Mintel last looked at the car retailing sector in 2004, shortly after changes to the Block Exemption regulations governing how new vehicles are distributed and sold within the EU. This report will examine whether the new rules have yet had any impact on car dealers’ freedom to operate, and whether they have liberated the car servicing market. It will focus on the trends in dealership development and location, and the extent to which multi-brand dealerships have emerged. It will also explore how the requirement to meet manufacturer standards is affecting the ability of dealerships to make a profit on new car sales. In the wider market, the knock-on effect on used car sales is discussed throughout the report.

Consolidation between dealers was a key feature of the market in 2004, as larger dealers jostled for position in a newly restructured market. This report will investigate whether this trend has continued, and, if so; look at the motivations for dealer groups to increase their scale. It will also consider the impact of such enlargement on the smaller car dealers that are left behind. This report also canvasses the opinions of consumers on these issues, in addition to exploring consumer behaviour patterns as they relate to car purchasing and driving.

Sales of new cars were down by 5% in 2005, as consumers felt the pressure of rising bills for fuel, household utilities and credit cards. Rising costs are of as much concern to car retailers, which need a large amount of retail and workshop space and are especially vulnerable to, rises in the price of petrol. Added to this are crucial supply-side factors such as global overcapacity in the car industry and the growing number of model variants made available by improved car production technology.

The main theme to be explored in this report, therefore, is whether car dealers are making enough profit on new cars to enable them to survive in current market conditions. Related to that will be a discussion of the options available to dealers to strengthen their position in periods of weak consumer demand for cars. The report will also discuss the growing impact of the Internet on car purchasing, and what ramifications that is having for dealers; and the extent to which other alternative sources of supply, such as car supermarkets, have encroached on the traditional dealer model.