The first-ever comprehensive survey of franchised motor Dealers reveals a mixed level of satisfaction amongst Dealers regarding the four pillars of the franchise model.

For the first time, the AADA (via automotive specialist accounting firm BDO) gave Dealers the chance to provide meaningful feedback on key franchise and operational matters that impact on the relationship between themselves and the manufacturers/importers (franchisors).

The results of the AADA Dealer Attitude Survey were presented by BDO partners Mark Ward and Randall Bryson at the AADA  National Dealer Convention held in Melbourne in August.

In summary the overall sentiment of Dealers across all four pillars of the survey was one of general optimism.

The ‘four pillars’ investigated were:
•  Franchise: What is the current state of play?
•  Financial: Is the model sustainable?
•  Facilities: Are you investing in your facilities?
•  Future: What does the future look like?


The Franchise Pillar

Dealers were asked to rate their satisfaction with their franchise relationship, based on measures of product quality, reliability, warranty support, consumer acceptance and overall satisfaction.

Of the 15 brands represented, Dealers reported positive feelings about their relationship with all but one brand – Chrysler Jeep Dodge.
Subaru Dealers reported the highest satisfaction rating, with a collective response close to the highest rating of ‘very satisfied’. Mercedes-Benz and Mazda Dealers were not far behind, with Honda, Toyota, Hyundai, Audi, and Kia Dealers also reporting levels higher than ‘satisfied’.

On the next tier, below ‘satisfied’ but above ‘neutral’, were BMW (marginally below ‘satisfied’), Volkswagen, Mitsubishi, Ford, Holden, and Nissan Dealers. CJD Dealers were the only ones to report levels of satisfaction below ‘neutral’, coming in closer to ‘dissatisfied’.
Asked to rate their satisfaction regarding the value of their franchise relative to others, Dealers were split. Seven groups of franchisees reported positive levels of satisfaction, seven reported negative levels, with one neutral.

Mercedes-Benz Dealers were the most positive, followed in order by Mazda, Toyota, Audi, Subaru, BMW and Volkswagen. Honda Dealers were right on the ‘neutral’ line, while Holden, Hyundai, Mitsubishi, Ford, and Kia were below it. CJD and Nissan franchisees both averaged out as ‘dissatisfied’.

Almost half (47%) of respondents reported using a factory-aligned financier (34% said they didn’t, 19% declined to say), while 58% reported actual penetration by a factory-aligned financier. Regarding new retail finance, 55% said they were ‘very satisfied’ with their factory-aligned financier, another 24% said they were ‘satisfied’, 11% were ‘neutral’, 8% ‘dissatisfied’, and 2% ‘very dissatisfied’.
For used retail finance, 45% were ‘satisfied’, 26% ‘very satisfied’, 22% ‘neutral’, 5% ‘dissatisfied’, and 2% ‘very dissatisfied’. Overall, 39% of respondents were ‘very satisfied’ with their factory-aligned financier, 41% were ‘satisfied’, 13% ‘neutral’, 6% ‘dissatisfied’ and 1% ‘very dissatisfied’.

The Financial Pillar

Almost half the Dealers surveyed reported negative feelings about their overall dealership profitability.

Seven brands gave ratings below ‘neutral’, with Kia the lowest, averaging a ‘dissatisfied’ response. CJD was just above that, with Holden, Hyundai, Mitsubishi, Nissan, and Honda also below ‘neutral’. Volkswagen and BMW franchisees were ‘neutral’, while Toyota, Mazda, Ford, and Subaru were all above ‘neutral’ but below ‘satisfied’. Audi Dealers reported they were ‘satisfied’ on average, while Mercedes-Benz Dealers again rated between ‘satisfied’ and ‘very satisfied’.

When it came to new car profitability, franchisees were again split almost down the middle. Eight groups gave positive answers and seven negative.

Audi Dealers reported the highest level of satisfaction, followed by Mercedes-Benz. They were the only two to average above ‘satisfied’, but Mazda, Subaru, Holden, Toyota, Volkswagen, and BMW Dealers all came in above ‘neutral’.
Ford Dealers rated just below ‘neutral’, as did Honda and Kia respondents.

Nissan Dealers were halfway between ‘neutral’ and ‘dissatisfied’, while CJD Dealers were just above ‘dissatisfied’. Mitsubishi Dealers were ‘dissatisfied’ and Hyundai Dealers slightly worse than that.

When it came to manufacturers collecting and reporting financial data, two-thirds of franchisees gave positive ratings. Audi Dealers led the way, almost reaching an average rating of ‘very satisfied’. Subaru Dealers were also more than ‘satisfied’, while Honda Dealers achieved an average rating of ‘satisfied’. The lowest rating was that of Kia Dealers, halfway between ‘dissatisfied’ and ‘very dissatisfied’.

In terms of the accuracy of manufacturers’ collated financial results, only Honda Dealers reached a level of ‘satisfied’, while Audi, Ford, Holden and Toyota Dealers were all above ‘neutral’. Mazda, Subaru, Mercedes-Benz and Kia Dealers came in right on ‘neutral’. Those recording ratings below ‘neutral’ but above ‘dissatisfied’ were Hyundai, Volkswagen, and BMW, but Mitsubishi, Nissan and CJD were all worse than ‘dissatisfied’.

As far as financial benchmarks go, Dealers rated net profit percentage of sales as the most relevant, followed by gross margin per department. Employee costs percentage of gross was third, with rent percentage of gross fourth, and advertising percentage of gross last of the five considerations.

Asked if financial benchmarks had become a self-fulfilling prophecy, 39% of respondents said yes, 24% said no, with 37% replying ‘N/A’.

The Facilities Pillar

Dealers reported they had invested $17 billion dollars between them in their facilities. The survey results ranged from $60 million in a single franchise metro dealership, to $500,000 in rural Victoria. The average investment was $8.5 million, with an average income return of 7.65%.

Audi Dealers were the most content with their facilities and level of investment, followed by Mazda franchisees.
Both reported levels above ‘satisfied’, while Subaru and Mercedes-Benz Dealers came in right on ‘satisfied’.

Ford, Honda, Kia, and Nissan Dealers were all better than ‘neutral’, but Toyota, Holden, Hyundai, CJD, and BMW Dealers were all worse than ‘neutral’, with Volkswagen Dealers bringing up the rear with an average rating of ‘dissatisfied’.

Dealer feedback on facilities included the belief that there are too many brands in Australia relevant to market size, making them unable to justify the expenses of facilities and staff. One described investment in facilities as “unrealistic and out of touch”. Another said that facilities offered “insufficient ROI as a dealership site on expensive real estate”. A further issue was with non-Dealer websites, which were “sucking the life out of dealerships that have major investments in facilities and staff”.

The Future Pillar

Asked about future market share potential, 49% of Dealers thought dealership profitability would remain similar five years from now. Forty per cent thought it would decrease and 11% believed it would increase.

The cessation of local manufacturing is a big issue, and Holden Dealers are the most nervous about it, with 53% believing it would have a negative impact on their business. Twenty-seven per cent said it wouldn’t, while 26% were neutral.

Half of Ford Dealers were neutral regarding the issue, with 30% believing it would have a negative impact on their dealerships, and 20% saying it wouldn’t.

Toyota Dealers are the most comfortable with the change, with 64% saying an end to local manufacturing would not negatively impact them. Twenty-seven per cent were neutral and only 9% said it would be bad for them.

On the matter of the number of brands in the country, 41% said the level would remain similar over the next five years, 35% said there would be fewer five years from now, and 24% predicted there would be more.

The major challenges Dealers reported they were facing included attracting and retaining quality staff, volume targets and their impact on profitability, “too many brands”, the regulation of finance commissions, and the relaxation of import rules.

AADA Feedback

Half of respondents said it was too early to say whether the “new” AADA has been effective; 38% said it has, and 12% said it has not.

The major issues Dealers want the AADA to address are:
•  Grey imports
•  Relaxation of import legislation
•  Finance regulation
•  Term of franchise agreements
•  Manufacturer target setting.

Objective of the Survey

The objective was to identify opportunities to enhance the relationships between the Dealer network and the manufacturer. The survey was designed to identify which areas of the relationship work well and those that can improve, which should then allow the parties to prioritise and address as they see fit.


Almost 300 Dealers participated in the survey, which was a very pleasing response. Dealers were asked to respond in regard to one particular franchise, whereas most are multi franchise. We would like to see even greater participation next year as it gives Dealers an opportunity to assist AADA in addressing any concerns.

Participation was invited from General Managers and Dealer Principals only.

In order to gauge the attitude of Dealers to each manufacturer, it was important to have an adequate sample size for each manufacturer, which then provides a level of comparability. Accordingly, AADA and BDO determined that an adequate sample size should be achievable for the manufacturers represented in the top 15 by reference to market share. Although there are approximately 51 new car manufacturers represented here in Australia, the top 15 account for more than 90% of the total volume.

Overview of the Survey

The survey mirrors similar surveys conducted by AADA’s sister associations, namely NADA in the United States and NFDA in the United Kingdom.

AADA engaged BDO to facilitate the survey process and deliver the results. In part, BDO’s involvement was intended to give Dealers and manufacturers the confidence that participation in the survey would be treated with total confidentiality.

AADA’s own instructions were that the participants’ names and their individual survey responses were not to be shared with any party, including themselves.

All up there were 45 questions which were a mix of multi-choice and free text.

For further details, you can view the presentation on the AADA website


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