Multi-branding dealers gaining ground

HOW AUTO BRANDS SHARE THE DEALERSHIP PIE

Imagine picking out a vehicle from a lineup of different auto brands in one showroom. With this, you could compare the models side by side to find the one that suits you—without the need to visit several dealerships a couple of times.

Such vehicle shopping experience may sound far-fetched, but this concept is slowly being introduced to the public: these days there is now an automotive row where different car dealerships can be found in one stretch of road.

If you pass by Greenfield Automall, an area along Sta. Rosa-Tagaytay Road, you would readily see dealerships of competing brands namely, MG, JAC, Volkswagen, Suzuki, Mitsubishi, Chevrolet, and Foton. What is not too obvious though, is that these dealerships are under the management of just one or two automotive dealership groups.

Pro-customer

“This setup is actually pro-customer. We want to make it convenient for car buyers to have the options during that moment when they are on the lookout for a new car and are ready to purchase. With this setup, there’s no need to be in different locations because we bring the brands to them. We see the same setup in other countries like the United States so this idea is no longer new,” said Doroteo “Tey” Sornet, EVP and COO of LICA Auto Group that currently handles 13 automotive brands.

Indeed, the transformation of the business of selling cars is happening before our eyes at an incredible pace. While a number of big automakers still do not want their partners to set up another dealership that sells rival vehicle brands, the opposition is softening somewhat.

Sornet recalled that it was around 2002 when LICA started with the brand, Nissan, and then Chevrolet, a few months later. Today, LICA auto group offers a total of 13 auto brands with Chinese brand Geely as a recent addition. “In fact, we also have two motorcycle dealerships (Yamaha and Honda).
Currently, we now have 47 3S—Showroom, Service+Spare Parts—dealerships, which will soon become 58 once the 11 3S dealerships are completed by 2020 (for the motorcycle dealerships, a total of 18 are being targeted).

“While we do carry several brands, we assure our partner auto brands that we are into
focus selling. We have different management for the different brands, from the sales agents up to the general managers, and even the support group,” said Sornet.

He shared that at LICA, their people practice friendly competition among brands. “We encourage them to be more cautious on their own performance, and strive to improve more, rather than compete with the others. That’s how we can see progress and growth for each brand.”
Among the major players in the dealership business are the Laus Auto Group which operates multi-brand dealerships in Northern and Central Luzon and ANC Group which boasts of at least 40 dealerships each.
The others are the Ayala Auto Group which now operates at least 40 covering four brands (Honda, Isuzu, Kia and Volkswagen), the Chiongbian Group with at least 20 and the Yuchengco Automotive with more than 10.

More products

“These days you have to have more products to cater to the market. Moreover, your market share will increase as you reach out to tap the bigger passenger vehicle market,” explained Rommel Sytin, president of United Asia Automotive Group, Inc. (UAAGI), that will soon distribute the Chinese auto brand Cherry after selling only Foton (another Chinese auto brand) for many years.

Asked if selling multibrands in one or adjacent showroom the future of selling cars, Sytin said with the escalating lease rates especially in prime locations, the showroom dealership will just be a point of sale venue just like in other developed countries.

“That would be our aim one day, when a car buyer would enter one showroom and be able to check out several competing auto brands. Imagine the convenience this setup brings,” he said.

Sytin said UAAGI will continue to strengthen multibrand setup. “One example is what we are now doing at Greenfield
Automall in Sta. Rosa, Laguna. Auto brands must understand the present (business) situation and developing trends. For me, as long as the partners do well as a distributor, and provides utmost customer service, I don’t see any problem with this arrangement,” said Sytin.

Bold measures

For Sytin and Sornet, auto dealership groups like UAAGI and LICA must adopt bold measures to ensure that they and their networks are well positioned to accommodate future automotive trends, regardless of how events play out.

“The stakes are high. Dealerships that take the wrong steps—or cling to the status quo—risk losing a large portion of their revenue and profits, while those that make the right moves could see their revenue and profits grow even more,” said Sytin.

Sytin added that multibranding smoothes out the ups and downs in an automaker’s product life cycle. “When one automaker’s range is getting old and does not sell well, you have another range to fall back on. What matters to us is that there is greater competition between auto brands and inside each brand, so that the consumer can benefit. If multibranding contributes to that, so much the better.”