A question of attitude
What do dealers really think of the brands they represent and what does this mean to fleets? Curtis Hutchinson, editor of Motor Trader, reports.
The relationship between car manufacturers and dealers is complex. In essence they’re both after the same goals but their approaches can often be at odds.
Somewhere in the middle is the fleet boss of an SME who needs to source and maintain company cars in a hassle free and cost-effective manner and is heavily dependent on local dealers to make sure this happens.
Although some manufacturers own a number of their dealers the others are made up of a broad church of businesses ranging from small standalone family-run sites and regional groups to large plcs operating on an increasingly national basis.
The guiding rules are that the OEMs produce appealing new cars and the dealers sell them. Behind that the carmakers provide the marketing support, underwrite much of the finance and set quarterly sales targets. This all sounds fairly straightforward, but these targets have been ratcheted up since the financial downturn, as OEMs strive to keep production lines busy. Last year the new car market hit a record high over 2.6 million new car registrations. That’s registrations, not sales. For as long as anyone can remember dealers pre-register cars to hit their quarterly targets and then sell them as ex-demonstrators or manager’s specials. That way targets are hit, cars are eventually sold and everyone’s happy.
Or are they? Like any business, dealers are happy if they’re making a profit and that means having desirable new cars in their showrooms and decent margins. Furthermore workshops need to be kept busy servicing these cars over their ownership cycle.
What can hinder all this are the new car cycles which will leave all brands, at some stage, competing against their rivals with ageing model lines. Also, from time to time, OEMs will rollout mandatory new corporate identities adding significant costs to overheads.
Twice a year the National Franchised Dealers Association points a spotlight on this relationship with its Dealer Attitude Survey. Bosses of dealerships across the UK are sent a detailed questionnaire and invited to make their feelings known and with the guarantee of anonymity punches are not pulled for those who feel under the cosh. The results form a qualitative piece of research which is pored over by dealers and manufacturers here and by OEM head offices worldwide.
Inevitably, with 28 car brands under the microscope there are outright winners, downright losers and those treading water somewhere in-between. This summer’s survey had a high response rate polling the views of over 1,700 dealers from a universe of around 4,100 UK showrooms. Dealers are asked 12 questions about their manufacturer partners and invited to rate them from 1 to 10.
The question everyone goes straight to is the one that asks dealers how they rate the overall value of the brands they represent. Mercedes-Benz scored a near perfect 9.5 making it the most valued brand in the UK by its dealers. Kia, a steady climber in recent years, clinched second place with 9.2 and Lexus third at 9.0. Rounding out the top five were fourth placed Suzuki (8.9), a predominantly retail brand that consistently punches above its weight in terms of dealer and customer satisfaction, and BMW (8.1).
At the other end of the table there were a couple of surprises. Notably bottom placed Citroën which only mustered a score of 3.6, followed by Alfa Romeo (3.8), Jaguar (4.2), Volkswagen (4.5) and Mitsubishi (4.6). To put these low ratings into perspective the average was 6.2.
There are always mitigating circumstances. Alfa’s poor showing is fairly typical of the survey with its dealers still desperate for an expanded and competitive line-up. Jaguar’s lowly placing is a blip caused by the recent lack of new products, which has been addressed, and a move by Jaguar Land Rover to put both brands either under one roof or on the same site; a capital intensive requirement which will certainly be handy for local businesses.
Mitsubishi dealers are probably coming to terms with the growing pains of a brand which achieved impressive annual growth, largely on the back of the Outlander PHEV, only to see sales significant drop in the year to date. While 12 months on and Volkswagen is still feeling the pain from the Diesegate fallout with dealers on the front line when it comes to customer dissatisfaction with the OEM’s emissions shenanigans.
However, Citroën’s poor performance across all the questions is a difficult one to explain. Yes its year-to-date registrations are down but some of that shortfall can be explained by PSA Group’s decision to make the upmarket DS line a separate brand, a move which has struck a chord with customers judging by the rising registrations.
What will puzzle fleet buyers it that earlier this year Citroën’s UK operation won PSA’s President’s Award for its sterling performance in 2015. Its bottom ranking perhaps suggests a disconnect between head office and the network and the survey should act as a wake-up call for both sides. We’ll know in six months time when the next one is published.
For more insights from Curtis Hutchinson, click here.