The effects of grey importation of vehicles on the performance of franchised dealers: a case of Puzey and Payne

Abstract

The study is titled “The effects of the grey importation of vehicles on the performance of franchised new car dealers: A case of Puzey and Payne”. The main objective of the research was to establish the effects of the grey importation of vehicles on the profitability of franchised new car dealers. The research also sought to analyze the effects of grey imports on the sales of new vehicles by franchised dealers. The literature reviewed include Duhan and Sheffet (1988) views on the nature of grey imports and Clerides (2005) perspectives on the impact of grey imports on franchised dealers and the economy. The target population of the research were the employees and the management of Puzey and Payne. Interviews and questionnaires were used to collect primary data for the research on a sample size of 20 respondents whom were selected using the purposive sampling technique. The study shows that the performance of Puzey and Payne has greatly declined due to the influx of second hand vehicles from Japan, United Kingdom and other developed countries. The study also established that grey imports are substitutes of the new cars imported by franchised dealers through official channels of distribution. They are cheaper or affordable alternatives of new vehicles which explains the decline in sales by franchised dealers. The study also assessed government policies that relate to the importation of used goods and the effects on the economy. The main recommendations of the study are centered on encouraging franchised dealers to diversifying product range and include the selling and servicing of grey imports if they are to improve their performance. Also the research recommends that the government should put in place policies that rationalize unfair competition posed by grey imports in the motor industry.Regarding the implications of the research findings the researcher recommends that other areas of research be undertaken.