The Industry's Leading Source For F&I, Sales And Technology

Top News

Auto Dealers Satisfaction with Manufacturers Shows Dramatic Turnaround: J.D. Power Study

December 5, 2002

A dramatic turnaround is being reported this year in the overall attitude of America's car dealers toward automobile manufacturers. The J.D. Power and Associates 2002 Dealer Attitude Study(SM) released Dec. 5 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, according to Chris Denove, a partner at J.D. Power and Associates. "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," Denove said. "Another contributing aspect is that Ford and General Motors have successfully mended fences with many of their dealers after pulling back from retail initiatives. The real key to this year's study is how optimistic dealers are

about the future."

This year's study not only shows an increase in current profitability ratings, but also 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," Denove said. "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."

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 maximize 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 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," Denove said. "This improvement can be attributed in large part to

dealer confidence in GM's ability to revitalize 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 (MSRP).

The 2002 Dealer Attitude Survey sampled 3,385 dealers between August and October. This is the 16th year of the Dealer Satisfaction Index, and the 26th year for the study, the longest running study of new vehicle dealers.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001 registered global marketing information services firm operating in business sectors including market research, forecasting, consulting,

training and customer satisfaction.

The firm's quality and satisfaction measurements are based on responses from millions of consumers annually.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email: