European luxury brands are insisting on exclusive U.S. dealerships, using both the carrot and the stick as never before.
Exclusive dealerships led the agenda at make meetings of most European brands at the National Automobile Dealers Association convention.
BMW, Saab and Volvo recently started their most serious campaigns to get dealers to provide single-line stores. Audi is offering dealers financial assistance to spruce up their dealerships. Lower-volume brands like Jaguar and Porsche are encouraging, but not requiring, exclusives.
'If you have ambitions to meet customer expectations, you have to face reality, and the customer expectation today is an exclusive customer experience,' said Hans-Olov Olsson, president of Volvo Cars of North America Inc.
'As we have been talking about quality in the past, and it has become a given, so it will be with the exclusive customer experience. Can you imagine any brand today that does not have quality? That is just the starting point,' Olsson said, in an interview following the jam-packed Volvo make meeting on Feb. 7.
NOW IS THE TIME
Why now? European importers are used to exclusive dealerships and factory stores in Europe, and they have longed for exclusive U.S. outlets for decades.
That longing became greater in 1989, when Japanese rivals Lexus and Infiniti debuted with exclusive dealerships. Land Rover North America Inc. also raised the bar, push one-line stores in 1991.
Four years later, Mercedes-Benz of North America Inc. required dealers in top markets to build exclusive dealerships or forfeit the M-class sport-utility introduced in 1997.
For the rest of the segment, three factors mean that now is the time:
1. Customers expect it.
2. Dealers can afford it, based on the highest U.S. sales in a decade. As day follows night, factory demands follow higher sales and dealer profits.
3. The factories can afford it, too, and most of the brands insisting on exclusivity are helping pay for it.
Saab Cars USA Inc. may be offering the sweetest carrot: interest-free loans to help pay for exclusive stores. At the other extreme, Volvo is threatening about 100 dualed dealers in its biggest U.S. markets with a big stick: Give Volvo an exclusive store or face termination.
BMW of North America Inc. recently disclosed it is taking a similar approach to rival Mercedes, using a new sport-utility as both carrot and stick. BMW is asking dealers to set up exclusive showrooms in return for getting the X5 sport-utility, which goes on sale this fall.
Staff Reporters Frank S. Washington and Ralph Kisiel contributed to this report