F&I Management & Training

Car dealers across Europe could be in line for financial assistance from manufacturers to help ease the burden of declining revenues.

According to the Financial Times, the credit crisis is forcing carmakers to offer financial help in order to avoid losing parts of their sales networks. 

With most dealerships operating on a small margins and equity bases, analysts claim struggling banks could reduce lending, prompting fears dealers will not survive the economic downturn.

Last week Credit Suisse said in a research note that carmakers would probably have to financially support their business partners.

"We believe this will potentially absorb significantly more of (carmakers') cash in the near future," the bank said.

Volkswagen and Daimler recently created emergency programmes in Germany to aid their dealer networks.

Werner Eichhorn, head of VW German sales, told the FT that Europe's biggest carmaker "cannot risk a decay of sales structures that have been built up over years".

Some European carmakers are helping dealers to build their customer base or cut costs, through temporarily easing stringent standards.

Russian carmaker Avtovaz, which is 25 per cent owned by France's Renault, has requested a $1bn loan from the Russian government to help its dealers finance stock.

DATED: 12.11.08

FEED: MT