What's a small dealer to do?
There's a new European twist on the old story about the rich getting richer. Or at least the survivors are getting more business.
The number of car dealerships in Western Europe has declined sharply because of rules that were supposed to increase competition and make it easier for consumers to buy a car at the best price.
It has had a spiral of unintended consequences.
European block exemption rules imposed two years ago by the European Union's Competition Commission were supposed to increase competition by loosening the factory's grip on dealers. The theory was that fewer restrictions would allow dealerships to handle more competitive franchises and to sell in new markets, even across borders. The result would be a more efficient pan European market with stable, rational prices.
But several manufacturers raised the bar. They set higher standards that dealers had to meet, which discouraged a flood of franchise applications from undercapitalized, wannabe dealers.
Some of the standards also proved to be too costly for smaller, existing dealers.
So in the past two years, about 20 percent of the dealerships in Western Europe have closed their doors. European dealerships already were consolidating for many of the same reasons that U.S. dealerships have been consolidating for the past half century.
Last year, among Western Europe's 13 leading brands, the average number of vehicles sold per dealer contract -- including at satellite locations -- was 525. That compares with average sales of 754 per U.S. dealership location.
That's a healthier outlook for the dealerships that could stay in business. But small consolation for the little guy who was put out of business by bureaucratic good intentions.