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Showroom standards force dealers to quit, finds NFDA

One in three new car dealers is considering cutting loose from unprofitable manufacturer relationships, according to the latest research from the National Franchised Dealers Association (NFDA), part of the Retail Motor Industry Federation (RMIF).

The findings of the NFDA survey, conducted this autumn, show almost a quarter of retailers have reduced the number of staff they employ, while 8% have terminated a franchise and the same number sold a dealership because of manufacturer standards.

“Dealers told us that they are required to spend phenomenal sums on implementing standards that do not deliver profit back to the business, with one in 10 spending in excess of £1 million in the last four years,” says Sue Robinson, director of the NFDA.

The survey also revealed non profit cosmetic features were directing investment away from more important areas of dealer’s businesses.

“In a new car market down by more than 3% on last year, it is vital that these findings are acknowledged as soon as possible,’ says Robinson.

“While dealers accept the need for showroom standards, they do question the logic of pretty signs and sofas that incur massive expense with no return.

“With the average dealer currently making just 0.8% profit on every unit sold, every penny spent is critical. To make a financial outlay without any prospect of a return on investment would be considered commercial suicide in any business, and motor retail is no different.”

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