Dealer Groups, Franchises and Independents: What's the difference?

By Marin Pretorius

At first glance, most car dealerships function pretty much alike. There will be some cars on display, some salespeople on hand to show you the available products, and administrative staff in the background to keep the paper trails up to date. But the way in which they go about their business can be vastly different, and this can have wider implications on your car-buying experience. Car dealerships operate on one of 3 different business models:

Dealer Groups

These are the big guns: groups of dealerships, across brand names and all over the country, all controlled by a single parent company. These groups often span the breadth of the car sales landscape, covering both new- and pre-owned sales channels, as well as service centres.

As an indication of the influence of dealer groups, consider that the Williams Hunt group has taken on Opel's distribution in South Africa. If the scale of that enterprise is impressive, consider that Imperial holds the importing and distribution rights for Hyundai, Kia, Mitsubishi and Renault (among others), and operate 358 dealerships in South Africa alone (and many more internationally) – and those are only two of many such examples. Big guns indeed.

Franchise Dealers

These are the “Original Equipment” (OEM) retailers – dealerships which have a distribution agreement with a manufacturer or importer. These dealers sell new vehicles from premises with facilities specified by the OEM, and usually have parts- and service departments, as well as pre-owned vehicle outlets.

However, there isn't much of a difference in the car-buying experience between dealer groups and franchise dealers. Certain service- and presentation standards must be met in both cases, because they have the same agreements with the OEMs.

Independent Dealers

These dealers hold no affiliation with any manufacturer, so they are not bound to the same standards as the franchise dealers. Independent dealers are usually involved in the used-car market, although some have actually secured distribution rights of privately-imported vehicles.

While franchise dealers are bound by manufacturer standards, independent dealers have their own regulatory body to set standards applicable for their industry – die Independent Dealer Association (IDA). Independent dealers are however not compelled to join the IDA.