Car sales in Europe may be falling, but car importers could be set to grow in the coming years

• Roland Berger research shows: although starting from a difficult position, the European automotive industry expects to grow by around 2% p.a. by 2016
• Importers could profit considerably from this growth if they use the right strategies and do the right things
• They could make their retail sales 8-10% more efficient a year alone, for example
• Even the mature organizations and processes at national subsidiaries conceal potential efficiencies of anything up to 15%

Business was good in 2011, but Roland Berger's experts expect car sales in Europe to fall by around 6% in 2012. The market will recover in the mid-term, though: both OEMs and importers expect car sales in Europe to grow from around 13 million in 2011 to over 14 million by 2016 – up 2% p.a. But exploiting this growth potential in this saturated market means importers need to develop their business and improve their professionalism. And unlike domestic players, importers often have more room to improve, both in terms of sales and at their respective subsidiaries. These are the findings that are reflected in Roland Berger Strategy Consultants' "Importer Management Radar". As well as strategic issues, this "Radar" also looks at some other important aspects of organizing dealers' businesses, their retail networks and performance.

"While domestic carmakers are highly mature, most importers still have a lot of room to improve, at both wholesale and retail level," explains car expert Marcus Hoffmann of Roland Berger Strategy Consultants. "Because, in many cases, importers need to evolve their structures and business procedures that have grown over time to meet their high growth targets."

European car market prospects good

The slight recession in the eurozone is also leaving its mark on the European car market. The automotive industry expects car sales to fall 6% this year. "Things look better in the medium term, though," says Andreas Männel, who co-wrote the study: "We expect car sales to rise around 2% p.a. by 2016. So business is looking good, not just for domestic makers, but for importers too." Experts believe car sales in Europe to rise from around 13 million in 2011 to over 14 million by 2016.

Four main success factors

There are four main factors importers should consider to give the market what it wants: prioritizing key strategic issues, making their trading organizations sustainably efficient, looking at the size and quality of their retail networks and ensuring each of their dealers is performing optimally.

1. Key strategic issues
   
   The European market is a mature one: to continue to grow, importers need to bring their strategies in line with the maturity of their organization. This means they need to precisely set their growth targets and ensure availability of the required resources. But it's also important to develop an after-sales strategy, because this is what decides whether customers stay loyal to brands. They still have a long way to catch up in the fleet business, too, Hoffmann explains: "Importers only account for around 23% of the fleet business in Germany. They need to give customers what they want and tackle local companies' restrictive company car guidelines."
2. Effective sales companies
   
   Effective sales companies guarantee growth. So importers need to define clearly what they want their national sales organizations to do and create clear, transparent processes – or "lean management" as it's known. Non-European importers in particular still often have inefficient duplicate structures, with the sales competences of their European and home HQs overlapping one another.
3. Retail network size and quality
   
   As well as a well-functioning sales organization, an extensive dealer network tailored to meet the OEM's level of development is a critical success factor. Depending on their volume targets, each and every importer must decide on how large their dealer network should be and whether it should have one or two levels.
4. Performance of individual dealers
   
   Whether importers grow successfully is, ultimately, also down to each and every dealer. They, after all, are the people who are directly in contact with customers. So importers need to make sure dealers locally have all the relevant sales processes running optimally. Sales support marketing campaigns are just as important here as individual training and incentive schemes.