Dealer opinions of the value in holding franchises has reached their lowest level for two years.

There are suggestions the inability of dealers to improve profits during the booming new car market may contribute to this negativity - and in increasing unhappiness at the level of investment expected in franchise standards.

The latest biannual National Franchised Dealer Association Dealer Attitude Survey results, published today, show that when asked the overall value of their franchises on a score of 1 to 10 the average for all respondenets was 6.6.

This is the lowest score for this question since the Summer of 2012 and was 0.6 points down on both last winter 2013 and summer 2013 surveys.

Thirteen of the 29 networks surveyed recorded beneath average scores for the question, with 15 scoring above average. The Citroen network recorded an average score of 6.6.

"The results to this question are seen as the main barometer of dealer opinions regarding car manufacturers," said Louise Wallis, NFDA head of business development.

"The top performing franchises are very much seen as the franchises to hold and aspire to and are often reflected further in other question scores in the survey, helping to explain why a franchise is performing well or poorly in this question. Significant movements in the score will reflect the relative changing fortunes of a particular franchise and any major events that may have caused them."

Top performers

Land Rover remains the top performing franchise on the question of the franchise value, with a score of 8.8.

However, the score is 0.8 points lower than for the survey last winter and the lowest score in the past two years.

Following Land Rover at the top of the table is Mercedes at 8.7, Kia at 8.6 and Audi at 8.5.
Mercedes' score has improved by 0.4 since the winter and is returning their best score in recent years.

Both Kia and Audi though have recorded scores lower than the previous survey as well as in summer 2013 .

Bottom performers

Honda is the lowest scoring brand with a score of 4.6.

This is a whole point lower than for the Winter 2013 survey and suggest dealers have some significant concerns with their manufacturer in this network.

Volvo, Toyota and Seat with scores of 4.7, 5.1 and 5.2 respectively, join Honda as the four lowest scoring franchises.

All these franchises have returned reduced scores compared to the winter 2013 and the summer 2013 surveys.

The franchise with the greatest improvement is Alfa Romeo which, in the winter 2013 survey, was the lowest scoring at 3.9.

In the summer 2014 survey the brand scores 5.9, up a full 2.0 points from the winter and just under three points from last summer.

Renault has also shown significant improvement up 1.5 points from the winter 2013 survey and last summer’s.

In contrast, Skoda’s scores fell by 2.4 points from winter 2013 to this survey giving a score of 5.4.

Skoda over previous surveys had scored consistently well above average, but dealers this time rated them over 1 point beneath the mean. Toyota saw the second largest fall to 5.1.

This shows a significant change for a brand that historically scored well above average and in the survey two years ago scored 8.1 and ranked as one of the best franchises to have.

Ford and Volkswagen also recorded significant declines in score both falling 1.3 points.

Volkswagen still remains above average scoring 7.1 but Ford has now fallen beneath the average at 6.4.

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Profit return

The average score for the question 'how satisfied are you with the current profit return by representing your franchise?' is 6.1.

This is down 0.6 points since the winter survey and lower than a year ago.

"The score would suggest most dealers are fairly neutral about the profit performance of their franchise, and that they are not seeing the situation improve," said Wallis.

"This is a little concerning at a time of a growing new car market and suggests that registration growth is not bringing financial growth to the networks at the same rate."

Scores from the individual networks give a very broad range.

Land Rover are the highest scoring at 9.2, indicating almost complete satisfaction from its network.

Toyota are the lowest scoring at 3.8 suggesting their network is fairly dissatisfied with the profit return of the network.

At the top of the table behind Land Rover are Audi, Kia and Mercedes reporting scores of 8.5, 8.1 and 8.0 respectively.

Dealers in these franchises all appear reasonably satisfied with the profit return from their franchise.

At the bottom of the table above Toyota are Honda, Volvo and Jaguar scoring 4.2, 4.5 and 4.6 respectively.

All three of these have returned lower scores than the previous report.

Furthermore views on the franchise profit potential were down since the winter DAS survey.

Mercedes at 9.1 scores highest and Toyota, with a score of 4.8, is at the bottom.

A number of scores in this question differ the question on current profitability.

Mercedes dealers score future profitability (9.1) more highly than current profitability (8.0) by 1.1 points suggesting they expect the franchise to be more profitable.

Jaguar dealers show the biggest difference in score with current score being 4.6 and future 2.9 points higher at 7.5. This probably reflects Jaguar dealers optimism that with upcoming new models and investment in the brand that profit levels will rise in the future.

Alfa Romeo also showed a 1.2 point rise. Conversely, Land Rover give 0.3 points score lower for future profit compared to current.

Only 6 franchises have scored lower on future profitability compared to current, Land Rover
(-0.3), Vauxhall (-0.5), Ford (-0.3), Citroen (-0.1), Vauxhall (-0.1), Nissan (-0.3) suggesting most dealers are more optimistic about future profit.

Franchise standard costs

Dealers were asked how satisfied they are with the costs required in your dealership to meet franchised standards.

The average score for this question was 5.7, down 0.5 points from the previous survey.

"The score shows dealers giving a generally neutral opinion on the question allowing for a fair amount of improvement.

"This suggests generally that dealers are not that happy with the amount of investment manufacturers are demanding in comparison to the return their dealerships make, and that this situation is worsening rather than improving," said Wallis.

Suzuki dealers with a score of 8.1 gave the highest score.

This is a strong score suggesting the manufacturer has got the investment levels right for the return the brand gives dealers.

Kia and Land Rover follow with scores of 7.7 and 7.0 respectively.

Generally, these networks are happy with the rate of investment to return but there could still be some improvement either by lessening investment demands or giving better profit potential.

Volvo returns the lowest score at 3.4, indicating dealers in this network are far from happy with their profit return in relation to the investment their manufacturer requires.

Toyota, with a score of 4.3, and along with Honda and Skoda with scores of 4.5, are the next lowest scoring franchises.

Renault has made significant improvement with this question increasing their score from 3.4 to 5.6 bringing them to just below average from the last survey where they footed the table. Lexus has also improved since the winter survey returning a score of 6.8 from 5.4.

Its current score brings them back to where they were in the survey 12 months ago following a dip through the winter.

Toyota, Skoda and Volkswagen all had 1.7 point declines leaving all three beneath average on this question with scores of 4.3, 4.5 and 5.1 respectively.

Its scores would suggest all three franchises have growing concerns about profit return compared to investment to their brands.

Sue Robinson, NFDA director, said: “The survey has been running since 1989 and it is extremely positive to see so many dealer networks taking part. This is in part due to the recent updating of the survey questionnaire, carried out in conjunction with comments and feedback from dealers.

“Dealers have found that there has been a slight decline in the overall franchise value in this year’s survey results with the average score down from 7.2 to 6.6.

“With the declines in scores for certain key questions, there is still scope with certain manufacturers to develop their relationships with their dealer networks as some still fall well below average in many areas of the survey. 

> The NFDA had the highest response rate ever in the 25 years history of the survey this summer receiving 1,662 responses, representing 40% of UK dealer networks.

The latest survey covered 29 franchises including Chrysler and Jeep who were separated for the first time.

> NFDA DAS full analysis.