Franchised car dealerships set to fall by 115

The number of franchised car dealers in Ireland will fall by 115 in the next four years, according to a major report on the Irish motor industry.

The report was carried out by Saleslynx, an automotive research, consultancy and training provider, and predicts that the number of franchised dealers will fall from 490 to 375 or less by 2016.

Most of the closures will likely happen in the next two years, according to the report.

Saleslynx said that dealer numbers have already fallen by 110 since 2006, but will likely see a further dramatic decline in the coming years.

According to the report a car dealer is unsustainable below 300 sales per year. However, the average new car sales per dealer totalled just 183 last year.

Although the report found that the new car market is set to grow from 80,000 this year to 112,000 in 2016, Saleslynx said that the increase is too low and too slow to restore profitability.

Report author Brian Milsted noted that the amount of available service work is declining and thus won’t be enough to offset falling sales.

“Another problem is that the supply of used cars for dealers to retail is constrained by weak new car sales volume. The combination of these factors means the number of dealerships will have to fall.”

Mr Milsted said some dealers will leave the industry voluntarily or through business failures.

“Many will also be culled as vehicle manufacturers use new European Block Exemption regulations, effective from May 31, 2013, to reshape and reposition their dealer networks,” he added.

The days of the private importer also appear numbered. According to the report, manufacturers are continually taking over their retail distribution in Ireland. In 2006, 56% of the passenger cars and LCVs sold in Ireland were distributed through private importers, while last year it was just 33%.

However, the report indicates that a move towards more manufacturer-owned dealerships and more manufacturer-supported dealerships is under way.