Integration of car dealers

As a channel to distribute their own cars, car manufacturers own shops under exclusive distributor contracts. These dealers sell new cars and provide maintenance services to their customers. Until sometime around 1990, depending on the marketing areas, customer segments, car categories, etc, these shops were following the distribution channels the manufacturers had set. For example, Toyota had 5 different distribution lines and each shop was specialized in:
・Toyota Shops: luxury cars such as the Crown and the Celsior
・Toyopet Shops: middle-class cars such as the Mark Ⅱ and the Corona
・Vista Shops: middle-class cars such as the Vista
・Corolla Shops: low-end cars such as the Corolla
・Netz Shops: compact cars such as the Vitz
Among the shops above, the Vista shops are now closed and changed to the Lexus shops.

Because Toyota has 30 – 40 new models of cars on the market at the moment, it is　impossible for one salesperson to have the product knowledge of all the cars; so by grouping their cars, Toyota was selling their cars from each shop specialising in a certain channel. Nissan, Honda, Mitsubishi, Mazda and other Japanese car manufacturers were also using this channel dispersion strategy.

However, following the bubble's implosion around 1990, sales of new cars has started to decline and the manufacturers have restructured and integrated some of their dealers. Because dealers are individual companies in their own right, so the manufacturers carried out the restructure slowly, respecting the dealers’ own business; but after the Lehman shock, the situation is getting worse. Not only the dealers, but the manufacturers are also having a hard time, which is accelerating the restructures now.

There are a few car dealers around our office but the nearest Toyota Netz shop was closed the other day. As for Nissan, when I rang the usual dealer to inquire about renewal of insurance, I got a recorded message saying that the office had been shifted to another area. When I rang the new number, it was connected to another Nissan shop nearby. I asked for the person I have been dealing with and according to him, the manufacturer is now looking at quick integration and his shop had to be integrated with this shop at the end of last month. Both dealers were separate companies, so he is now treated as a contractor but soon will be transferred. A harsh reality, isn’t it?
For us, the worst thing this kind of integration can cause is that, even if with the same manufacturer’s signboard, they do not always share their policies and price system; sometimes we do not continue to receive the same service. For example, a dealer only charged JPY 10,000 as a fee for a renewal of insurance but his new shop might charge JPY 12,000. Some may not do a free maintenance service before the change of ownership. In most cases, the conditions turn worse for us. This is because the new dealership would consist of new mixed employees and systems who will have to follow their old rules faithfully and recheck their costs and raise their prices.

Each car manufacturer and dealer now has to decide what to do to survive in this ever shrinking market in Japan.


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(Editor)
JPC TRADE CO.,LTD.
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Japan Used Motor Vehicle Exporters Association (JUMVEA)
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