There has been a 10% fall in dealer confidence since August 2020, suggesting that the most recent lockdown has taken its toll on some dealers.
This is according to research from Close Brothers Motor Finance, which found that that 85% of car dealers are confident about the outlook of their business, falling from 95% in August 2020.
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The Dealer Satisfaction Survey found that of those who say they are confident about their business in the short-term, over a quarter (29%) feel ‘completely confident’ and 57% feel ‘fairly confident’. This rises to almost a third (31%) feeling ‘completely confident’ when considering the longer term.
Despite the optimism from dealers, the figures represent a significant fall on last year, which saw 58% of dealers who were ‘completely confident’ pre-Covid (in August 2019), and 55% after the first national lockdown (August 2020).
When it comes to the future of the motor industry more broadly, there is a more nervous picture still. Just 22% are ‘completely confident’ in the short-term future prospects for the sector, rising to 27% in the long term.
Moving into 2021, there are reasons to be positive. The research revealed the biggest opportunities foreseen by dealers for the year ahead are the growth of online sales & research (15%), returning to normal post Covid-19 as the vaccine is rolled out (11%) and maintaining the stability of the business (8%).
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By GlobalDataThe coronavirus recovery and further lockdowns (42%), the economic downturn and unemployment (13%) and lack of stock availability (8%) are the main concerns for dealers in the months ahead.
Seán Kemple, managing director at Close Brothers Motor Finance, acknowledged that the industry has evolved ‘remarkably’ since the start of the pandemic. “New car sales have been going ahead through Click and Collect, or click and deliver services, and dealers continue to adopt new ways of working to get cars from forecourt to driveaway in what is commonly now a top-to-toe digital journey for buyers.
“As forecourts reopen, it’s encouraging that dealers are feeling relatively confident, both in the short-term and long-term, but there’s no denying that the latest, longer lockdown has been felt across the sector. But the motor industry is resilient, and so are dealers.
“As of the beginning of 2021, a lack of stock availability was the third biggest concern for UK dealers, after Covid-19 recovery and broader economic downturn. This bottleneck has pushed prices up, both at a wholesale and retail level. When stock is scarce there’s a real risk of overpaying.
“Without an understanding of customer demand and the price a vehicle is likely to retail at, dealers could end up making a loss when they come to sell or be sat with stagnant stock. Instead, dealers should consider working ‘retail back’ – which means thinking about how much they’re able to sell a vehicle for, calculating the amount of profit they need to make, and basing the price they’ve prepared to pay on that.”
