their new car. The results from used car buyers were similar.
The dealer brand is better reinforced in the aftersales market once the customer has already started a relationship by buying the car. More than 50% of respondents said they would purchase aftersales products and services from the same dealer that sold them the car, and their likelihood of buying from the same site again is stronger if this aftersales relationship is in place.
Terry Hogan, director of Motoring.co.uk, said: “The manufacturer brand is the clear winner in terms of the initial choice, but the role of the dealer should not be underestimated. Dealers with strong brand values and a clear message can support their manufacturer franchise partners while those that deliver a lesser experience will dilute the OEM brand values for a customer.” (Full survey findings)
No surprise customers are swayed by manufacturer brand
At the automotive research organisation ICDP, senior researcher Peter Bailey said it is unsurprising that many consumers are swayed mostly by the manufacturer brand given the investments carmakers make globally in winning a prospective buyer’s attention. “While the dealer name is above the door, the whole dealership is generally doused in the manufacturer’s corporate identity which pushes the brand first. But the major groups are still successful in pushing their own brands with heavy marketing,” he said.
Swansway Group director Peter Smyth said he believed most dealers accept that it is the manufacturer brand which draws in the customer. Swansway’s franchises include Audi and Volkswagen, with dealerships branded by the placename, and others such as Honda and Fiat which bear the group’s own name.
The manufacturers spend billions promoting their brands worldwide and I’m happy to get on board with that, as nowadays the customer often feels they’re dealing with the manufacturer and we’re the conduit,” said Smyth.
“However, I see Swansway as the brand for the people who work within our business. It’s important to put your own brand, and the values you maintain in your own business, across to your staff so in turn they’ll be proud to provide great service for you. The end-user may still think they’re representing the manufacturer, but we don’t worry about that.”
Ray Sommerville, chief executive of Perrys Group, which has 40 dealerships with 15 franchises which all operate under the dealer brand, said clearly the manufacturers are most important as consumers don’t buy Perrys-branded cars. He sees the carmaker brand domination continuing in the specialist and prestige segments, but warned against removing differentiation. “If you anonymise the dealer brand, particularly with mainstream brands, then the retailer which has the best reputation cannot make the most of that. I believe the consumer will buy the car secondly on the basis of the dealer sub-brand and the level of service they can expect. We’re heavily involved in social media, public relations, local campaigns, supporting school sports teams and grassroots sports because we see it is still important to put the Perrys brand in front of consumers.”
The manufacturer may be the new car heavyweight but dealers have more opportunity to promote their own brand better in the used car market, according to Nick King, market research director at Auto Trader. He said the need for brand building by any business can be illustrated by the fact that global giants such as Coca-Cola are still committed to spending billions of pounds on brand marketing even when they’re already a household name.
“There’s an argument that people will go to a manufacturer website to get their information, but do they really go there to look for used cars? We believe most look locally at their dealers or at a third-party website such as Auto Trader, so wherever the dealer is promoting its brand it needs to be shouting ‘look at me’ and ‘come to me’.”
Marketing spend should be seen as an investment’
Local television is most effective at raising brand awareness, but the challenge is being able to keep up the spend, so billboard poster campaigns, local radio and events still play a crucial part in engaging with their local prospective purchasers.
The dealer also needs to pick their messages carefully to emphasise the strengths of their own business – overlapping with the vehicle manufacturer’s product push could result in wasted spend.
“One challenge dealers often cite is the constraint on their marketing budget and their reluctance to increase it. It’s seen as an expense, but it should be seen as an investment – it’s you telling the world about your business,” King said.
Alphera Financial Services director Andy Gruber provided a different perspective on the dealer versus manufacturer brand argument – and how dealers benefit in another area of the supply chain.
Ask a customer who they bought a car from, they might say a manufacturer rather than a dealer; ask a customer who they got finance from, they will say the dealer, rather than the finance company, he said.
“They won’t see the finance company until they sign the agreement, the small print,” Gruber said.
“The dealer’s name is at the forefront: car from the manufacturer, finance from the dealer. It’s clearly an area where dealers can push their brand and demonstrate excellent customer service.”
No matter what badge is above the door, the role of the dealer is still secure at present, according to recent research by Black Horse and YouGov. It found car buyers value the ‘security’ of buying from dealerships, and consumers found the overall car buying process a positive experience with 78% recommending visiting a dealership when purchasing a car.
Of those who took part in the research, 60% went to dealerships when they bought their last car, with 32% visiting one dealership, 22% visiting two and an identical proportion visiting three dealerships before buying. The research also revealed that 19% of buyers changed their mind about the car they wanted to buy after visiting a dealership.
