Increased dealer scepticism is an unexpected side effect of the new European Union block exemption regulation, according to a new survey by the Retail Motor Industry Federation (RMI).
The RMI’s winter 2003/2004 franchised dealer attitude survey, published this month, shows that dealers are confident at the moment, but are unsure of whether their success will develop. Despite an increase in retained margins, very few expect profits to improve over the next year.
Forty-three percent of dealers believe profit potential has improved over the last 12 months. Thirty percent of dealers expect an upturn in profit potential over the next 12 months.
The majority of networks feel that, despite the new block exemption regulation, their manufacturer continues to exert a considerable degree of control over their business. However, opinion is closely divided over the question of future control.
Forty percent of dealers believe that their manufacturer/importer will increase the amount of control over their business in the next 12 months.
Opinion is also divided over the support manufacturers provide to dealers. While product advertising is seen to be effective, marketing by manufacturers is seen to be less successful. And while many are unhappy with the current parts distribution practices, vehicle distribution seems to be operating effectively.
Sixty percent of dealer networks believe that the broad marketing stance adopted by their manufacturer has failed to help improve margins; 67% are happy with manufacturer product advertising over the last 12 months; 47% of dealers are unhappy with the current parts distribution setup and 53% of dealers have seen an improvement in vehicle distribution over the last 12 months.
“Dealers are willing to give praise to manufacturers when they get things right, but are just as willing to point out any failings,” said RMI franchised dealer director Alan Pulham.
“It is particularly pronounced on this survey. Perhaps this is the result of the changes brought about by the new block exemption regulation. The new rules meant that contracts had to be renegotiated, and some dealers have had to reapply for their franchises.
“Now they have proved their commitment to their particular franchise, maybe a what-have-you-done-for-me-lately attitude has crept in. They have done their bit for the manufacturers, and now they want their concerns addressed.”