Preserving the Franchise Premium

New and expanding superstores are putting the used-car business of traditional franchised dealers under pressure. While eCommerce platforms increasingly drive customers to the internet (enhancing market price transparency), franchised dealer groups must re-double their focus on eliciting customer confidence.

A recent survey of prices asked on Autotrader reveals a clear distinction in prices asked by superstores and those asked by franchised and independent dealers.

The trend of prices asked by Cazoo, Sytner's Carshop and Pendragon's Car Store, Evans Halshaw and Arnold Clark is consistently £500 to £1,000 below that of franchised dealers Allen, Hendy, Gates, Trust, Bristol Street and others.

The manufacturer-association of franchised dealers can inspire greater customer trust, which may merit a price premium. However, eCommerce models tend to promote price-comparison, which fails to promote qualitative value from the franchised dealer. To make matters worse, superstore models consciously focus on enhancing buyer experience.

Surely, the car's colour, condition, location and other issues impact customer selection, but is the customer likely to take a 15,000 mile Ford Fiesta from People's at £13,000 or will they choose the same car from Evans Halshaw or Cazoo for £12,250 and £12,500 respectively?

Franchised dealers can establish confidence that customers want and are willing to pay a premium for. Going forward, they will have to find a way to move their eCommerce approach away from price-comparison by promoting the customer benefit of buying from a franchised dealer