Lexus plans overhaul
September 23rd, 2009 by Richard Aucock
LEXUS is to reconfigure its UK dealer network – and is ensuring every retailer is a part of the changes.
General manager Ewan Shepherd says the current retail network needs overhauling. That’s because it is geared up to sell far more cars than it actually does.
This is hitting retailer profitability.
‘Our network is built for sales volumes of 15,000 – but, this year, we expect to sell 7500 cars. Even by 2012, we don’t expect to be selling much more than 11,300 cars.’
So, the firm is returning to a ‘high margin, high cost service, high retention’ model. This is going to result in network changes – including, admits Shepherd, some current dealers losing their sales status.
‘We want to ensure everyone is profitable,’ said Shepherd. ‘Every single point should be viable with NO support.’ Lexus thus briefed its car dealers, in a half-hour meeting during a trip to the Frankfurt Motor Show, on a new ‘hub and spoke’ model.
This will maintain full standards at the brand’s main points. But, where an area is more marginal, the sales point will be moved to a sales satellite – leaving that to meet the lower commitments of service only.
‘We are open to how this will work,’ said Shepherd, ‘so long as our coverage is maintained.’
Shepherd stressed the total number of outlets will remain at around today’s 53-point size. But there may be around 15 percent fewer car dealers selling cars, as some retailers switch to service-only.
Car dealers are being fully briefed on the changes, which are not due to be imposed until 2011, when new contract will be issued for the network.
‘Our main exercise now is to sit down on an individual basis, and decide what it means for each dealer.
By Richard Aucock
September 23rd, 2009 at 4:45 pm
“Our main exercise now is to sit down on an individual basis, and decide what it means for each dealer”
Lexus speak for “We have to let you go…”
When I was a Lexus manager in the 90′s it was a ‘high margin, high cost service, high retention’ model’ and they did it well. Have they ever sold 15,000 units in the UK?