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Dealers believe manufacturer pressure will increase

Dealers are anticipating another year of falling profit margins and rising costs due to continuing demands from vehicle manufacturers says a new survey from the Retail Motor Industry Federation.

The RMI's Winter 2004/2005 Dealer Attitude Survey, published this month, shows that dealers are continuing to face low profits, as manufacturer requirements continue to increase: >{?

  • 70% of dealers say retained margins have fallen over the last 12 months
  • 82% of dealers say the broad marketing stance adopted by their manufacturer has not helped profit margins or improved new car sales
  • 52% of dealers are dissatisfied with the level of control being exerted by manufacturers

    Dealers do not expect the situation to change in the near future:

  • 94% of dealers believe that manufacturer control will increase over the next 12 months

    Despite these concerns, dealers are seeing progress in their relationship with manufacturers:

  • 76% of dealers say vehicle supply has matched requirements over the last 12 months
  • 94% of dealers are satisfied with the way vehicles are distributed to their dealerships
  • 73% of dealers expect overall business relations with their manufacturer to improve over the next 12 months

    Alan Pulham, RMI franchised dealer director, says: "Dealers have found themselves in a paradoxical situation in the last few months. They have had to make massive investment in their sites just as profit margins on new car sales have fallen.

    "New corporate identity, and in some cases new buildings are the price manufacturers are asking for the continuation of the franchise. In most cases dealers have little choice but to accede to these requests."

    "However dealers are also seeing new benefits. Manufacturers are taking a greater interest, and dealers have found that both the attitude of their partners, and the services they provide have improved.

    "Dealers may feel they are losing on one side, but they also know they are making gains on the other. Hopefully the improved relations will help them return to a greater profitability very soon."

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