We all know how much dealers contribute to vehicle marketing but this is not about dealer costs its about OEM overheads insofar as they do or do not rise in proportion to the size of their dealer network. The OEM's tell us that the cost of running a dealer network rises in proportion to the number of dealers NOT the volume of sales.
A 6,000 dealer network requires roughly twice as many (dealer related) staff members to service as compared to a 3,000 dealer network.
They also tell us that the capital requirement for stocking vehicles and parts inventory for a 6,000 dealer network is roughly double the capital requirement for stocking inventory for a 3,000 dealer network. In other words they need to build and circulate twice as many (unregistered) cars for sale. OEM's must pay for labor and OES's for components to build the finished product. One way or another this inventory requires capital to floor it. Very often funded directly or indirectly through OEM credit facilities. Unless the OEM's receive cash on delivery they need to use their own capital to fund network inventory. The interest that they may either pay or receive for capital is irrelevant for this discussion.
If the average dealer inventory were $5 Million then the capital requirement for stocking 6,000 dealers would be $30 Billion as opposed to a 3,000 dealer network which would be only $15 Billion.
The view of many dealers is that it does not cost the OEM's any more to retain a large dealer network. What do you think?