High levels of consumer savings and low levels of debt could see buyers head back to dealerships in great numbers when restrictions are lifted.
Audi sales director Steve Catlin told Car Dealer he believes ‘revenge’ buying could make a comeback, a trend which sees consumers treating themselves to new cars to cheer themselves up, when dealerships are allowed to open again.
In an exclusive video interview with Car Dealer, which you can watch below, the Audi director said the current lockdown was taking its toll on sales volumes.
He said there are already concerns about March and that it was critical dealers were open in the key plate change month if ambitions for numbers for the year can be hit.
Official new car figures are to be released by the SMMT later this week and industry sources have told Car Dealer they’re likely to show a fall in new car sales volume of around 40 per cent.
Catlin said: ‘We are seeing a reduction in demand which is inevitable, but in a positive light there are lots of customers that we are talking to and once we are out of the restrictions – and fingers crossed that happens shortly – we’ll be in a great position to take advantage of that demand.
‘Those relationships that we’ve been having with consumers over the last few weeks will come to fruition once showrooms are open again in the near term.
‘We’re also seeing low levels of personal debt, high levels of savings and assuming that the overall macroeconomic impact isn’t too severe we’ve got some great opportunity for some “revenge spending”, to use another buzzword, that might come out of that.’
Catlin said all of the national lockdowns have felt ‘very different’ and that this third set of national restrictions had taken on ‘its own characteristics’.
He said this time around dealers have not furloughed as many staff and kept them in place to service consumer demand.
On Friday, Auto Trader boss Nathan Coe said most dealers were currently performing at around 66 per cent of normal volumes. Marshall Motor Group boss Daksh Gupta said his dealers were performing better than that.
Catlin added: ‘From a network perspective we are facing into this much more positively. You can see that from a much greater degree of resource, in terms of staff, being kept in the network.
‘We know people are interested in talking to us at the moment.
‘Collectively with the network there has been a lot of changes in processes through the learnings of the last 12 months to be able to manage this demand in the right way.’
The Audi director said these changes – including how dealers respond to customers digitally and offer services like click and collect – will stick for the long term.
He said: ‘We’ve been talking a lot as an industry about digitalisation and it’s been a buzzword at every conference, but frankly we haven’t seen the implementation and realisation of what that actually means as much as we have over the last nine months.
‘That step change of a shift to an omni-channel environment where we have to have the digital infrastructure to meet the customers’ needs as well as the physical infrastructure to serve them is here to stay.’
Catlin said the dealers that had made the digital changes are reaping the rewards and have benefited from them just as much during periods they have been allowed to open as lockdowns.
‘That is absolutely here to stay,’ he added.
‘Not just from our perspective, but also from a consumer point of view too where fundamentally they are using digital infrastructure to do far more of their buying process than they ever have before.’
Catlin said there were concerns about March and whether dealers will be allowed to open showrooms to trade during the key plate change month.
The Prime Minister has said schools will not reopen until at least March 8 and it is unlikely retail will be open again before April.
Catlin added: ‘It’s really hard to call [sales volumes] on the basis of not knowing what is going to happen in March.
‘It will be down to how much of March is impacted by showrooms being closed and the current restrictions we’re in.
‘If the public health crisis gets to a point where showrooms are open again in March then there is a great opportunity to recover the lost volume in the calendar year.
‘If it goes on past that then we face some difficulty opposed to our original plans.’
Catlin added there were ‘lots of reasons to be optimistic’ about what the future holds and hopes pent up demand and the fact many Audi customers are on PCPs will keep sales buoyant.
He said: ‘Most of the business we write is on a contract basis so those customers are facing a decision that they need to make at the end of that.
‘That gives us a great ability to talk to those customers and find the right solution for them and hopefully that solution means we can move them into another vehicle at the end and keep that level of customer loyalty, customer experience and the volume that follows from there.’