Sanger Automotive Companies, Inc. is a company that operates luxury vehicle dealerships in Florida and Georgia. They operate dealerships that specialize in the following luxury brands: Cadillac, Lexus, and BMW and is considering the possibility of an exclusive franchise agreement with Fisker Automotive, Inc. for a plug-in hybrid vehicle. Sanger is one of the most successful auto dealers of the United States, Sager has annual sales of $700 million.
Fisker Automotive, Inc. was founded in 2007 and is based in Anaheim, CA. Both founders have had extensive experience in the automobile market as far as designing vehicles and operating large automobile companies. Their focus was to create a luxurious hybrid vehicle. Their target market are buyers of previously mentioned luxury car brands, but with a more environmentally responsible conscience.
Sanger Automotive Companies Inc, has a vacant location in Southwest Florida and is considering acquiring a franchise of Fisker Automotive, Inc. The company needs to determine whether or not to pursue a franchise for a plug-in hybrid electric vehicle by partnering with Fisker Automotive, Inc.
Company analysis of existing consumer base, offerings and sales will determine if this partnership is a good move and the potential profit of this venture.
There are 2 possible alternatives for Sanger Automotive Companies Inc,
? 1- Opening a Fisker franchise in southwest Florida. This will add another luxury brand to their current inventory with the addition of being environmentally friendly vehicles. This option has a cost of $200,000 for the franchise plus operating costs. Fisker is a well-known luxury electric vehicle brand with plans for continued growth and product line expansion, thus allowing Sanger to obtain a sustainable competitive advantage over neighboring dealerships.
2- Do not invest in a Fisker’s franchise. With this option the company won’t introduce a new line of luxury vehicles to their inventory. They won’t have to invest $200,000 in franchising cost.
Sanger Automotive Companies Inc, SWOT analysis.
Strengths Weaknesses Opportunities Threats
Successful auto dealer. High price for hybrid vehicles. Market for hybrid vehicles is growing. Market uncertainties.
Exceptional customer service. High price for hybrid vehicles. Vacant location for the franchise. Oil low prices
Loyal customer base Customer education. Tax credit to consumers. Hybrid segment is relatively new.
Wells stablished car dealer in the luxury car sales segment. Hybrid vehicles are relatively new. Not much competition on this segment of the market. Consumer lack of familiarity with hybrid vehicles.
The best alternative for Sanger would be to invest in Fisker Automotive and implement a brand extension strategy by using their existing brand in a new market. Fisker is a well-known luxury electric vehicle brand with plans for continued growth and product line expansion, thus allowing Sanger to obtain a sustainable competitive advantage over neighboring dealerships. As interest in electric vehicles continues to grow, Sanger can continue to phase out other brands (or lines within those brands) to make more room for Fisker vehicles, eventually opening an exclusive dealership.
Thera are some facts to consider when going for this alternative, consumer lack of knowledge of hybrid cars, and the incremental cost that Sanger would incur. But the market has a lot of potential for growth and Sanger has excellent customer service.
In order to be successful implementing this brand extension, Sanger will have to educate consumers on hybrid vehicles and address safety/performance concerns. Sanger should emphasize the tax credit consumers get for buying a hybrid vehicle. Sanger may want to sign a deal with Fisker to have exclusivity in the area.
Proposed $66K for incremental and targeted advertising, promotion, and public relations will assist Sanger in attracting potential consumers from nearby markets.
Sanger should talk about the benefits of using electric vehicles, having the biggest one that involves the environment. Living in an era where everything is about “going green”, this can be their biggest marketing strategy.
To be successful Sanger must continue to uphold their brand and keep providing excellent customer service and quality vehicles in the luxury car segment of the market.