UK dealers are anticipating another year of falling profit margins and rising costs due to continuing demands from vehicle manufacturers, according to a new survey from the Retail Motor Industry Federation (RMI).
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The RMI’s winter 2004/2005 dealer attitude survey shows that dealers are continuing to face low profits, as manufacturer requirements continue to increase.
Seventy percent of dealers say retained margins have fallen over the last 12 months, 82% say the broad marketing stance adopted by their manufacturer has not helped profit margins or improved new car sales and 52% are dissatisfied with the level of control being exerted by manufacturers.
Dealers do not expect the situation to change in the near future.
Ninety-four percent believe that manufacturer control will increase over the next 12 months.
Despite these concerns, dealers are seeing progress in their relationship with manufacturers.
Seventy-six percent say vehicle supply has matched requirements over the last 12 months, 94% are satisfied with the way vehicles are distributed to their dealerships and 73% expect overall business relations with their manufacturer to improve over the next 12 months.
RMI franchised dealer director Alan Pulham said: “Dealers have found themselves in a paradoxical situation in the last few months. They have had to make massive investment in their sites just as profit margins on new car sales have fallen.
“New corporate identity, and in some cases new buildings are the price manufacturers are asking for the continuation of the franchise. In most cases dealers have little choice but to accede to these requests.
“However dealers are also seeing new benefits. Manufacturers are taking a greater interest, and dealers have found that both the attitude of their partners, and the services they provide have improved.
“Dealers may feel they are losing on one side, but they also know they are making gains on the other. Hopefully the improved relations will help them return to a greater profitability very soon.”
