Toronto, Ontario – While 52 per cent of Canadian car dealers believe the value of their dealerships is decreasing, over three-quarters are committed to staying in the industry and are pleased with the products they sell, according to a new survey by PriceWaterhouse Coopers and Dennis DesRosiers Automotive Consultants.
Of the 250 dealers surveyed, 82 per cent plan on staying in the business for at least five more years, including 95 per cent of Japanese car dealers and 83 per cent of the “Detroit Three”. In previous years, one in four dealers wanted to exit the business.
Of those surveyed, 90 per cent believe it is not a good time to sell their stores, because of lack of available cpaital, reduced goodwill valuations and lack of qualified buyers. However, 36 per cent would like to acquire additional dealerships, should they be able to raise the necessary capital.
“Despite market issues facing the automotive sector, particularly the Detroit Three, dealers are still planning to stay in the game and probably longer than what they initially intended,” said Terri McKinnon, automotive retail leader at PriceWaterhouseCoopers. “2009 is forecasted to be a difficult year, but the results indicate dealers are looking ahead and thinking long-term. The question is whether they have the right management team in place to weather the storm, as surprisingly, 35 per cent of dealers believe they do not.”
To help manage through the downturn, the vast majority of dealers are looking to increase revenues from fixed operations, and finance and insurance products, while 56 per cent are planning on tightening controls over expenses, including reducing inventory. However, only 56 per cent of dealers have confidence in the long-term plans of their manufacturers to successfully see them through the next ten years.
Of those surveyed, 75 per cent are very pleased with the products they sell, a significant improvement from previous survey results, when only close to half were satisfied with their products.