Multi-Branding Strategies in the German Automotive Market

A study by Booz Allen Hamilton examines multi-branding sales and service strategies in Germany's automotive industry. The study is based on a survey of more than 400 dealers of six volume brands (Ford, Opel, Peugeot, Renault, Toyota, and Volkswagen), two premium brands (Audi and BMW), and 50 independent repairers with after-market "soft franchises" (Bosch and Coparts).

Multi-Branding in New-Car Sales

Booz Allen predicts that over the next five years multi-branding in automotive retail will increase in popularity. "In new vehicle sales, 30 to 40% of dealers will sell more than one brand," according to Booz Allen Senior Associate Sania de Miroschedji. "Our research revealed that large dealers — dealers that sell more than 200 new cars annually — showed the highest affinity for multi-branding. Volkswagen and Audi dealers are the most active in terms of future multi-branding initiatives."

In new-vehicle sales, 80% of dealers cited increased turnover as the primary motivation for adopting a multi-branding strategy, while 13% cited anticipated cost savings. Whereas many premium brand dealers said they opposed multi-branding for fear it would jeopardize existing relationships with their manufacturers, other dealers cited financial concerns and operational issues as major deterrents.

Multi-Branding in After-Sales

More than a third of dealers surveyed reported an interest in multi-branding in after-sales. "Most dealers show a higher affinity for multi-branding in after-sales compared to new-car sales," said Booz Allen Principal Steffen Schick. "Eighty-one percent said they hoped to achieve better usage of existing resources, such as an extension of their market offering. Premium brands like Audi and BMW cited anticipated cost synergies as a major driver." Booz Allen anticipates that multi-branding activity in after-sales will be dominant within the brand portfolio of large manufacturers — Volkswagen dealers already show a high interest in sister brands like Skoda or Seat.

Status of Multi-Branding Plans

Approximately half of the dealers planning to implement multi-branding strategies are still in the early planning stages. In new vehicle sales, 49% of all dealers with multi-branding plans are considering adopting another franchise, 28% have submitted an application to a manufacturer, and 23% are already involved in concrete negotiations. In after-sales, 58% are considering their next step, 30% have applied for a new franchise, and only 12% are involved in negotiations.

Independent Repair Businesses

Eighty-six percent of the repair businesses surveyed are opposed to focusing their services on specific automotive brands and have not applied for manufacturer authorizations. Booz Allen predicts that multiple manufacturer authorizations for independent repair businesses and auto service chains will be the exception rather than the rule.

About the Authors

Booz Allen Vice President Peter Soliman, Principal Steffen Schick, Senior Associate Sania de Miroschedji, and Associate Partner Bernhard Port are the authors of the "Mehrmarkenvertrieb und-service" study. For more information, please contact Steffen Schick or Sania de Miroschedji.

story posted October 9, 2003