Poll shows many German dealers suffering losses

Mood has worsened significantly

Munich. The mood within the German automobile trade has worsened significantly.

A poll by Automobilwoche of 31 dealer associations found that many businesses are losing money. Specifically, dealers of volume brands are concerned.

The current situation does not give businesses much hope for an improvement during the second half.

"One dealer after the other is going down," said Rolf Leuchtenberger, president of the central auto trade association ZDK.

The situation at Fiat is the worst. "Approximately two thirds of our dealers are making losses," said Friedrich Karl Bonten, president of the Fiat-Lancia dealer association. He said that there have never been as many insolvencies as during the first half. Fiat announced that 25 businesses have closed down already since the beginning of the year.

The situation at Ford is also worrying. "Only 60 percent of our dealers are making a profit," association spokesman Volker Reichstein said. Approximately 5 percent of around 700 German Ford businesses are in immediate danger of going bankrupt, he added. He said that no one in the new car trade could make a living from an average gross return of 0.39 percent.

Reichstein expects the pressure on profits to grow even further during the second half. "The competition is dreadful."

Morale within the VW dealerships is also "very low," says VW dealer association spokesman Michael Lamle. His association colleague Dirk Weddigen von Knapp adds that, although there are fewer discounts now, total results are still significantly below year-earlier levels because of the weak economy.

Profits within the new-car trade have reached new lows with almost all brands.

Volvo dealers' rate of return , which was 1.09 percent during the first quarter, has fallen significantly, association spokesman Karl-Heinz Winter said.

Skoda partners announced a drop to a 0.91 percent rate of return during the first half from 1.5 percent.

The consequences of these financial problems are difficult to assess. Last year 1,800 showrooms closed and the ZDK retailers association expects "at least 1,000 insolvencies for 2004."

Of the current total of 42,000 auto retailers in Germany, 320 have already thrown in the towel since the beginning of the year.