Car dealers confident about business prospects despite Covid-19
95% of car dealers are confident their business will survive the impact of Coronavirus, according to new research by Close Brothers Motor Finance. The study, conducted in June as lockdown measures saw showrooms reopening, found that well over half (55%) of dealers feel ‘completely confident’ about the survival of their business.
This is a significant increase on the UK average, where according to BVA BORC’s business sentiment tracker in the same month, just 69% of businesses were confident that they would make it out the other side of the pandemic.
Despite an unprecedented 2020 for the motor industry, the findings show a sense of business optimism. The researched revealed the biggest opportunities for the year ahead foreseen by dealers are demand for used/second-hand vehicles (7%), new opportunities arising from reduced demand for public transport (7%) and maintaining stability (6%). The growth of online sales and research also increased to 5% - up from 2% in the previous quarter.
Despite the optimism, there are also threats looming on the horizon. Three in ten (29%) dealers admit they are worried about an economic downturn, made more pertinent by the UK going into recession. And 13% are worried about a second wave of Coronavirus.
Looking more specifically at the motor industry, a quarter (23%) of dealers are worried about stock availability, exacerbated by reduced manufacturing after a two-month factory closure and slower production in the new socially distanced world. One in ten (10%) are worried about a reduction in sales, and a further 4% in low consumer confidence.
Opportunities and threats for car dealers
Seán Kemple, Managing Director at Close Brothers Motor Finance commented: “The motor industry has navigated through several tough years with Brexit, the economic downturn, uncertainty around fuel type, as well as changing regulations. 2020 has brought new unprecedented challenges with Covid-19 and the UK-wide lockdown. But the motor industry is resilient and will continue to navigate through this difficult period.
“Although there are clearly bumps in the road ahead for dealers, there’s also scope to build back better. Dealers are confident their business can survive the impact of Covid-19. And we’re already seeing strong indicators of growth. Used dealerships have seen a surge in demand and this will likely continue in the months ahead as buyers tighten budgets and are still reticent to taking public transport. Dealers need to keep their fingers on the pulse and be prepared to adapt their stock and sales strategy to meet consumers’ evolving needs.”