AM Online

Extended online version: Dealers and manufacturers work together to fight recession

Dealers and manufacturers have been brought together in a show of solidarity against the adversity of the recession, with almost three quarters more satisfied with the relationship.

Almost all dealers (91%) have become more satisfied by the profit return represented by their franchise since the last survey.

The view comes from the RMI National Franchised Dealers Association (NFDA) Summer 2009 Dealer Attitude Survey which shows a distinct improvement in some dealer-manufacturer relations since the Winter 2008-2009 Survey.

The results were based on 1,076 respondents to the survey representing a total network size of 4,688 sites. The RMIF said figures for the network sizes were provided by manufacturer direct.

To download the full NFDA dealer attitude survey click here.

The results were mirrored by results from Sewells’ 2009 annual dealer attitude survey which shows dealer satisfaction with its manufacturer partners has matched its highest point.

The overall dealer satisfaction with manufacturers rose from 65.9 last year to 66.8 points out of 100 in 2009, which matches the highest levels of satisfaction ever achieved back in 2007.

The Sewells survey was based on the opinions of over 600 franchised dealers.

To buy the Sewells 2009 dealer attitude survey click here.

AM asked some of the manufacturers that performed well and also ones that performed poorly how they would improve or maintain the relationship they have with their networks.

How do you rate the partnership you have with your manufacturer?
Audi 4.2 – improvement of two points
Kia 4.3 – improvement of seven points
Citroen 2.9 – decrease of one point
Subaru 3.0 decrease of four points

Audi

Audi has worked to get stocking and demonstrator costs down for its network in 2009.

“Despite lower interest rates, new car stocking costs were significant and Audi provided a support package which extended the network's consignment periods and also provided a fund to assist with the sale of stock cars.

“We revised demonstrator standards to align the number of demonstrators required with the prevailing market conditions and provided a programme to support the networks costs of running their demonstrator flee,” Audi told AM.

Audi has made a conscious decision to ramp up the level of communication between itself and its dealers in 2009 and believes it has worked hard to have a collaborative approach to management of the economic downturn.

The German brand introduced a new “fixed price for the job” programme to get the network repairing older cars more than three years old and has also introduced a free MoT offer.

“We have also introduced a National Service Pricing programme, which through competitive pricing ensures that the vast majority of cars owned by the contract hire companies are serviced within the Audi network,” Audi said.

Dealer council

Audi has revised its dealer council and it's now meeting on a bi-monthly basis instead of quarterly and new sub groups have been introduced to deal with the “unprecedented circumstances” thrown up by the recession.

Audi said: “Meetings with franchise owners are also now more regular to ensure that these investors in the Audi brand are fully apprised of developments. These forums have been a vital component for discussing the immediate operational aspects of the market during these difficult times and also to help map the strategic future for Audi.

“The cascade of information to the entire network is vital and to address this Audi has conducted twice as many regional forums for sales and aftersales in 2009 and has also introduced a monthly television broadcast from the management team which is broadcast via the network's intranet.”

Audi’s biggest concern for the dealer network this year has been profitability.

Audi said: “There are positive signs that profitability is recovering across sales and aftersales in the second half of 2009, which is testimony not only to the sustainability of our network but also to the effectiveness of the collaborative approach, to our open communication and to new initiatives from the network and the manufacturer.

“Over the last few years the Audi model range has grown at an exceptional rate, and this momentum is showing no sign of abating. We have built a network capable of accommodating this growth, but our challenge is to ensure that we complement this with an outstanding level of service to the expanding, and increasingly diverse, customer base our broad span of models now attracts.”

Kia

Michael Cole, managing director at Kia Motors (UK), was pleased with the improvement in the partnership with dealers but made clear the company would not rest on its laurels.

He said: “We have reduced demonstrator costs, reduced stocking costs, delivered advanced bonus payments and sought to speed up payments of end of programme balances and scrappage payments.”

Dealers have seen similar margins to those seen in 2008 and Kia is working to grow retail volumes.

Cole told AM: “We continue to communicate effectively and continue to build on relationships already established and ensure costs are kept under control. Our new model introduction programme along with competitive pricing and warranties ensure dealer cash flow is assisted appropriately.


“We have improved the warranty payment systems and we are assisting dealers with improving key performance indicators to improve their overall business and profitability.”

Cole is focussing on maintaining volume and profitability for the network after scrappage has finished.

Chrysler

Chrysler highlighted the fact the survey only took the opinions of seven respondents from a network total of 50 sites.

Chrysler told AM: “For the first time in three years our dealer network is realising strong, positive levels of return with both operating and direct profits increasing.

“In fact through the very difficult trading environment that the industry has experienced in 2009, our number of profitable dealers has trebled when compared to 2008. The majority of the Chrysler network in the UK is now profitable with our upper quartile dealers experiencing a return on sales of over 3.2%.”

Chrysler has appointed 11 new dealers in the past three months and will be adding another six before the end of this year. Chrysler believes confidence in the brand is still strong and is rerpresented by business still wanting to represent the franchise.

Citroen

Marc Raven, communications director for Citroen said the results from the survey were not unexpected given that the franchise was going through a reorganisation.

Since the survey was taken, Gary Savage has been appointed the new managing director for Citroën in the UK and he is now running a dealer road show to engage with dealers.

The brand will also be revealing its new sales strategy for Citroen in the UK at its November national dealer conference.

Raven said: “We are confident that the September market performance of Citroen in the UK will show our determination to increase volume, which is a key driver of dealer profitability and dealer satisfaction.

“This will continue next year as we launch five new models, including the new C3 and the first model in our new DS3 range. These will drive the franchise forward and we are confident that the network will respond positively to these new products and our new strategy.”

Subaru

Paul Tunnicliffe, Subaru managing director, said: “We were ready for a kicking and I suppose I am still quite new and need to establish myself within the network.

“I try so hard not to take it personally, I was on holiday at the time and it ruined it. I think the reason behind the results was that in the past dealers were encouraged to register cars, have had to take on too many demonstrators and there has been a decline in STi sales.

“We want dealers to be making 2.5% return on sales next year and not all the network is profitable right now.”

Tunnicliffe believes Subaru’s return to television advertising in October to bring in new customers and new product in the Legacy and Outback will go some way to appeasing the dealer network.

He said the dealer network had performed well for the brand in customer satisfaction stakes, but there was still a slight disconnect with some dealers that hadn’t left behind the performance focus the brand used to have.

Tunnicliffe said: “We need dealers to realise that we aren’t a brand that can compete on things like scrappage with the Koreans and we’re about all-wheel drive, Boxer engines, estates and SUVs, this is where the future is for the company.”

For more insight on Subaru’s sales strategy for the UK see the October 23 issue of AM.

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