LONDON - Western Europe may have too many dealers, but there is lots of room to grow retail networks in the emerging markets of the former communist states.
New vehicle sales average just 446 units per 100,000 population across the 26 countries in central and eastern Europe.
That is one eighth of western Europe's level of 3,390 units per 100,000, according to a new report by UK-based consultancy Harbour Wade Brown.
And with import tariffs rapidly being removed - by 2002, 10 of the 26 countries will have abolished them - importers are scrambling to gain a foothold.
By the end of 1996 there were 6,486 dealerships in central and eastern Europe. The total new car market was 1,828,011 units. However, the sales figure is depressed by the large used-car import trade. Much of the used-car import business is illegal, involving stolen vehicles.
The black and gray imports are prompted by necessity: locals simply cannot afford new cars.
Harbour Wade Brown estimates the vehicle parc in eastern and central Europe at 40.6 million. This equates to 98 cars per 1,000 people, less than a quarter of western Europe's 436 cars per 1,000 people.
'At current new vehicle sales levels, it would take the region 22 years to replenish the vehicle parc, compared to 13 years in western Europe,' said Philip Wade, the report's author.
'The influx of used vehicles should accelerate parc growth and park turnover, although current levels may not be sustained as governments take steps to control the level and age of used vehicle imports,' says Wade.
The dealer networks are being developed more efficiently than in western Europe.
Manufacturers and distributors are using the opportunity to implement state-of-the-art networks, granting larger territories, for example, and developing satellite service operations.
On average, annual sales per dealership were higher across the region than in western Europe. The average in 1996 was 233 vehicles, against western Europe's 123.
However, the west European figure is depressed by the large numbers of sub-dealers in some countries. Average annual sales per main dealership in 1995 was 274.
And compared with the more successful American retail model, east European dealers are under-achieving. The average US dealer sold 674 cars in 1995 thanks to a relatively small number of outlets - around 22,000, serving a 15 million car market.
Carmakers are focusing mainly on the five Central European Free Trade Association (CEFTA ) nations - Poland, Hungary, Slovenia, the Czech Republic and Slovakia.
Opel dealers are especially strong in the region. Opel sells 460 cars per dealer in Slovenia and the Czech Republic, 499 in Poland and 631 in Slovakia.
The lessons of Saturn in the US, which sells more than 1,000 cars per dealer, have been passed on. GM covers the whole region with just 232 dealers. In CEFTA, there are only 161 Opel dealers selling 66,235 cars, an average annual sale per dealer of 411.
Dealership density is much lower than in the west. Only in Slovenia is the number of dealers comparable. Slovenia has 27 franchise points per 100,000 people, and 27 dealerships per 1,000sq km. That compares to a west European average of 28 dealerships per 100,000 people and 30 per 1,000sq km.
Other central and east European countries show a much lower density. Romania only has two dealers per 100,000 people. Poland, seen as the market with the greatest short-term potential, has only four dealers per 100,000 people and five per 1,000sq km.
While nearly all manufacturers have distributors in the five CEFTA countries, only a handful are represented in countries like Belarus, Moldova and the eight Asian CIS states such as Armenia, Uzbekistan and Turkmenistan. Altogether there are 496 national distributors, of which 74 percent are independent companies.
Thirteen percent are owned by the vehicle manufacturer, and 6 percent are joint ventures between manufacturer and independent distributor.
The report, Vehicle Distribution in Central and Eastern Europe, is available from Harbour Wade Brown, priced £495. (44) 1926 494141.