1:50 pm, July 25, 2023
Two-thirds of used car dealers fear future margin erosion will affect their business.
That’s according to new research from Startline, whose July Used Car Tracker poll of 50 dealers showed that their biggest concern – at 66 per cent – is high values of used cars squeezing margins.
That was followed by cost of electrification such as installing chargers and rising staffing costs – both at 52 per cent.
Other major worries include rising difficulties surrounding compliance and the cost of infrastructure including showrooms – both at 36 per cent.
Paul Burgess, Startline Motor Finance CEO, said: ‘We’ve been seeing increasing concern about margin erosion among the used car dealer community in recent months and this month’s Tracker shows that it is a genuine worry for very many.
‘There is simply a lot going on in the sector at the moment.
‘There are many areas where costs are rising, such as staffing and infrastructure, where investment is needed, such as electrification, and where resources are being consumed, such as compliance.
‘Add to this the ongoing difficulties generated by stock shortages and the resulting high prices and values of vehicles, and it is clear that profits are being threatened from many directions, while new opportunities are perhaps currently more difficult to identify.’
The research also indicates that just 27 per cent of dealers were worried about losing sales from warranty and other aftersales products, while only 15 per cent thought the new Consumer Duty regulations, which come into effect on July 31, would affect their ability to sell motor finance.
Burgess added: ‘Certainly, we are seeing efforts across our dealer base to increase motor finance presence, with many viewing Consumer Duty as a way to positively rethink their whole approach to this area through better matching of car buyer to finance product.’
