【正文】 s sales results to the current year‘s preplanned volume without consideration of how many days it took to sell specific vehicles. BUSINESS INTELLIGENCE GROUP US Automotive Distribution: Inefficient Network Dealers account for nearly all US car and mercialvehicle sales, but these works are increasingly inefficient. Automotive panies have not been able to relocate or shut down poor performers due to state laws. However, it is possible to reshape dealer works by orchestrating a series of ownership changes, encouraging weak performers to exit the market, helping top performers to expand, and encouraging dealers to improve sales skills. Given tight profit margins, manufacturers can definitely use the extra profit that a more efficient distribution system could deliver. ? dealer works were built in an incremental and uncoordinated way over several decades creating room for consolidation as well as other efficiencyenhancing improvements. ? Manufacturers have awarded franchises to thousands of independent owneroperators ranging from small family businesses to large scale national chains. ? Once a dealership opens for business, the manufacturer can‘t exert much direct control over it and must be content, essentially, with the role of product and financing supplier. Multibrand manufacturers face the additional plication of dealing with several overlapping works that work against one another. ? A dealer has substantial power to put a manufacturer‘s top and bottom lines at risk—for example, by cutting back its investment in facilities, pushing the brands of petitors, or pursuing fewer but highermargin sales at the expense of the manufacturer‘s volume goals—thereby optimizing its profits and undermining those of the OEM. ? US automotive manufacturers rely almost entirely on dealers to distribute their products. In 2023, dealerships had sales of more than $800 billion—close to 100% of the manufacturers‘ total vehicle sales. The manufacturers also depend on their dealer works to provide the aftersales parts and services that are fundamental to their success. Source: McKinsey Quarterly, Strategy Business, Wall Street Journal, EIU BUSINESS INTELLIGENCE GROUP US Automotive Distribution: Inefficient Network Factors Issues Geographic Distribution ?Outlets must be close to customers but not too close to one another. ?The once robust works of the Big 3 were built largely in the 1920s1950s and haven‘t been adapted to demographic shifts. These works are too tightly clustered in urban areas and too sparse in the suburbs. Dealer Sales ?Some dealers are better at running their businesses than others yet manufacturers can not eliminate poor performing dealerships. ?The experience of one major manufacturer suggests that, adjusting for market size and location, dealers in the top quartile sell three to four times as many vehicles as dealers in the bottom quartile. Business Format ?Providing service and parts is essential to the health of dealerships and manufacturers whose reputation depends on service. Some dealers cover 100% of their fixed (and even other) costs through parts and service. ?Some dealers do not capture downstream revenues in full. Traditional business formats require authorized dealers to provide service only at or near their showrooms. If a local market can‘t support the customary full sales and service operation, dealers have no way of providing service by themselves,4and the work forfeits tens of billions of dollars to independent repair shops and thirdparty parts makers. ?Some automakers estimate that they control no more than 20% of the total service business for their cars (margins on spare parts are several times higher than those on new cars). Brand Mix ?Manufacturers generally want dealers to sell only one brand at a given showroom to create strong brand loyalty, sharpen identity, and minimize petition within the work. Dealers usually want to hedge their bets, selling two or more brands, sometimes from peting manufacturers. ?Singlebrand dealerships are most viable in growing markets or for strong products that can make it on their own. Multiplebrand dealerships make sense in markets where a single brand can‘t give a dealer sustainable sales volumes. ?Some US brands might not be able to survive without sharing showrooms with a stronger plementary brand. Source: McKinsey Quarterly, Strategy Business, Wall Street Journal, EIU BUSINESS INTELLIGENCE GROUP US Automotive Distribution: Inefficient Network ? State franchise laws and other regulations protect dealers from ―intrusive‖ moves of OEMs. In some states, direct ownership of dealers by manufacturers is prohibited outright。 sB i g 3US Car/Truck Share 1996 vs. 2023 Source: The Economist, June 2023 BUSINESS INTELLIGENCE GROUP Big 3 Continue to Lose Market Share to Japan ? The Big 3‘s incentives (14% of sale prices) are likely unsustainable. Their dependence on increasingly large incentives to offset the lower resale value of US cars reflects perceived problems with their longterm quality and durability. For example, Toyota and GM cars can be virtually identical (sometimes made on the same assembly line as part of a GMToyota joint venture), but because GM sells in the usedcar market for 1520% less than Toyota,2GM routinely offers purchase incentives of $1,000 a car, four times more than Toyota‘s ? The Big 3 continue to concentrate their testing efforts on the defect rates of product ponents. However, this focus doesn‘t increase the likelihood of producing a more appealing car. For the Big 3, tests rate the car‘s ponents but with less emphasis on the performance of the entire car as measured by the desired attributes (such as quietness). Conversely, Japanese automakers are particularly effective at testing for the attributes that excite their target customer