Franchised dealers are concerned about the increasing levels of standards being imposed on them as a result of the new Block Exemption – and the costs they are incurring. Margins are being squeezed to what many feel is an unacceptable level as standards are pushed to the limit.
The RMI has expressed strong reservations about this. It is seen as a very expensive way for manufacturers to protect their networks from the threat of new entrants joining the franchise system. And in some cases, it is actively preventing dealers from growing their business – particularly where manufacturer requirements for their dealers’ corporate identity have effectively prevented those dealers from developing a multi-franchise business.
At the AM Financial Management conference last November, Alan Pulham, the RMI’s Franchised Director, predicted the rate at which franchised dealerships are closing would accelerate unless manufacturers eased the financial pressures they are placing on their franchisees. “The sector is now at a financial crossroads”, he said. “There’s a case across the whole industry for people to look at sensible cost levels”.
Matthew Carrington, chief executive of the RMI, will present this case at autoretailing 2005. He will also address the issue of standards-related bonus payments, on which dealers increasingly depend for their profitability. “The way dealers are rewarded for selling the manufacturer’s products and services has been changing for some time”, says Matthew. “Increasingly, margins are getting smaller as bonus payments become less focused on achieving sales targets and more on achieving manufacturer franchise standards and CSI. Many dealers feel this approach does not always help them to attract, satisfy and retain more customers”.
Grant Thornton Motor Retail are seeing many situations where standards are impacting on the way manufacturers and retailers work together. Paul Burrows and Nigel Ruddock will provide the conference with an insight into the financial effects on retailers and the longer term issues.
Also speaking on Day 1 of autoretailing 05 are Jacqui Smith MP, Minister of State for Industry & The Regions; United Auto Group chairman and CEO Roger Penske; Mark Berrisford-Smith, Senior Economist at HSBC Bank; Harley-Davidson Europe’s MD John Russell and Professor Leslie de Chernatony of Birmingham Business School. The conference chairman is TV newsreader Huw Edwards. More speakers will be announced in the next issue of AM.
Day 2 of autoretailing, begins with an opening address from Sir Tom Farmer CBE, and then breaks out into a series of ‘best practice’ management workshops including - Location Clause opportunity or threat, Working with manufacturers’ bonus schemes, Unlocking the profit in your property portfolio, Maximising profit from your data, How new technology is transforming the sales process, Strategic HR for small and medium-sized dealers, Retaining the owners of older cars for aftersales, Used cars: what and where to buy to make a profit, How to sell more finance in your dealership, Get your share of lifetime customer value, and more.
For more information about autoretailing 05, contact Luke Clements on 01733 468 325 or firstname.lastname@example.org. Or see the website at www.autoretailing.co.uk.