PARIS - The sharp drop in French car sales is leading to a restructuring of dealer networks in the country.
The numbers of independent companies operating dealer outlets are falling at Renault, Fiat, Ford, Volkswagen and Audi.
Where the number of franchise-holders is stable - as at Mercedes-Benz - profitability is poor.
All carmakers are struggling to cut distribution costs.
They want to work with fewer and stronger retail partners.
Under pressure from carmakers, many dealer companies are closing or merging to improve profitability, while maintaining adequate geographical coverage.
According to trade newspaper Journal de l'Automobile, 145 French dealerships closed in 1997. That followed 212 closures in 1996.
Last year, the total number of dealer companies in France slipped below the 5,000 mark to 4,980.
'We think the network consolidation will go on,' said Jean-Pierre Vaillant, Fiat Auto France general manager.
Fiat had 306 dealers last year, but Vaillant said that 40 percent lost money.
Vaillant said he expects the number of Fiat dealers to fall to 250 eventually.
Fiat was badly hurt by the 20 percent decline in the French market last year.
Fiat group registrations in France fell by 34 percent to 115,000.
Renault had 385 dealers in 1997, down from 401 dealers in 1996. Ford France is also restructuring its sales network.
'The French car market will barely reach 1.8 million units this year and will be no more than 1.9 million in the long term,' said a Ford France spokesman.'But the break-even point for all networks combined is 1.9-2.0 million units.'
Pretax profits for Ford dealers last year averaged about 0.7 percent, according to Ford France Chairman Claude Brunet. He said that Ford targets 5 percent within four years.
To get there Ford is drastically consolidating its network.
Brunet has said that the total number of dealers will be reduced by more than a third from the current 303. Last year, the number of sub-dealers was slashed from 1,100 to 550.
Ford sales in France last year fell 16 percent to 136,000. Volkswagen France Chairman Michel Le Paire targets 224 dealers for Volkswagen and 188 for Audi by 2000. That compares with 312 joint VW-Audi dealers in 1996.
Altogether, about 100 dealers' contracts will be changed or cancelled.
Mercedes-Benz dealers also face problems. In 1997, two Mercedes dealer groups went bankrupt - Sofco, which owned six outlets in the Lyons area and Chevreux, which had four in the Paris area.
'We lost 1,200 sales because of this,' said Francois Le Clec'h, Mercedes-Benz France general manager. 'We will not increase our present total of 78 dealers. We must increase profitability.'
He said that 55 percent of Mercedes dealers in France earn a net profit under 2 percent. Fifteen percent lost money in 1997.