For the first half of 2017 in Russia the total number of dealerships increased by 17 stores, reaching 3530 points were opened 206 new stores and closed 189. This was stated on Thursday, July 20, President of the Association “Russian automobile dealers” (ROAD) Oleg Moseev at the final press conference. This was the first time in 2014. According to moseeva growth in the number of dealerships contributed to the market recovery in the first half.
After four years of decline in new car sales in the first half of 2017, they grew by 7% to 718,53 thousand cars, reported the Association of European businesses (AEB). Market growth, in turn, contributed to the increase in sales volumes of cars at one dealership by 6% to 203 units, follows from the data of ROAD. The dealers turnover for January—June 2017 amounted to nearly 892 million rubles, an increase of 10.6%.
New showrooms open mainly mass brands, said Moseev. The premium segment requires much more investment as sales are not as good as in the mass segment, he adds. The leaders of the Central Federal district (opened 64 center, has closed 50) and the southern Federal district (opened 25 and closed 19 centers). On July 15, the total number of dealers amounted to 3530 PCs.
The reduction of the dealer network continued for three consecutive years, in 2014 the market has lost 750 dealers, reduced from 4100 to 3513 centers. Primary closure was necessary in 2015-2016, only for these two years was closed about 500 companies. In January 2017, Moseev said that the year may close another 150 centres. But now, after the incipient market recovery, it forecasts an increase in the dealer network by 30-40 new stores by the end of 2017.
However, new car sales far from pre-crisis, says the head of the ROAD. “We hope that the dynamics of opening new centers will not be significant, because even the existing number of dealers is excessive for the capacity of the market,” he says. But if the market will recover more actively, and the number of dealers will increase, says the analyst of “VTB Capital” Vladimir Bespalov. However, he admits that the explosive growth not wait.
New market for dealers
In the first half of the official dealers sold 295,2 thousand cars with mileage, which is 5% higher than last year, follows from the data of ROAD. As a result, their share in total sales of used cars increased to 12% (in 2014 was only 6%). According to forecasts of the ROAD, by 2022 the share of official dealers in this market will reach 30%. According to Bespalov from “VTB Capital” is a necessary measure for dealers due to the fall of the new car market.
The dealers don’t see the need to increase the number of dealerships. Now in Moscow there is no need in opening new showrooms, as the brands are already represented by several dealers, says predpravleniya “Autospeccentre” Alexander Zinoviev. “The opening of new showrooms is justified only in the regions where the brands are represented unevenly distributed”, he added. To open new showrooms will be mostly big players, adds CEO of the group “Avilon” Andrey Pavlovich: “the Proportion of new players are negligible due to high competition, capital intensity, low margins and ongoing large investments required by this industry”. According to estimates moseeva, the cost of opening a dealership range from 60 million to 600 million rubles. depending on region, brand and other conditions.
PR-Director of “Rolf” Svetlana Branitskaya believes that the development of dealer network in Russia is still not matched the level of the market. “The dynamics of revenue, as car sales in units, not quite accurately reflect the situation on the market: a large number of dealerships today are unprofitable, they balance around zero or do work “in the negative,” says she. Automakers at the opening of the centres focused on the sale of 3.5 million cars, but with the market volume of 1.4 to 1.5 million vehicles a number of dealers were made redundant, agrees Executive Director of the analytical Agency “AUTOSTAT”, Sergei Udalov. Thus, the largest Russian automaker AVTOVAZ has no plans to significantly increase the dealer network (currently consists of more than 300 salons), said his spokesman. “The main task now is to continue the re-branding and to improve the quality of customer service,” he said.
According to Branitskaya, a General dealers, burdened by debt, in the current market model was not viable. “They will leave the market or be absorbed by the large and successful players, so market consolidation will continue,” she said.