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Manufacturer controls to increase in tough market say dealers

Dealers are suffering the double dilemma of falling profits and margins and increased manufacturer control of their businesses.

But they remain satisfied with the level of support they get from carmakers, according to a new survey from the Retail Motor Industry Federation (RMI) National Franchised Dealers Association.

The RMI National Franchised Dealers Association Summer 2005 Dealer Attitude Survey, published today shows that the trend towards lower profits and increased manufacturer control, highlighted in the winter/spring Dealer Attitude Survey, continues.

The most significant findings are:

  • 97% of dealers report that average retained margins on new car sales have fallen over the last 12 months
  • 72% of dealers believe that selling their range of new cars did not increase the profit potential of their business over the last 12 months
  • 62% of dealers believe that selling their range of new cars will not increase the profit potential of their business over the next 12 months.

    Dealers are also experiencing increased manufacturer control:

  • 94% of dealers feel their manufacturer exerts a considerable degree of control over their business
  • 47% believe manufacturer control will increase in the coming year.

    However, at the same time many dealers are very happy with the level of care provided by their manufacturer:

  • 82% of dealers feel the supply of new cars to their dealership over the last 12 months has matched their requirements
  • 97% of dealers feel the warranty policy of their manufacturer supports its products properly.

    Sue Robinson, director of the RMI National Franchised Dealers Association, said: "The next few months could be challenging for vehicle dealers. Margins have slimmed, and manufacturer control has increased again, and more than half of the dealers surveyed expect manufacturer control to continue increasing.

    "Despite changes in the market manufacturer demands remain as high as before. 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 option but to assent to these requests.

    "However, the survey shows that these demands should be balanced against the very good level of service dealers receive from their manufacturers. It is here that the real relationship can be found, and according to our survey it is as strong as ever."

    The RMI is running a series of performance clinics for its members designed to help them manage these challenging trade conditions.

    The first takes place in the Midlands in late September, with more scheduled for the following months.

    Louise Wallis, RMI head of business development, will be leading the clinic. Attendees include dealer principals, accountants, and other senior staff from dealerships of all sizes.

    "The intention is to help dealers improve the performance of their business, looking at costs, and efficiencies and their effect on profits," said Robinson.

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