Picture Manny, Moe & Jack Selling Porsches
Imagine: You head down to your friendly AutoZone or Pep Boys. While you shop for the latest “guaranteed 10 horses more” K&N filter, and the Manager’s Special floormats all the way from Ningbo, China, your incredulous eyes stare at a sign: “New cars at shocker prices! More than 30 brands! Up to 35 percent off!”
It won’t be happening at Manny, Moe & Jack soon, the franchise laws will make sure it won’t. But it’s happening right now in Germany. ATU, Germany’s answer to Autozone, is getting into the new car business in a big way. Indeed more than 30 brands, indeed up to 35 percent off sticker.
Of course they won’t have the 30 brands, with more than 20,000 models and trim variations in stock. You pick your car from a catalog, and it will be delivered to you. How does a Hyundai I30 grab you? €14,232, down from €21,900? Smash your clunker, and the Abwrackprämie will bring the Korean beauty down to €11,732. Come on down! (Hurry! 81 percent of the Abwrackprämien-Money is already spoken for, and the rest is going fast.)
The ATU auto dumping deal has been made able through the European Block Exemption Regulation, the law that blew the European car and after sales market wide open. Anything goes! Dealers? Who needs them! Warranty service? You next branded dealer will—has to—do it. And he will be happy to oblige, because he makes more money on warranty repairs and after sales than on new car sales.
Just to rub it in, ATU calls the offer “Mehrmarken” (multi brand) sales points, running cold shivers down the necks of marketing managers of all European brands who still are busy forcing their dealers into single brand stores, the Block Exemption Regulation be damned.
The ZDK, the industry group of the German auto trade, is watching the matter “with great concern,” writes Automobilwoche [sub]. The “already distorted price structure” of the German market would be thrown even more out of whack.
ATU can use the additional revenue. They had been sold twice to private equity firms at obscene prices, and the debt load is killing them. They have some in-house expertise in selling new cars. ATU CEO Michael Kern was Volkswagen’s sales chief before he left VeeDub to run the repair chain.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Sweet! I want to bypass most of the dealer experience COMPLETELY. Give me a showroom full of cars, let me test drive them, and I'll order one. I don't want to talk to anyone but hourly-paid car nuts hanging around the showroom. No sales people, no finance people, no gum-clacking receptionist.