Business confidence in the motor retail industry has risen for the second consecutive quarter, and is now running at a record high since the launch of the AM/HPI Litmus Test in November 2005.

Almost half of dealers surveyed in the latest Litmus Test say they are more optimistic about their business prospects compared to three months earlier. And 44% predict a rise in profits over the next three months.

But dealers are still faced with rising investment costs to meet manufacturer franchise standards.

Two-thirds of dealers say manufacturers’ demands have intensified since last year. Forty-five per cent have invested less than £50,000 meeting manufacturer standards, 20% spent £51,000-£100,000. Five per cent – all AM100 dealers - invested more than £1m on either major refurbishments or new premises.

Asked whether it has helped them to improve sales, 60% of dealers say no; just 17% yes. Most tellingly, 69% say the investment has not helped them to become more profitable, a view held by 82% of AM100 dealers.

Further investment is required this year, with more than half of dealers (54%) expecting to invest up to £50,000 in their facilities. Just 16% expect to make no investment in meeting standards.

You can read this story in full in the May 4 issue of AM magazine. To subscribe to AM click here or call 01733 468659.