Dealerships crucial in maturing auto market

• Source: Ce.cn
• [11:12 July 28 2009]
• Comments

The automotive industry is a tricky business. Automakers offering the right product at the right price is a big step in the right direction, but not a sure fire formula for success. Beyond product, other factors are key to an automaker's success, including a strong and capable dealer network.

Yet in China - now the largest and most important in the auto market in the world - the vehicle distribution system remains a work in progress.

The build-out of retail infrastructure with independent dealers is a top priority for each and every automotive company competing in China today. As anyone familiar with network development knows, this is not an easy process. The process starts by determining the optimal dealer locations - an art unto itself - then turns to the search for capable dealers in targeted locations.

Automakers search for dealers that are willing to invest their private capital and take the risk of private enterprise while at the same time be willing to adhere closely to strict guidelines set out by the company. They search for entrepreneurial personalities with good management skills, and the financial strength to withstand the ups and downs of a cyclical industry.

The right dealers

Of course, it's not easy to find an entrepreneurial personality willing to closely follow company rules - but that is the challenge facing the dealer development manager in China.

Successful companies work to build strong and trusting relationships with their dealers. After all, with an independent dealer, a manufacturer is asking an outside company to handle some of the most important responsibilities along the distribution chain.

Consider that a dealer is the main contact point between manufacturer and the would-be buyer of its products. A bad experience for shoppers at the dealership means the potential for making sales rapidly deteriorates.

Automakers look for dealers willing to invest wisely in a physical site that represents the personality of the brand, and to maintain the site in good condition. They ask their dealers to invest in an inventory of vehicles and an inventory of parts, and to carry the responsibility of cost until the product is sold on to the customer.

Automotive makers want dealers to be their eyes and ears on the ground in specified territories, to provide market feedback and to build relationships with the community.