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Final lockdown takes its toll, with dealer confidence falling 10% since Summer 2020

7 May 2021

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With lockdown restrictions easing and forecourts reopening, 85% of car dealers say they are confident about the outlook of their business, according to new dealer research by Close Brothers Motor Finance. But this is down from 95% in August 2020, suggesting that the most recent, and longest, national lockdown has taken its toll on confidence. 

The Dealer Satisfaction Survey, which asks dealers directly about their attitudes and behaviours and forms part of the annual Britain Under the Bonnet report, 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. 

However, despite the optimism from dealers, this is much less than 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). 

And 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%).

But there are clearly threats looming on the horizon. The 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. 

Top five opportunities and threats for car dealers in the months ahead

Threats and opportunities table - Dealer Satisfaction Survey Research

Seán Kemple, Managing Director at Close Brothers Motor Finance commented: “We’re now well over a year since the first UK national lockdown, and the industry has evolved remarkably during this time. 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, dealer 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. But it’s also important dealers continue to monitor consumer demand even after they’ve bought stock. Thinking demand first, enables them to not only buy it right, but sell it right.”
 

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