Friday, August 29, 2008

GM retailer deals with increased demand, limited supply














by Damon Lavrinc

The Genser General Motors dealership in Moscow is in an enviable – if not frustrating – position. The outlet moves between 600 and 900 vehicles each month. But if supply could keep up with demand, the dealer's director of sales, Nataliya Ignatova, insists they could sell around 1,200 vehicles per month during the busiest sales season.

The dealership peddles the General's biggest brands – Opel, Chevrolet, Saab, Cadillac and HUMMER – with varying levels of success. Chevy and Opel are the biggest sellers, with the Lacetti and Aveo leading the charge, followed by the Opel Corsa and Astra, which are quickly becoming a popular choice among Russia's youth. However, GM's luxury brands only account for between four and six percent of the dealership's monthly sales... for now.

With those stats in mind, it's obvious that the average Russian consumer is more interested in value and, just as importantly, availability. Last year, the normal wait for a Lacetti was six months. While this rarely caused dealerships to lose a sale (buyers might choose an equivalent Opel model instead), it speaks volumes about the demand for economical, reliable transport among Russia's working class.

Ignatova admits that sales are likely to level off in the next year as the market reaches its saturation point, but that doesn't mean that a decrease in demand is inevitable – at least that's what the group is counting on. The dealership is expanding, with plans to put three more outlets online by the end of the year, at a cost of between $15 and 20 million each. Assuming consumers' appetites continue unabated, each dealership will begin to make a return on its initial investment within the next seven to ten years.

But if everyone and their mother owns a Lacetti (or Ford Focus), what can dealers offer fashion conscious consumers?

It's simply a matter of time before urbanites are ready to upgrade their no-frills transport to something with a bit more flare. The Genser consortium will be ready with HUMMERS, Caddys and Saabs, including the most expensive model at the dealership – a $120,000 Escalade.

"People's tastes are changing," Ignatova told us through a translator. Currently, consumers are interested in price, but style, and more recently, fuel economy, are becoming important.

The Genser dealership and its sibling sites are going to be there to heed the call when consumers come knocking. But in a market like this, Ignatova and her 50-plus sales team could deal in gerbil-powered cardboard boxes and still sell out every month.

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