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Profit prospects are improving

Despite current fears about lack of customers and new car pricing, dealers are slightly more optimistic about profit potential over the next 12 months.

The NFDA industry average index, which has been dropping steadily for the past 18 months, has recovered slightly – by one percentage point. However, it is still below the rating recorded two years' ago.

There is rising optimism across a wide range of franchises, and notable improvements among the volume brands as carmakers move away from pushing units at the expense of margin. Only Renault is going backwards in this regard and has now fallen well into the lower reaches of the table.

A burst of enthusiasm from Kia dealers indicates how successful the new management has been in shaking up the franchise. But whether that enthusiasm translates into lasting sales and profit opportunities remains to be seen.

More significant are improvements in the rating at Rover (on the back of 75 launch), Citroen, Seat, Nissan and Toyota. These companies all have dynamic new product plans which will see their range transformed over the next 12 months.

At the other end of the scale, oversupply in the prestige market has seen Mercedes' rating plummet despite greatly increased volumes. Dealers used to long waiting lists for executive saloons are struggling to come to terms with family buyers queuing up for A-class and falling residual values.

There is no surprise in finding Proton and Daihatsu at the bottom of the table – both still struggling to find a clear brand image. Fiat and Mitsubishi are both under new management and will, no doubt, be fighting to instil more optimism and confidence in a largely demoralised network.

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