Urban Science Roundtable: Plan Needed to Adapt to Block Exemption

FRANKFURT, Germany, Aug. 19, 2003 -- Automakers in Europe need to do a better job of setting realistic standards, clearing away inefficiencies and developing a proactive plan for dealing with change if they are to survive and take advantage of Europe's block exemption rules, according to experts at a roundtable by Urban Science Inc.

Axel Schnabel, managing director of Urban Science, Germany, said manufacturers have been slow in making decisions required under block exemption, which deregulates auto dealer networks to allow more competition and separation of new-car, used-car and service operations. "It's understandable why people feel uncomfortable making moves when it's still unclear what the right move is," Schnabel said. "Some players will move more quickly, while others, who still have not decided on some low-risk decisions, will be left behind, putting the whole industry in more turmoil than is necessary."

Planning their networks in Europe will require automakers to devote more management talent to the retail side of the business. "Too often manufacturers have looked at their networks as simply a point of distribution, a shelf to put the product on," said Jim Moloney, director of European Retail Networks for General Motors. "Most companies have not placed retail management as a priority ... and I think they're reassessing that in light of the new regulations."

Juan Jose Diaz Ruiz, of JJDR and Partners in Spain, said inefficiencies extend to the basic operation of the dealer facilities. "Manufacturers find it all right to have three shifts in a factory, but most dealers only have one shift," he said. "Yet they're investing huge amounts of dollars in facilities."

Other inefficiencies may result from standards set by manufacturers. Schnabel said discussions have focused on whether dealers will be paid properly if they implement the new standards.

In a survey commissioned by Urban Science and conducted by Roper ASW, more than half of automotive sales channel executives said there is so much information available now that decision-making is getting harder.

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 .