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 AGOURA HILLS, Calif., Dec. 14 /PRNewswire/ -- Sales are up and profits are increasing, but automobile dealers aren't any more satisfied this year than they were last year, according to the J.D. Power and Associates 1994 Dealer Attitude Study(SM), the nation's most accurate indicator of the attitudes of principal owners of automobile dealerships towards their relationships with manufacturers. The Dealer Satisfaction Index (DSI) industry average has remained steady at 100 for two years running. And the culprit, ironically, is too much success: Automakers simply can't supply dealers enough product to keep up with soaring demand.
 Despite the strong demand for vehicles, dealers are representing fewer nameplates on average and are not increasing the number of facilities. The industry in general is adjusting to accommodate shifts in the marketplace, which have left many manufacturers with too many dealerships. The study reveals that automotive dealers have increased their productivity and overall efficiency. Saturn ranks highest in dealer satisfaction and epitomizes the franchise best positioned to meet dealer requirements for more streamlined and profitable operations.
 "Traditionally, with the economy surging and consumers more confident, many dealers would normally take advantage of this situation and seek out new franchises to add to their portfolios, but they are not," commented J.D. Power III, president and founder of J.D. Power and Associates. "Dealers are, in fact, holding fewer nameplates on average and are not increasing the number of facilities during this market comeback period."
 The trend in the industry over the past seven years has been one of "right-sizing." Right-sizing is best reflected in the number of nameplates held per dealer and the number of separate facilities per dealer. This is partially due to manufacturers' efforts to streamline their dealer networks and partially a result of dealerships simply going out of business. It is also a reflection of the fact that manufacturers are having to accept the reality that many of their franchisors simply cannot afford to maintain separate facilities for each nameplate. Both manufacturers and dealers are feeling the pressure of too many dealerships. Dealers' operating efficiencies are reflected in the number of employees per dealer, and in the amount spent on advertising per dealer. Trends indicate that in recent years, dealers have adjusted to the changing marketplace with greater productivity.
 "The entire automotive industry is evolving into a new arena of retailing and distribution," stated J.D. Power III. "The pressure on both manufacturer and dealer is to address a marketplace that is clearly over-dealered for today's competitive environment, which is squeezing margins. Therefore, in order for dealers to enhance profit margins, greater facility consolidation must take place -- and that appears to be happening in both good times and bad."
 Since 1992, the number of franchises held per dealer has decreased from 2.77 to 2.49 in 1994. The number of separate facilities has also gone from a high of 1.59 facilities in 1989 to a low of 1.44 in 1994. The increased sales per dealer experienced for 1991 to 1994 indicate that dealers are selling more vehicles, holding fewer franchises, and operating out of a reduced number of facilities. Dealer efficiencies are also evident in the reduced number of employees per dealer principal. Retailers have gone from a high of 71 employees in 1989 to 58 in 1994. This indicates that increased sales per dealer are being handled by fewer employees. Finally, dealers are also stretching advertising dollars. In 1987, individual dealers were spending a total of $277,000 annually. Spending peaked in 1988 at $337,000 and has fallen to $259,000 for the full year of 1993. It would appear that the strong market has reduced the perceived need for dealers to increase their advertising budgets substantially.
 Saturn has worked with its dealers on addressing some of the critical issues discussed above. The franchise has addressed the need for dealer economies in everything from the initial relationship with its dealer body to its day-to-day operations. The partnership remains strong between manufacturer and dealer, and this has added to Saturn's ability to maintain its profitability among dealers as well as its positive marketing strengths. No-negotiation pricing innovations and non-confrontational selling techniques have also appeared to influence dealers' other franchise operations.
 Although dealer satisfaction appears to be static at the industry wide level, make by make there is great fluctuation in recent years. The industry leader this year remains General Motors' Saturn Corp. It tops the DSI with a score of 157. Despite some press skepticism about its future, Saturn's retailers appear to remain quite content with the "market area approach," in which no two Saturn dealerships are placed close enough to compete head-on. Competition comes from dealers handling other franchises, eliminating intra-franchise rivalry.
 When Saturn started out as a concept more than ten years ago it was stated by General Motors that they intended to examine, with an open mind, the best way to design, manufacture, and distribute an automobile in the 1990s. In spite of a huge investment, they have apparently succeeded to set the stage for a proper return on this investment. While design and manufacturing have done their part, the big payoff, somewhat unrecognized, has been an innovative distribution plan. By drastically cutting back on the number of dealerships they appointed, Saturn gave the retailer/investor the margin and volume to not only get a return on their investment, but also to institute a friendly -- and customer satisfying -- sales experience.
 "Saturn looked at the advantages the volume Japanese players like Toyota, Honda and Nissan had with only 1,000 to 1,200 dealerships versus more than 4,000 dealerships for the volume domestic makes like Chevrolet and Ford," explained J.D. Power III. "Saturn carved the country into roughly 120 market areas and appointed only 120 dealer principals. This has been a major unmatched competitive advantage, especially for a model aimed at the volume sector," Power added. "Within their market area, dealer principals have the opportunity to add additional outlets as their market warrants and many of them have already done so. To date, there are now approximately 314 dealership points for Saturn, a far cry from Toyota's nearly 1,200."
 Also noteworthy in the DSI rankings was the finish of Lexus -- second overall for the second straight year with a DSI of 140. Lexus' sales drop does not seem to have swayed its dealers, who remain highly satisfied with the franchise. But Lexus' DSI score has dropped from a high of 157 in 1992 to 140 in 1994. Lexus dealers, however, seem to be determined to ride out, the Lexus price disadvantage caused by the yen/dollar imbalance and are relying on the back-up staying power of Toyota.
 The J.D. Power and Associates Dealer Attitude Study(SM) is based upon comprehensive questionnaire returns from 4,163 dealer/principal owners, which represent over one-quarter of all automobile retailers in the United States. This year's annual survey was conducted in September/October 1994, and it reflects the dealer attitudes at that time. Attached are supporting charts which illustrate the trends in dealership operations as well as the Dealer Satisfaction Index (DSI) rankings for those franchises serving the U.S. market which rank at or above industry average on the index.
 J.D. Power and Associates is an international marketing information firm with headquarters in Agoura Hills. The firm also has offices in Detroit; Torrance, Calif.; Westport, Conn.; Toronto; and Tokyo. J.D. Power and Associates is best known for its marketing information, consulting and measurement expertise in the areas of consumer opinion and customer satisfaction.
 1994 J.D. Power and Associates Dealer Satisfaction Index
 (Index Scores of Nameplates)
 1. Saturn 157
 2. Lexus 140
 3. Jaguar 124
 4. Toyota 117
 4. Volvo 117
 6. BMW 113
 7. Mercedes-Benz 111
 8. Infiniti 109
 9. Honda 107
 9. Nissan 107
 11. Hyundai 106
 12. Dodge 104
 12. Lincoln/Mercury 104
 14. Ford 103
 15. Acura 102
 15. Buick 102
 15. Chrysler/Plymouth 102
 15. Porsche 102
 19. Mazda 100
 Franchises ranking below industry average (in alphabetical order): Audi, Cadillac, Chevrolet, Geo, GMC, Isuzu, Jeep/Eagle, Land Rover, Mitsubishi, Oldsmobile, Pontiac, Saab, Subaru, Suzuki, Volkswagen.
 Franchises not included in the official ranking due to small sample sizes (in alphabetical order): Alfa Romeo, Kia.
 Source: 1994 J.D. Power and Associates Dealer Attitude Study(SM)
 -0- 12/14/94
 /CONTACT: Patricia A. Patano or Lance C. Wilcox of J.D. Power and Associates, 818-889-6330/

CO: J.D. Power and Associates ST: California IN: AUT SU:

CJ-MO -- LA006 -- 5258 12/14/94 09:08 EST
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Date:Dec 14, 1994

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