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Retailers buoyant over 2002 growth

Almost half of Britain's motor retailers expect their businesses to grow over the next 12 months, even though most anticipate a decline in the economy.

This is revealed in a survey by business and financial advisers Grant Thornton which shows most of the others expect a stable coming year.

The level of optimism is in marked contrast to the result of a survey by Experian whose latest corporate health check covers the year to March of this year.

Motor retailers' profitability (based on average return on capital) declined by more than a third – 14.89% to 9.23%. The consumer boycott over the price of new cars – and competition from car supermarkets and internet dealers – were to blame for the dip, says Experian.

Grant Thornton's findings suggest prospects are now brighter. When asked about the preferred method of growth, 47% quoted development of new products and services while 39% suggested acquisitions.

The proportion anticipating an acquisition indicated continued dramatic restructuring within the sector, according to Grant Thornton, which surveyed more than 100 motor retailers.

Grant Thornton warns dealers that an optimistic outlook alone is not enough to assure success. The research revealed a number of “alarming” issues which needed to be addressed if dealerships were to meet their targets. In particular, Grant Thornton expressed fears that employment issues, which continue to plague the sector, were being overlooked.

Employment issues were a major barrier to success for motor dealers, says Grant Thornton. After uncertainty about the economic climate, the labour shortage was the single biggest issue facing dealerships, according to the survey.

Preston Ayres, head of Grant Thornton Motor Retail Entrepreneurial Services, said: “Finding and retaining good staff is a challenge which all industries face. However, the motor retail sector has a particularly poor track record in this area and there is a need to examine why this is the case, and to find appropriate solutions.

“We were disappointed to note that only 13% of business owners cited investment in training and development of staff as a preferred way to motivate and retain staff,” said Mr Ayres.

“Motivational leadership at 19% was highlighted as the favoured route. While leading from the top is clearly important, there is a direct correlation between training and retention of staff.”

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