The typical European car dealer today is a private owner-operator with a single franchise who does business from one location and sells 200 to 300 new cars per year.
He has a small showroom, a small staff and small net profit, probably about 1.5 percent.
Analysts say that model will change in subtle and significant ways. Whether it is more like the US model, where dealers tend to be larger and more profitable, nobody knows for sure yet. But it will change.
Below are some standard features of today's dealer, followed by ways they may change, according to Philip Wade, author of the European Car Distribution Handbook:
Today's dealer is a private owner-operator: Many more will be owned by large groups in the future. Many private dealers in smaller markets are looking to sell their stores and retire. Carmakers, who now own and operate fewer than 2 percent of dealerships, want fewer and larger dealers.
Today's dealer holds a single franchise: Block exemption removes barriers to multi-franchising, but most dealers will stick with a single manufacturer if possible. Some may add smaller franchises to make the most use of their space.
Dealers combine sales and service: Though block exemption separates sales and service contracts, most dealers will continue to operate both businesses in one location. But some dealers may do service only. This is an opportunity for ex-dealers who have lost their sales franchises but still own the tools for service.
A typical dealer now operates in an urban street location: Manufacturers are still pushing individual dealers to upgrade facilities or relocate. More dealers are starting to relocate to industrial parks, where they find more space.
Dealers now sell about 300 new cars per year: Block exemption removes limits on how many cars dealers can order and to whom they can sell, a change that should favor larger dealers. Average throughputs have risen and will likely need to be still higher to compensate for declining margins and higher standards.
Dealers now average about 150 used car sales per year, mostly trade-ins: Dealers are becoming more interested in used cars because they tend to be more profitable than new cars. Europe's used car auction system is less developed than America's, but auctions could become more significant as dealers look beyond same-brand trade-ins to broaden their offerings.
The typical showroom now has room for about five cars: Manufacturer focus is on quality, not size, since build-to-order systems require less stock. But more complex model lineups may require larger display areas. Multi-make dealers might display only fractions of the full model lineup.
Service workshop, no body shop or fast-fit: Block exemption allows dealers to subcontract servicing but few are likely to exit this profit area. It is now easier to relocate workshops to cheaper locations, but most dealers will not. Parts profits are likely to fall, partially due to the entry of new franchised service outlets.
Typical outlets now have only seven to 10 employees: Little change. Staffing is the biggest cost for dealers. There is a shortage of skilled technicians and high turnover of sales staff.
Net profit 1.5 percent: As many as half of all dealers in a major volume networks are unprofitable in any one year. Block exemption does nothing to help profitability, and smaller dealers may be squeezed by more competition from larger players.