Each year ICDP publishes the European Car Distribution Handbook (ECDH) which is the ‘bible’ for network planners and anyone who wants to understand the structure of European dealer networks as a supplier of products or services. Change normally tends to be gradual year-on-year, with little evidence that restructuring plans by manufacturers actually make a huge difference on the ground. Partly that is because of the netting out of appointments and terminations, but also because we look at franchise points rather than rooftops or sites, so a new franchise point within an existing site does not have a high visual impact when you’re driving around.
The latest edition of ECDH which we launched in a webinar last week is a little different. As it shows January 2026 versus January 2025, it captures a period when there was a big move by the Chinese new entrants in multiple European markets. We have also been able to capture for the first time a comprehensive picture of the extent of multi-branding. As many of the new entrants are relying on securing space in the dealership of an established brand so that it becomes multi-branded, these actions also have an impact on the established brand. They retain the franchise point – at least for now – but the overheads of the site will be shared, so it may be more viable for the investor than it would have been as a solus site.
This edition appears to show more deliberate adjustments to network structures than we have seen in previous years, driven by a combination of deliberate decisions by established OEMs and the consequences of dealers making their own choices about how best to exploit their property portfolio. We see evidence of OEMs implementing network rationalisation that should have benefited the retained dealers as they have picked up the volume from the terminated points. We now need to see whether this improvement can be sustained, or whether the thinner network will lead to a loss of share – a topic that we are actively pursuing in current ICDP research.
The multi-branding analysis shows how much the very rapid network growth of the new entrant OEMs from China has been dependent on securing space in the showrooms of the established brands. However for those new entrants that are successful, the sales per franchise point numbers are now higher than that of some long-established brands, and the rapidly growing parc means that the lack of an aftersales business will become less of a handicap. This in turn means that dealers may be more willing to abandon the established brand which is a valuable prop financially in the early days of a new entrant franchise.
The OEM network planning has clearly been hard at work proactively making changes to reshape the structure of their networks. The changes that are driven by dealers who are lured into the networks of the new entrants are not under the control of the established OEM network teams however, and how they respond will be key to the quality and viability of the networks they have in 3-5 years’ time. Their challenge is to maintain the attractiveness of their brand as a business proposition, and this is not only about structure and market opportunity, but also about how they work with their network partners. That word – partner – is widely used but sometimes does not reflect the actual quality of the relationship between OEM and dealer. Future success will rely on winning on two fronts – one to have control of the best sites, under the best operators, and the other on working together in all the operational interactions in a way which provides a win for both sides, with minimum friction.
For new entrant brand network planners who are under pressure from HQ in China to build networks quickly there are similar lessons. They are able to capitalise on the wave of interest and publicity that has accompanied the arrival and early success of the leading brands. However as shown in ICDP’s ECDH report, those leaders are now approaching the network scale of brands that have been here for decades, and in some cases as long as we have had a motor industry. The challenges will change for them and their dealer partners, and the fight to build or even maintain market share will be tougher. Margins will drop. Some mistakes and quick fixes that were made in the very rapid growth over just a few years will now need to be addressed, and how that is handled carries reputational risk. How well they build all the back-office processes, controls, systems and infrastructure that join the dots to create a genuine network will also be a real test.
We have not yet reached the end of these two parallel paths, but we can perhaps see the crest of the hill ahead. Network managers and dealer development teams will be critical to the success of the brands they represent. Dealer investors will have tough choices to make as they weigh up the relative merits of an unprecedented number of potential OEM partners, not all of whom will survive. There has never been a time like this in the history of automotive retail, so understanding the changes and responding appropriately will determine who gets the best view from the hill.