European automotive dealers are in general happy with new contracts with OEMs. Only two percent of the dealers show dissatisfaction.
Premium dealers are the most satisfied of all.
The attitude towards service contracts mirrors that one of the overall agreements.
However, the new SGS survey on automotive dealers' satisfaction with the new contracts, standards and bonus schemes revealed that there are substantial differences how dealers rate the contracts between the lowest and highest performing OEMs.
The study, conducted during March-April among more than 1,300 automotive dealers covering seventeen brands in France, Germany, Italy and the UK, also sheds a very consistent light on insights and expectations on the level of bonuses and incentives.
These are still assumed to be too low in relation to market needs and are expected to rise further across almost all brands.
Looking at the UK:
Across all dealers in the UK, none indicated an unsatisfied rating when asked of their opinion of the new contracts overall
The UK demonstrates a very positive result with no unsatisfied ratings on new vehicle sales standards
The UK rates just below the industry average (74%) for service contract satisfaction at 73.5%, as opposed to overall contract and vehicle sales satisfaction.
More than half of French and Italian brand dealers in the UK expect bonuses and incentives to increase in six to 12 months
The UK has the least positive results of any country on satisfaction with sales bonuses and incentives management.
Concerning the requirements for future improvements, most of the dealers interviewed in the research indicated that the bonus and incentive administration needs to be further simplified.
“The level of satisfaction in this area is only at half compared with that of warranty administration”, said said Roland Gagel, SGS global sector manager, automotive and initiator of the study, referring to the 2012 international SGS research on dealer satisfaction with warranty and policy administration.
In the report's conclusion SGS said: "Sales bonuses and incentives systems are too complicated.
"The dissatisfaction with the administration process (far more here than for warranty administration) is a clear indication to OEMs that something needs to change.
"The structure and administration needs to be simpler and more transparent so that dealers know what to do and what to expect as a result.
"Complicated sales bonuses and incentives systems, as seems to be case from responses to this survey, can too easily lead to the risk of error or fraudulent activity.
"Consultative audits of the processes at the dealer level, combined with a robust feedback and consulting process with the OEMs, is the most effective way to begin on a path of continuous improvement.
"An approach similar to the one already proving successful for OEMs seeking to improve their warranty process is highly recommended."
On June 1 the new European Union Block Exemption Regulation (BER) for the automotive sector came into effect.
Almost all manufacturers have used this opportunity to review the contacts with their franchised dealers and authorized repairers.
On next steps, the report concludes: "Growth and continuing to increase customer satisfaction has to be the next step now that contract discussions are more or less at an end.
"While processes and standards provide an initial base to brands to build their reputations and customer retention, monitoring and continually improving these systems is how to achieve better satisfaction targets and ultimately increase brand loyalty.
"If the newly signed contracts are seen as an end point rather than the starting point, the opportunity to fully realise brand growth and increased customer satisfaction will be quickly lost – and lost to the competing brands who prove more proactive when the signs of dealer dissatisfaction begin to show."
SGS conducted a survey among more than 1,300 dealers for the 17 main brands of Europe, in Germany, France, and Italy and in the UK, the four largest markets in Europe.