Branding May Threaten Productivity of Retail Networks, According to Urban Science

FRANKFURT, Germany, Aug. 12, 2003 -- Requirements by automakers that dealerships in Europe invest heavily in corporate identity standards may be doing more harm than good, according to experts who participated in a roundtable conducted in Frankfurt, Germany, by Urban Science Inc.

A study commissioned by Urban Science and conducted by Roper ASW found that 90 percent of auto executives said increasing productivity of their distribution channel was a high priority. But with block exemption changes about to take effect across Europe the methods by which auto companies have tried to increase productivity may be backfiring, executives said.

Jim Moloney, director of European Retail Networks for General Motors, said some vehicle manufacturers have imposed strong brand image or corporate identity standards on their retail outlets. "While that may be nice from an image standpoint," he said, "when you look at what has been imposed on the dealer, in terms of investment, we certainly see some signals that dealers have over-invested and the return on those investments isn't good."

Axel Schnabel, managing director of Urban Science, Germany, said with automakers spending more resources on block-exemption issues, distribution networks must become more productive to ensure that "block exemption doesn't simply result in higher costs."

Juan Jose Diaz Ruiz of JJDR and Partners in Spain said the auto industry has consolidated dealership networks in Europe over the last 10 years by 30 to 35 percent. For the average dealer, costs over the last few years have increased by 30 to 40 percent, he said.

Urban Science is working to boost dealer-network productivity, including:

* Creating integrated and pan-European information systems for network management that promote common processes at vehicle manufacturers and distribution partners.

* Identifying the actions required to have the most productive and sustainable network structure in place, with the optimum number and types of dealership locations.

* Analyzing the performance and productivity gaps at individual sites.

* Helping manufacturers gain an understanding of customer segments and attitudes.

Founded in 1977, Urban Science provides customized intelligent solutions to companies seeking to increase the market share and profitability of their retail networks. Urban Science is headquartered in Detroit and serves its global clientele from offices in the United States, Spain, England, Germany, Italy, Australia, The Netherlands, Mexico and Japan. For information: www.urbanscience.com .