The ninth annual franchised dealer survey by the Institute of the Motor Industry revealed carmakers were showing confidence in existing UK retail networks.
The most surprising finding was an increase in the total of franchised dealerships despite the move to larger territories and business failures.
According to the IMI, there were 6,439 dealerships in March, up from 6,365 a year earlier. The March 1998 total was 6,381 and the IMI believes the retail industry is stabilising after years of falling outlet totals in the Eighties and Nineties.
Peter Creasey, IMI chief executive, said: “These findings could be a precursor to a much-needed shot in the arm for the retail motor industry which would benefit consumers. “We are advocates of professionally sold and maintained vehicles at a local level where customers have the reassurance of face-to-face contact with qualified staff.
“With the internet used primarily for accessing product information and comparative purposes, consumers are well prepared to do business in our home market. It is up to the industry to rise to this opportunity.”
The survey forecasts 200 dealerships being added by the end of the year though that might not be a net figure because of refranchising. Proton, says the IMI, has set the most ambitious target (80 new outlets by December) with Far East rivals Kia, Mazda, Perodua and Tata also indicating strong rises.
Manufacturers with the six largest networks - Ford, Vauxhall, Peugeot, Renault, Rover and VW - declined to disclose end-of-year targets.
BMW did not take part in the survey and information from Ford, Honda and Hyundai arrived too late. Many manufacturers supported the logic of a future division of sales and servicing. Citroen, Daewoo, Proton and Renault were among those planning to boost the number of service-only sites “which could fuel the need for more skilled technicians”.
Substantial changes were expected at Rover, according to the survey, with many dealers likely to give up the franchise. Asked about alternative methods of sales and promotion, almost every manufacturer had a presence online with half indicating direct orders were possible, with delivery via the franchised network.
According to the survey, carmakers are increasingly interested in the idea of selling cars from their motor show stands. Arthur Way, who compiled the survey for the Institute, said: “Franchised dealers should be aware of a growing interest among manufacturers to use motor shows as a sales channel.
“Recent discussions with manufacturers indicate that some believe the cost and upheaval involved in exhibiting can be justified in the future only if the occasion is used as a means to sell cars.
“More than half express the view that motor shows will become sales venues in the future, although few anticipate that non-dedicated outlets (such as supermarkets) and mail order will become a feature of the marketplace.”
Mr Way said the period of change and uncertainty characterising the UK new car market was reflected in the general tenor of the responses. Some tended to be vague and guarded.
“Many manufacturers were unwilling to outline in detail the objectives for their franchised networks during the coming year,” he said. “A higher number than usual appeared anxious to stress their support for the existing distribution system.
“In reality, almost everyone realises that manufacturers' relationships with their dealers are entering uncharted waters for a number of reasons. “These include the continuing debate over new car prices, the impact of the internet and - in particular - the new breed of internet-based retailers, and review of Block Exemption.”
Mr Way said some manufacturers wanted increasingly to invest in distribution activities. Many property developers were scouring the country for attractive dealer sites suitable for alternative use. “These are the ingredients of a potentially explosive cocktail,” he said.
There was a widespread perception that vehicle manufacturers were becoming more heavily involved in “downstream” activities, including distribution, said Mr Way. The reality was that the number of manufacturer-owned sites increased by 17 overall during the past year.
A clear divide was emerging between manufacturers which saw sales and servicing functions staying together and those who see the logic in a growing separation.
Six marques revealed they were planning to increase the number of service-only sites in their network and a further four stated a rise was possible. Mr Way said: “The past year has seen a marked shift in sentiment towards service-only sites with 23% of manufacturers believing there will be a greater separation between sales and servicing in the future. That compares with a mere 7% which held this view in 1999.”
Based on 21 manufacturer responses, almost half indicated retail buyers would be able to buy a vehicle via their website. “Typically, it is stressed delivery will be through the traditional franchised network,” said Mr Way. “It follows that manufacturers are refusing to admit publicly that the internet will provide the means to bypass their dealers. That would secure the prime objective of achieving a substantial reduction in distribution costs.”