Car dealers and industry experts have offered a mixed reaction to news dealerships will be forced to close their doors for a second time this year.
The prime minister has announced a second national lockdown which will see non-essential retail closed from 00.01 on Thursday.
Car dealers have been working hard to recover from the first lockdown and have enjoyed a sustained period of booming car sales – and the lockdown will come as a bitter blow.
SMMT chief executive Mike Hawes took to Twitter to declare showrooms must remain open.
As England heads back into lockdown, we need to keep business operating. Auto Manufacturing must have its showrooms open; its proven safe & secure, a very different environment from other retail premises. We need to keep the economy turning – safely – and prevent wider job losses
— Mike Hawes (@MikeHawesSMMT) October 31, 2020
Robert Forrester, CEO of Vertu Motors, replied saying ‘he totally agreed’ and added that ‘some businesses will be in the balance on the decision’.
Daksh Gupta, CEO of Marshall Motor Group also chipped in, replying to Hawes he said: ‘Totally agree. How can garden centres be allowed to open and not retailers with all that space?
‘We were fully open on June 1 – five months ago – and there was no uptick in the virus.’
Peter Waddell, chief executive of used car supermarket group Big Motoring World, has been busy preparing for the launch of his new online offering Carzam, and is pleased the lockdown is only for a month.
He said: ‘We are ready for click and collect. We have stored over 5,000 cars away, fully prepped and ready.
‘Dealers are much more sorted than last time. What we need is CAP not doing values this month. If so, we won’t need to panic – we just need to keep going.’
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Nathan Tomlinson, boss of Mitsubishi dealer Devonshire Motors, said dealers have learned a lot already in 2020 about how to deal with the lockdowns and what comes after them.
He told Car Dealer: ‘Although a second lockdown isn’t the best news, we’ve already learned a lot.
‘I’ve seen September composite reports from four brands in the last few days and all of them show improvement versus 2019.
‘There’s a lesson there for what comes next, and a reason to enter quarter four with some comfort.’
Tomlinson said the automotive sector is ‘innovative and resilient’, but the news will still cause dealers to reassess their plans for next year.
He added: ‘If a second lockdown is needed then a sacrifice in November and even December isn’t going to cause the same pain as it did for many in March.
‘The state of the economy, inconsistency of direction and accelerated pace of change clearly identifies the need for a nimble and flexible model that can adapt quickly to ongoing disruption – that’s not, traditionally, what a dealership business looks like.’
James Hind, CEO of new car lead generation site Carwow, said he believes car dealers are far better prepared to cope with the second lockdown.
He told Car Dealer: ‘We know that lots of consumers continue to order cars while showrooms are shut, and if click and collect is still allowed then we wouldn’t expect a large drop.
‘On new cars, over the last couple of weeks we have seen a healthy pipeline of factory orders continue to flow in, despite many regions being in Tier 3 and with Wales in lockdown.
‘In terms of staffing at dealerships, we haven’t heard of any franchise retail groups making digital or call centre teams redundant, and those teams were generally brought back from furlough early on, so most will be well placed to continue to serve online customers.’
Sean Kelly, MD of Vines BMW, told Car Dealer: ‘I was sceptical that a national lockdown was coming, nonetheless here we are.
‘I consider dealers to be in a much stronger place to deal with the disruption from showroom closures – click to buy, virtual sales consultations, online finance applications etc – and we have proven that we can safely operate aftersales in a Covid amended environment.
‘So providing the lockdown remains “short” the government support required will be around supporting wages for non-working employees with the furlough scheme extended and deferred tax, VAT and PAYE submissions.
Tony Denton, MD of Batchelors Motor Group, said he hoped suppliers would once again step up and support the motor trade by cutting bills.
He believes dealers are far better prepared this time round, though, but said ‘December will be more challenging’ and that dealers should remember that a click-and collect sale means a full transaction completed online, ‘not an appointment for a showroom visit’.
Specialist car dealer Umesh Samani, who also chairs the Independent Motor Dealers Association, said ‘all good things must come to an end’.
‘After such a great run since reopening on June 1, car dealerships again see themselves forced to close their showrooms along with thousands of other non-essential shops,’ he told Car Dealer.
‘Despite this, dealers will be able to carry out Covid safe home deliveries and potentially click and collect.
‘Unlike the first lockdown in March we already have in place many of the items required for restarting and letting customers back in, therefore that cost will be cut significantly.’
Samani said most dealers have been paying close attention to the developing Covid pandemic and the lockdown wasn’t unexpected.
He added: ‘Dealers should have planned for this financially and should have enough funds in the bank to see them through this dark period of winter.
‘November and December are traditionally quieter for car sales anyway therefore the downturn should not affect things as much as it did back in March when we were already in top gear!’
He did have concerns about the end of the furlough scheme, and its replacement the JSS though, but said ‘the nation’s health must come first’.
David Kendrick, accountancy expert at UHY Hacker Young said ‘cashflow will be key’ for dealers.
He added: ‘While clearly it isn’t good news, it’s unavoidable and dealers must embrace it on the back of six months incredible trading in the main.
‘Keeping close attention to cashflow is key during this and what support comes from the government, as well as encouraging staff to use non-taken holidays.’
AA president Edmund King added: ‘This second lockdown will obviously have an effect on dealers and their trade. However, many have adapted well and have kept helping customers to buy on line with safe systems built in to ensure they can safely deliver cars for test drives and sales.
‘It is a great time for consumers to buy new cars particularly with uncertainty regarding potential post Brexit tariffs.’
Jim Holder, editorial director of Haymarket Automotive, said the news was ‘bitterly disappointing’, but public health had to come first.
He aded: ‘Once again we are in a situation where the most agile and determined operators will have a chance to accelerate some of their offerings, particularly those able to continue to manage and process digital leads.
‘It’s a huge blow, no doubt, but within this terrible situation there will be opportunity for those ready to think and act differently.’
First published: Oct 31, 19:34; Updated several times, most recently: Nov 1, 07:34