Does Wal-Mart Want to be a Dealer, Anyway?

Will Wal-Mart and the likes ever become franchised auto retailers? That question has been posed periodically, with the main focus on whether state dealership franchise laws would allow that. Looking at it differently is Umar Riaz, group partner and senior analyst at Accenture, a consulting firm. Even if they could sell vehicles, he questions whether mass-market superstores would do so. He doubts that

Will Wal-Mart and the likes ever become franchised auto retailers?

That question has been posed periodically, with the main focus on whether state dealership franchise laws would allow that.

Looking at it differently is Umar Riaz, group partner and senior analyst at Accenture, a consulting firm. Even if they could sell vehicles, he questions whether mass-market superstores would do so.

He doubts that they'd want to take on auto industry problems, “leaving that for individual entrepreneurs better adapted for the ever-changing new-car and used-car business.”

He says new pressures are rising for dealers of nearly all brands as they and their respective auto makers face growing competition created by bloated inventories, hefty sales incentives, over-capacity at assembly plants, and narrowing gaps in vehicle quality.

Meanwhile, faster product cycles make competition even more intense. “Redesigns must occur sooner to sustain sales levels,” says Riaz.

He adds: “I'm looking for automakers, in view of the rise in competition in all brands and segments, to fine-tune their dealer networks for more volume, profitability and efficiencies.”

He contends manufacturers are “somewhat dissatisfied” with the results turned in by the publicly-owned dealer networks, which auto makers see as driven more by stock prices than factory needs.

Accordingly, auto makers “will ask more from the privately held stores, especially in terms of better marketing, upgraded appearances and increased performances.”

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