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The global motor show industry

Motor shows have been one of the main exhibition victims of the recession. These giants of the exhibition calendar are being pulled down left, right and centre by an exodus of exhibitors, desperate to save costs in the hard-hit motor industry.

But not in the Netherlands. Amsterdam RAI was determined not to see its motor show go the way of others such as the 2010 London International Motor Show. AutoRAI, held in April, normally attracts between 350,000 and 450,000 visitors and is the largest consumer event in the country. The Netherlands has a population of 16.5m and no car manufacturers. The opportunity to gather the world's carmakers under one roof once every two years has made the show a national institution.

It was just over a year ago that MD of RAI Exhibitions, Ids Boersma, first got wind that the car manufacturers were looking to pull out of the show. The event organiser's office started taking calls from manufacturers explaining that budget cuts meant they would be unable to afford their stand for the 2009 event. It wasn't until the end of the year, just a few months before the exhibition was due to take place, that BMW became the first to confirm it would not participate in the show.

The German marque was not alone, and when the rest of the manufacturers began to follow suit, the future of AutoRAI 2009 fell into doubt. “In November a couple of brands again called us to say 'we think we are going to cancel'. This time, that quickly became 'we will cancel'. It was a bad day,” says Boersma. “This was four months prior to the show. The floor plans were ready, we'd sent out all the material and then we got these cancellations.”

Boersma decided it was time for direct action. He pulled together every exhibitor and crisis talks began. Was it possible to do a low-cost participation event and if so, what sort of figures were they talking?

“We told them we could create an event for just nine per cent of the cost...we didn't have a clue how to do it.”

Car brands spend around €1m, on average, to take a stand at AutoRAI. The least an exhibitor spends is half a million, with others spending as much as €3m for nine days of exhibiting. Boersma agreed with the gathered manufacturers: “This cost is too much”.

“We told them we could create an event for just nine per cent of the cost. The vast majority said they were interested. At that moment we didn't have a clue how to do it, but it was three, four months before the show and we said this is what we're going to do.”

Boersma followed the meeting with a survey, questioning the manufacturers to find out how their costs were built up. The bulk of the cost, 61 per cent, was spent on the stand itself. Forty-nine per cent of this went on stand building and staff, the other 12 per cent on square metres. Clearly, this is where Boersma had the greatest opportunity to reduce costs.

“So we created a brand new event,” said Boersma. “We said 'it's all about the visitor now'. We sold no square metres to exhibitors any more, they were just allowed to bring their cars. Companies were not allowed to make their own stands, instead we created ‘worlds’, environments where they could put their cars, such as cabriolets, family and luxury cars. No more grandstands.”

The result was that more cars were featured than at any previous show, up to 550 from 370 in 2007. The show also incorporated a motorcycle event and lots of entertainment, delivered at newly-built theatres and pavilions.

This entertainment came at a price. Costs rose beyond the promised nine percent, with exhibitors instead paying 20 per cent, but still, the average cost came down from €1m to €200,000 in a year.

Only 70 per cent of the manufacturers turned up and the show attracted just 220,000 visitors. This figure, although lower than hoped, was not unexpected. The number of visitors at a car show correlates directly to car sales, and car sales have plummeted in recent months. One major Dutch car importer went into bankruptcy as the show was being built. In addition, car firms normally generate a lot of publicity for the motor show through their own marketing. But due to budget restrictions, this was no longer the case.

However, despite the lower turnout and reduced exhibitor range, the event defied expectations; the number of leads that the manufacturers took was equal to 2007, at just 20 per cent of the cost. When the dust settled, Boersma saw that the RAI had taken an exhibition on the verge of collapse and turned it into a successful show.

He heard several explanations for the high number of leads. Fewer visitors means fewer distractions, and there were more cars so more choice. But ultimately he believes the absence of expensive, elaborate stands was key. “If you build a castle, people won't step into it. This was an exhibition of low-key presentations, there were no thresholds so visitors could just walk into each set very easily.

“The MD of Porsche told me that when you build castles, people hide away. Here there was no escape for the sales people, no room for them to sit down, so they were dealing with visitors every day.”

The cost-cutting was not without its innocent victims. Exhibitors saved money on stand building, but in an effort to reduce cost further, the organiser chose not to run the event across the Easter weekend. Easter is expensive for exhibitors because they have to pay the staff twice as much, but it had an impact on visiting families.

“We also skipped - and I think this was the worst mistake we made - the evenings. We stopped at 7pm where in the past we went on until 10pm,” says Boersma. “Ultimately it all had to do with downsizing the cost, this was our only gospel.”

So did the show break even? No, but it came close. “It was almost break even,” he says. “It was totally different to what we used to make in the past, but the important thing to us was to keep the show alive. It went on because the only alternative was no show. In 2010, there will be another car show. It may be different from the one we did, but one thing's for sure, the old show, with the big castles, will not be back.”

Ultimately, Boersma took a traditional, tried and tested format and revised it in three months, making a saving of 80 per cent for exhibitors, delivering a show that generated as many leads as the full-strength 2007 exhibition.

"In the exhibition industry we are not used to transformation. A change in exhibitions is normally done gradually, because not all exhibitors have the same objectives. Only in a crisis do you do it all at once.”

And if you encounter exhibitor withdrawals on a grand scale, make sure that you have the legislation in place to secure your event, says Boersma. “We will no longer accept cancellations as we used to. Now we have the legislation in place to say we will not just accept a cancellation, we will first study the individual case to see if we can accept it. Everyone expects an exhibitor to be there, so how can they cancel just three months prior to the exhibition?

“I once met the chairman of an association and he told me 'I know exactly what my members want'. A thousand members, and yet he said to me 'I know exactly what me members want.' So I asked him 'What do they want?

And he said, 'They all want something different'. This is what we have to deal with in the exhibitions business.”