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RMI survey shows dip in relationship

Motor retailers have issued a call for greater support from their vehicle manufacturer partners in order to overcome the challenges of a stuttering new car market.

Many are still unhappy with the profit-earning potential of their franchises, and suggest that carmakers could put greater effort into marketing support and improving the margins available to their networks if they are to achieve the growth targets demanded.

However, the sector has seen improvements in some areas of the dealer-manufacturer relationship in the last six months, according to the Winter 2004/05 Dealer Attitude Survey, published last week by the Retail Motor Industry Federation.

Many of the retailers involved reported an increase in satisfaction in relation to parts and vehicle distribution across all 33 of the UK’s top networks.

"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," says Alan Pulham, RMI franchised dealer director.

"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."

The extent of the influence which their manufacturer partners have on their business remains of serious concern to the majority of franchised retailers responding to the RMI survey.

Some still feel that their worries and opinions are falling on deaf ears, and have little hope of their relationship with the carmakers improving in the short term.

Nevertheless, Pulham believes that many franchised retailers are beginning to see some new benefits, as the leading vehicle manufacturers like Lexus, Toyota and BMW/Mini take greater interest in their plight.

"Dealers have found that both the attitude of their partners and the services they provide have improved," he adds.

How dealers rate manufacturers

The RMI Dealer Attitude Survey shows a slight dip overall in the value of franchises, reflecting toughening trading conditions related to a contracting new car market.

Lexus – AM’s carmaker of the year – retains its place as the most valued franchise in the UK. Its relationship with retailers is as strong as that with customers, who consistently rate the company highly in terms of products and service.

Mini, which in last summer’s survey shared second spot with its BMW parent, now has the position to itself as the network begins to separate with standalone showrooms. With the arrival this month of the new BMW 3-series in UK showrooms, expect BMW to come back strongly in the summer survey.

Propping up the list is MG Rover. As uncertainty over the future of the British carmaker affects dealers and consumers – sales last year fell 18% to less than 77,000 – it suffers the survey’s largest drop in franchise value. Retailers are waiting for the Shanghai deal – if it comes off, the summer results should see an uplift.

"They may feel they are losing on one side, but they will 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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