A New Approach for Assessing Dealership Performance: An Application for the Automotive Industry

Abstract

The competitive nature of the contemporary business scenario requires productivity-driven organizations to be aware of the efficiency level of their dealers. The recent economic and financial crisis has highlighted the need for effective evaluation methods going beyond the limits of traditional performance assessment methodologies in the retail industry. The automotive industry is no exception to this logic. In this sector, traditional methods are often based only on market share performances, ignoring the key role of input-output ratios on the overall productivity of the parent company. Following this lead, in this paper we propose a method to evaluate the performance of dealerships taking into account both their market share performances and their efficiency. In order to assess dealership efficiency we use the DEA technique, and apply the proposed methodology to a multinational automotive company considering its Italian dealer network.