It has certainly been an interesting time to observe the motor industry over the past few months.
There has been much jockeying for position by the major groups, seeking control of the UK markets.
The rise and rise and rapid fall of Car Group will certainly cause more than a flicker of panic or relief in the Used Car sector.
Finally the newsmen now seem to be targeting the new car side of our industry. After a series of unfavourable Watchdog treatments, Panorama has got in on the act, attacking the bigger picture, the control exerted by manufacturers over their dealerships.
Whatever your views on the veracity of the incidents in these programmes (I have my own and my lawyers advise me to keep them firmly to myself), the fact remains that there is always a temptation for those with the power to exert more control than they legally or morally should do.
Those doing so will nearly always feel justified and may often plead that the ends themselves are justification enough for the means. These cases will almost certainly be denied strenuously, they have to be, especially as the manufacturers concerned may or may not have been set up.
Nevertheless, we are not all idiots. We have worked in this industry long enough to have heard of such agree agreements and to know of rumours of dealers losing their franchise on a technicality because they would not fit in with an orderly marketing policy. In short even if we have not participated ourselves, we are pretty sure it has gone on.
It seems to me clear that the market is about to change, and we had all better take note. There are at least four reasons for this:
The European Commission has already signalled its intention to get tough with its £65m fine on VW over anti-competitive practices.
Block Exemption is shortly up for review. If Europe believes for one moment that the franchise system is responsible for price fixing, then whatever other arguments our industry puts forward, it will abolish the franchise system.
The Market Area approach has introduced larger territories for bigger players. Bigger players always exercise more control, or they go out of business.
We are about to see a sharp reduction in demand. The business cycle and an unfavourable government will see to that. Manufacturers always exercise less control in a recession.
These four separate influences could well mean a very different market in the next five years. Taking the worst case scenario, the abolition of the franchise system, what could be the results?
We probably only have to look at the Electrical and White Goods industry to know what might happen. 30-40 years this was structured very similarly to the car market, with dealers making as much money out of service, parts and used as they did out of the sale of new product. (Many may still remember a six monthly service on the television to change the valves!)
Today it could not be more different. Dixons has almost total control of the high street, a number of major players operate on retail parks, and the enthusiasts are served by any number of specialist shops and mail order houses.
Service is no longer part of the equation. Products therefore have to be very reliable to survive. Warranty ids the exception rather than the rule, and is handled centrally rather than at each branch. Above all the level of salesmanship at each branch has disappeared, as has the level of product knowledge. It is into that gap that the expert retailer can step, and can do well.
Most analysts do not predict the end of the franchise system yet, though it may be nearer than any of us think. Whatever the reality, programmes such as those presented by Panorama can do the long term future of our industry no good – we cannot afford another one.