3:29 pm, May 26, 2020
IMDA chairman and independent car dealer Umesh Samani writes a guest blog the day after Boris Johnson gave car showrooms the go-ahead to restart next Monday
Boris has finally given us the nod. We are all allowed to re-open our car showrooms and sales yards from June 1 if you trade in England.
So, does this just mean that we throw open the gates and wait for the surge of customers caused by the pent up demand during lockdown?
Well, not quite!
Although we are going to re-open, release the pause button and press ‘start’ we are not going to restart where we left off.
During lockdown and more so over the last six weeks we have been encouraging our IMDA members to invest in social distancing signage, hand sanitiser, disinfectant, car sanitising units, seat covers, steering wheel covers and nitrile gloves to ensure they are reducing the risk of spreading the virus at the same time as displaying a duty of care towards their staff and customers.
We do feel that there will be a surge in interest as lockdown is relaxed over the coming weeks, however, there will be those who still prefer to buy from home and therefore dealers have to make sure they give customers the choice to reserve or even buy online and display a helpfulness to deliver to the customer’s home.
When customers do eventually start coming back into our showrooms, they will have to follow the social distancing guidelines set out by that dealership, which should be clear and concise.
Following our successful lobbying of the DVLA for a change to the trade plate rules to finally allow unaccompanied test drives we feel that this will become the new norm for many customers looking to try before they buy.
Click and collect along with click and deliver will become widespread, with much more use of video technology to help build trust during the dealing process.
It will also be used to build more transparency during the presentation and test drive process and to help show customers the controls prior to a contactless handover/delivery. All of these will start to become the new norm.
The IMDA have issued detailed legal advice regarding the Distance Selling Rules to ensure that deals don’t come back to haunt dealers months down the road because they have missed a simple line in their terms and conditions.
We feel that many customers that are first to the market maybe looking to downsize to reduce monthly payments or potentially come from one expensive car to two smaller cheaper cars as all of a sudden the cramped commute via public transport isn’t so appealing anymore.
With so many potential customers on furlough now the real effect of the increase in unemployment will not become apparent for a few months.
Prior to the pandemic, quality used cars were very thin on the ground and therefore were commanding a premium at auction.
This is unlikely to change overnight with the collapse of Hertz and the potential tsunami of used cars on the market from them will make for choppy waters over the coming weeks and months, but the used car market is resilient and as long as used cars price continue to be stable, we can weather the storm.
Due to the absolute destruction of the new car registrations over the last couple of months it seems that the new car franchise world is starting to push for the government to further support the automotive industry by way of a ‘scrappage scheme’ similar to that seen back in the global economic crisis in 2008/2009.
This could help kick-start the automotive industry which in turn will help generate much needed VAT income for HMRC.
However, we feel this shouldn’t be restricted to the new car market this should also be offered to independent used car dealers where customers can upgrade from their older polluting vehicle into a more modern example, but at the same time paying a much lesser balance to swap than going for a brand new car.
This would make it much more accessible to those on smaller household budgets who are also those more likely to be running an older car.
A scrappage initiative on used vehicles would still generate VAT income for used car sales via the margin VAT scheme also the DVLA would benefit from the sale of road tax, much needed income for the already stretched government purse.
We can only speculate and predict, but only time will tell how the automotive industry will bounce back. There will undoubtably be many casualties over the coming months and years from the fallout of this pandemic but the sector will survive and be stronger because of it.
Here’s to the future.
Umesh Samani is the owner of Specialist Cars in Stoke and chairman of the Independent Motor Dealers Association
Watch Samani and fellow independent car dealer Jim Reid talk to Car Dealer Live below
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