The New Power of Car Dealerships

In the article "The New Power of Car Dealerships" published in the Frankfurter Allgemeine Zeitung, Jann Vollmar, a doctoral candidate at WHU – Otto Beisheim School of Management, and Professor Dr. Martin Fassnacht, Chair of Strategy and Marketing at WHU, examine the shifting power dynamics within the automotive industry. Their focus is on the growing influence of car dealerships, which are evolving into comprehensive mobility service providers.

"Traditionally, automobile manufacturers controlled the entire value chain and wielded significant influence over both suppliers and dealers," Vollmar and Fassnacht explain. “However, German automakers have underestimated the complexity of their transformation and are trying to adapt on too many fronts. Meanwhile, car dealerships are skillfully adjusting to these changing conditions and strengthening their market position—partly by turning to alternative automakers, such as those from China.”

Based on a study of the 21 largest car dealership groups in Germany, the authors found that these groups have not only grown considerably in recent years but are also transforming into holistic mobility providers. "Today, car dealership groups are far more than just car sellers. They offer a variety of mobility services that enable, maintain, and expand personal mobility," says Vollmar.

The study illustrates that dealerships can respond more flexibly to changes in the automotive industry than manufacturers, who face numerous challenges such as direct sales and software integration. Dealerships have successfully implemented strategies for diversification, digitalization, and customer retention, bolstering their independence from automakers.

Furthermore, car dealerships have recognized the opportunities brought by the market entry of Chinese or U.S. automakers: partnerships with these manufacturers provide an additional option to to strengthen their market position and broaden their reach.

"Car Dealerships are actively shaping the transformation in the automotive industry and have become rather independent players," Fassnacht states. This should give German manufacturers food for thought.

The Frankfurter Allgemeine Zeitung published the full article on October 13, 2024.