Europe's big dealers gain market share despite pandemic

Europe's big dealer groups weathered the pandemic better than the automotive retail industry overall last year to increase market share and continue their growth trajectory.

Europe's top 50 groups as measured by 2020 revenue captured 13 percent of the region's share of new vehicle sales in the region through 2020, up 1 percentage point from 2019, rankings published by automotive retail analyst ICDP show.

ICDP predicts that the top 50, led by Switzerland's Emil Frey, will account for 15 percent of all new European car sales by 2025 as they expand and swallow up smaller groups.

The figure is up from 10 percent in 2015.

"We expect the consolidation process to continue," ICDP Managing Director Steve Young told Automotive News Europe. "That is driven by continuing M&A [mergers and acquisitions], which we continued to see last year and again this year."

Emil Frey's estimated 13 billion euros ($14.7 billion) in revenue from 555,000 new and used vehicle sales last year put it far ahead of second-placed U.S. group Penske Automotive, which posted revenue of 5.82 billion euros on vehicles sales totalling 231,172, mainly from its Sytner chain in the UK.

Frey took the No. 1 spot in 2017 from Penske after the purchase of 275 dealers from Volkswagen Group's dealer arm, Porsche Holding Salzburg.

The Inchcape Group and Arnold Clark, both UK-based, moved up to third and fourth, respectively, after Lookers in the UK dropped to fifth from third last year after suffering financial problems.

Big dealer groups will become central to automakers' plans to cut costs by moving to a direct sales model in which dealers act as their agents, rather than buying cars wholesale from the manufacturers as they do currently.

"The scale and professionalism of the larger groups will be an important enabler of the transition," Young said.

Relatively small dealers with high inventories will push back against the agency model more than larger groups more used to selling from pooled stock, predicts Young.

"If you have a market like the UK, where the dealerships are generally larger, they are quite sophisticated professional operators," he said.

The top 50 rankings are skewed at the top by dealer groups that also work as importers for brands, which swells their revenue with large numbers of wholesales to other dealers.

Dealer groups with big import businesses include the Netherlands' Pon Holdings, which moved to sixth from 17th in the rankings after providing clearer financial data.

Switzerland's AMAG at seventh place, Norway's MoellerBil in eighth and D'leteren in 10th all benefited from wholesale revenue as importers.

The pandemic hit group revenue by an average of 10 percent compared with 2019, with the top 10 groups hit hardest, falling 15 percent on average, while smaller groups were less affected. However, the overall trajectory for revenue remained up.

In 2020, the top 50 dealer groups still increased their average revenue by 58 percent compared with 2013.

A lack of data, particularly from non-listed groups, makes profits hard to track, but the evidence shows that many groups did well as the car market bounced back after lockdowns and subsequently tightened as automakers were unable to fulfil demand.

"There's been some fairly spectacular results announced by the public groups." Young said. "The shortage of products has actually worked to the benefit of both the manufacturers and the dealers and to a certain extent customers, which benefit from higher residuals."

Of the groups owned by automakers themselves, Porsche Holding Salzburg remains on top with 529 outlets and a revenue of 21.5 billion euros, ICDP figures show.

Overall, automaker-owned dealer groups accounted for about 900,000 to 1 million new vehicle sales in 2020 based on available data, giving them a share of 6 to 7 percent.

Renault shrunk its network in France and the UK by about 15 last year and 25 this year as part of a strategy to focus more on urban areas.

Last year Renault Retail Europe had 275 outlets in France, the UK and Italy, ICDP data shows.

Mercedes-Benz Retail meanwhile has sold or plans to sell 25 outlets in Belgium, the UK and Spain, ICDP said, estimating that Daimler-owned network had 179 outlets in 2020.