Towards a New Business Model for Automotive Distribution

The automotive industry has been undergoing a profound reorganization in upstream activities for quite some time. Such reorganization, however, has only recently started to affect the distribution domain that has traditionally been based on a system of family-owned franchised dealerships according to a scheme of vertical quasi-integration. During recent years the market downturn in Western Europe has exacerbated an already critical situation of reduced dealer profits due to high levels of intra-brand competition, while service and intangible elements in the automotive product matter and digital technologies are creating new potential for change. This chapter focuses on the transformations in place (including margin structures and retailer concentration) and discusses how the traditional business model of franchised dealerships (intended as a set of choices on the target, the offering, the chain of activities and the profit model) is evolving.