JD Power and Associates claims there has been a dramatic turnaround this year in the overall attitude of American new car dealers toward car manufacturers.

The company’s 2002 Dealer Attitude Study shows dealers are more satisfied now with manufacturers than at any time in the past 16 years.

The Dealer Satisfaction Index (DSI) increased 15 points (from 93 to 108) in the 2002 study, and represents the biggest single-year increase in the index since it was created in 1986.

The study shows a strong turnaround from six straight years of decline that saw the index drop from 100 in 1994 to an all-time low of 88 in 2000 (the index rose a modest 5 points last year).

Dealers appear very pleased with manufacturers' responses to a sluggish economy.

"Aggressive incentives have kept vehicles moving off dealer lots more quickly than would normally be expected in a slowing economy, making profitability one of the key drivers of the satisfaction increase," said J.D. Power partner Chris Denove.

"Another contributing aspect is that Ford and General Motors have successfully mended fences with many of their dealers after pulling back from retail initiatives," added Denove. "The real key to this year's study is how optimistic dealers are about the future."

This year's study shows an increase in current profitability ratings and an even stronger increase in the ratings of expected future profitability.

"There are two practical implications of dealers' high levels of optimism about the future. First, manufacturers are in a better position to request that dealers make capital-intensive facility improvements or build exclusive facilities for their franchises. Second, fewer dealers are likely to be seeking an exit strategy, which suggests that large consolidators may need to pay more money to acquire new dealerships," said Denove.

Lexus ranks highest in overall satisfaction, scoring 23 points higher than Toyota, which ranks second.

"Lexus seems to be firing on all cylinders with its dealers," said Denove. "Not only are Lexus vehicles hot on the market, the company's policies and processes allow dealers to maximise their returns with a minimum level of stress."

Cadillac shows the single-largest increase in dealer satisfaction, (34 points), moving it from 27th place in 2001 (and below industry average) to 20th place in 2002 (and above industry average). Much of Cadillac's improvement can be attributed to dealer confidence that the franchise has turned the corner in its attempts to reposition itself to compete for younger import brand luxury buyers.

"Cadillac and many of the other GM brands show particularly strong gains in the rating of models that are expected to be introduced over the next few years," said Denove. "This improvement can be attributed in large part to dealer confidence in GM's ability to revitalise the company's product line-up."

The study finds the main thing that dealers believe their manufacturers need to improve upon is to stop shifting the cost of doing business to the dealers. Cost shifting is a major concern for most franchises, but is of particular concern to domestic dealers.

The next two biggest areas of recommended improvement are the need to introduce new products and to increase the profit margin between the invoice and manufacturers suggested retail price.

The 2002 Dealer Attitude Survey surveyed 3,385 dealers between August and October.