【正文】 that automakers use to satisfy demand are out of alignment. ? In record sales years (such as 2020), profits in the automobile industry averaged a mere % and only three panies—BMW, Honda and Magna International had 5% profit. ? Forecasts often miss actual demand. For example, demand for Daimler‘s PT Cruiser far exceeded supply when it came on the market. Then DCX ramped up capacity to 230K units, making it ordinary and buyers moved on. Right now the factory is discounting the model, further eroding the model‘s image. ? Suppliers are hurt by variation. When an OEM plans incorrectly on a particular platform volume, of about 1015%, the factory has to raise or lower volume suddenly. ? In 2020 sales were the lowest in four years, leaving vehicle inventory at 70 days. Seventy days of inventory can mean $40B in capital sitting on lots. Meanwhile dealers and OEMs spend $3B and $11B, respectively, every year on advertisements. ? The loop from production planning to manufacture to sale and back takes up to 6 months, which is too long to fix overproduction of an unpopular configuration or to inform suppliers of surges in demand. With a lagging market, intense petition and more rapidly shifting consumer tastes, this poor alignment has been more obvious in the industry than ever. ? Automakers are still applying last year39。 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 amp。 in others, manufacturers can‘t close or relocate poorly performing dealerships and must settle for isolated and relatively superficial storelevel improvements (remodeling showrooms or providing additional sales and service training). If the manufacturers were allowed, many would have already restructured their dealer works, consolidating their presence in some markets and expanding in others. ? A more integrated approach where dealers and manufactuers work together, sharing sales data, trends and information is likely the best solution for dealers and automotive manufacturers. ? Among the Big Three, Ford and DaimlerChrysler each has more than 4,000 dealer locations in the United States。 Business, Wall Street Journal, EIU BUSINESS INTELLIGENCE GROUP European Automotive Distribution: Increased Competition from EU Legislation Adopted in July 2020, and eventually fully implemented in October 2020, EU legislation for block exemptions will force the automotive distribution systems to bee more petitive, likely creating more price pressure for cars, parts, and services. Under the new rules, manufacturers can: ? Opt for exclusivity, granting exclusive sales territories for their distributors (thus limiting petition among dealers selling the same brand). ? Opt for selectivity, giving the dealer the right to sell cars to nonauthorized resellers, which can, in turn, sell them anywhere in the EU. This also allows manufacturers to ban nonauthorized resellers but permits dealers to sell and market cars directly to consumers anywhere in the EU. ? Much of this new legislation will lead to increased petition. Restrictions on multibrand dealerships are being eased, so brands will get even more petitive. Crossborder trade will also increase, which could lead to greater Inter sales, an acceleration of the consistency of car prices (which vary widely across the EU). ? New rules also threaten car manufacturers share and margins in the aftersales market (where they actually make most of their profit), by breaking down the car business value chain. ? Car makers will also be forced to give independent service providers plete technical information, as well as authorization of service providers. Source: McKinsey Quarterly, Strategy amp