Are Dealers Still Relevant? How Dealer Service Quality Impacts Manufacturer Success
Department
Michael A. Leven School of Management, Entrepreneurship and Hospitality
Document Type
Article
Publication Date
10-1-2021
Abstract
Most automobile manufacturers use franchised dealers to distribute their products and to perform sales-related and after-sales services. However, the link between dealers’ service quality and manufacturer performance is not well understood. Some studies suggest that these services’ quality affects product sales, repeat sales, and brand reputation. Others posit that dealer services are a commodity, and their quality may only affect sales in the extremes. We constructed data representing sales and service quality ratings of 1078 U.S. automobile dealerships over a year in five different car classes. We find that the quality of after-sales services positively influences sales of the brand in the dealer's region. Manufacturers whose dealers struggle with after-sales services take a hit in market share even in markets where they enjoy superior competitive status. We also find that sales-related services gain importance in highly competitive markets where the manufacturer has few dealers and competitors have many.
Journal Title
Production and Operations Management
Journal ISSN
10591478
Volume
30
Issue
10
First Page
3560
Last Page
3578
Digital Object Identifier (DOI)
10.1111/poms.13450