12:01 pm, April 14, 2026
Franchised car dealers have said they are facing a growing profitability crisis despite healthy new car sales, and how current challenges represent a fundamental shift rather than a short-term downturn.
Speaking on a special panel at Car Dealer Live 2026, the CEO of Hedin UK, Richard Ennis, and managing director of Luscombe Motors, Sam Luscombe, explained that while volumes remain robust, the underlying financial picture is becoming increasingly strained.
‘New car volumes are definitely there,’ Richard Ennis said, noting that the market continues to deliver ‘circa two million’ annual registrations. However, he added: ‘Profitability is really not – it’s become increasingly problematic for lots of retailers.’
He added: ‘It’s been our challenge since 2024, then 2025, and again in 2026, and it probably it won’t change until ’28, ’29 or ’30 – that’s a really long stretch and it puts pressure on your balance sheet.’
The session can be watched by visiting the Car Dealer Live website where you can purchase a replay ticket. This will allow you to watch back each session, including Motorway’s, in-full on video to watch back at your leisure.
The disconnect between volume and profit is emerging as one of the biggest issues facing the motor trade, with many dealers being forced into heavy discounting.
‘If you’re fighting that hard for market share, then you always end up discounting your way there,’ explained Ennis. ‘The minute you’ve got more cars than customers, it becomes really tricky.’
The situation is being compounded by a sharply rising cost base. Wage inflation, energy costs and property expenses have all surged in recent years.
Ennis said: ‘When you start to look at the gross profit levers, it’s like, have we pulled any lever in the last 10 years that’s given us an extra 70% gross profit? And it hasn’t.’
Both Ennis and Luscombe agreed that the current environment should not be viewed as a typical market cycle, but rather a deeper structural change to the motor trade’s retail model.
The days of high volumes and large physical sites are increasingly being questioned as costs rise and margins tighten.
Sam Luscombe gave some insight into how AI has both potential and limitations within the franchised dealer model, arguing that technology alone does not automatically translate into better performance.
‘If you’ve got an AI tool that comes in and saves somebody some time, okay, that’s great,’ he explained. ‘Is that time then being reinvested to do something else more profitable? If it’s just giving them time for an extra fag break, it’s useless.’
Elsewhere in the discussion, the pair explained how dealer consolidation is coming, how growth doesn’t equal profit, and that car prices are unlikely to fall.
You can hear all the highlights from Car Dealer Live 2026 in our special podcast, which can be listened to below:
