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Smaller firms see profits freeze

Seven out of 10 small automotive retailers have seen profits remain static for the last 12 months, according to a new report.

More than 700 of the 1040 dealers questioned said they had failed to see any growth in profitability. Research suggests small to medium retailers are losing out to bigger plc like Reg Vardy and Pendragon, which have seen profits soar.

It also sounds a warning that these retailers have failed to capitalise on two consecutive years of record new car sales. The study by Pinewood Computer Solutions, found a direct link between falling dealer profitability and a failure by retailers to prospect new customers. Now Pinewood managing director Neville Briggs is urging retailers to take immediate action and interrogate their database for marketing purposes or face the consequences.

“Some dealers are facing tough conditions and it won't be possible for all of them to prospect their way out of trouble,” he says. “However, those who invest in customer relations massively improve their chances of survival.”

Large dealer groups have invested heavily in consolidating core elements of their business such as call centres, accounts, parts stocking and administration. This has allowed them to reduce costs and overheads while increasing control over the business compared to disparate and remote operations.

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