The ongoing cost-of-living crisis in the UK will be the biggest challenge this year, according to more than three quarters (78%) of dealers, surveyed as part of Close Brothers Motor Finance’s Forecourt Foresight research. Relatedly, more than a third (35%) of dealers believe that low consumer confidence is going to be a challenge, and 35% said their business would struggle to survive if energy costs remained high.
Well documented issues affecting production, such as the semiconductor shortage, have made it hard for manufacturers to restore production to pre-pandemic levels. More than half (53%) of dealers believe that lack of stock availability is going to be a challenge in 2023.
And more than one-in-five dealers are also concerned with increased competition from online retailers, and 6% are concerned by government and industry regulation. 5% of dealers also have concerns around specific upcoming regulatory changes such as consumer duty.
Silver linings ahead
However, dealers do see some opportunity for the year ahead. Given recent economic growth, 39% of dealers cited an improving economy as an opportunity for their business. 35% also view the growth of online sales as an opportunity, and 34% for easing supply issues.
Despite a growing market share of AFVs (alternative fuel vehicles), only 16% agreed that the growth of electric cars and other AFVs presented an opportunity for their business during the cost-of-living crisis.
The cost of doing business
The cost-of-living crisis is also having an impact on dealer spending. For example, 17% are spending little on staff numbers, and 13% plan to cut back further. In contrast, a mere 1% are spending heavily on staff numbers and the same number plan to increase spending further.
|
|
Spending heavily right now, and will increase further |
Continue to spend heavily |
Spending heavily right now, but will cut back |
Currently spending little and will cut back further |
Continue spending little |
Currently spending little, but will increase spending |
Don’t know |
Not relevant |
|
Staff training |
0% |
3% |
5% |
16% |
19% |
5% |
6% |
45% |
|
Number of staff |
1% |
1% |
3% |
13% |
17% |
6% |
14% |
44% |
|
Website |
3% |
13% |
13% |
13% |
34% |
9% |
6% |
9% |
|
Social media |
0% |
6% |
10% |
10% |
42% |
6% |
6% |
18% |
|
Upkeep of premises |
1% |
10% |
12% |
14% |
45% |
9% |
1% |
6% |
|
Stock |
6% |
21% |
22% |
16% |
13% |
16% |
5% |
1% |
|
Advertising |
1% |
22% |
21% |
17% |
27% |
1% |
5% |
5% |
|
Sponsorship |
0% |
1% |
5% |
13% |
26% |
5% |
4% |
45% |
|
Subscriptions |
0% |
1% |
3% |
10% |
25% |
3% |
3% |
56% |
As a result, 22% are planning to cut heavy spending on stock, compared to 16% who are planning on increasing spending. 45% dealers also stated that they are going to continue spending little on upkeep on premises in order to save money.
Lisa Watson, Director of Sales at Close Brothers Motor Finance, said: “As the whole of the UK continues to grapple with the cost-of-living crisis, it’s clear that it is having a significant impact on the motor industry. Costs are rising for consumers and businesses alike, meaning demand is constrained and prices have no scope to fall.
“It is important that we continue to work together to provide solutions and tackle the challenges faced this year. For example, by utilising insights, we can assist dealers, through our dealer funding support, with stocking forecourts to effectively meet demand and ensure that pricing is optimised, saving dealers money on unnecessary stock and making sure that they’re investing in the right places. This also helps consumers, by ensuring they can get the most for their money whilst budgets are tight.”
