Profit predicted for dealerships in June but building trust will be key

Time 1 year ago

ASE Global chairman Mike Jones has suggested we could see a busier second half of the year based on what’s being experienced in other global markets – but warned the surge in demand now could ease after the initial June boost.

In the latest figures from ASE, UK dealerships made an average loss of £63,000 in April. However, from the figures Jones is seeing so far, he revealed on Car Dealer Live today (Jun 15) that he thinks May’s result will be better and by June ‘we could be back to the normal’ with an average profit.

The groundwork for a successful industry on the other side of this crisis is there, though, explained Jones, who said that work already done in dealerships to help educate car buyers in the shift to electric cars was similar to the trust-building needed over the coming months.

He said building trust would be a ‘key part to the industry staying profitable’.

On the show, he also told how the latest information about the new Flexible Furlough Scheme suggested that dealers may be able to put redeployed staff back on furlough part-time.

‘The danger is that we bring people back now to cope with a surge in demand – pent-up demand – because we’ve not been open for a couple of months and then we quieten down so we don’t need them any more.’

Jones explained that this should help dealerships balance the workforce and customer demand over the next few months.

‘The part-time scheme coming in from July I think is going to be really useful for dealers. At the moment, we don’t know what the consumer demand is going to be, so the ability to bring people back gradually is going to be really useful,’ he explained.

‘Digging into the stuff from over the weekend this morning, people who were previously furloughed, so the entire sales team, can go back on to part-time working. So even if we brought them back fully now, it appears that we can put them back on part-time furlough from July 1.’

He added: ‘It looks like we can stick them back on to part-time furlough, which will clearly enable people to flex the supply of labour with the customer demand as we go through the next few months.’

While this hints that the industry needs to remain cautious, Jones was positive about many elements, starting with used cars.

He said: ‘Used cars are always the first thing to bounce, and I’ve been saying it all along, because you can see it and drive away in it today.’

It also appears that we could see some big shifts in acquisitions over the coming months, as Jones talked about the number of groups coming to him with ambitions to both sell and buy.

He said: ‘I’m seeing the interest in acquisitions and disposals picking up. I was on a number of calls last week with people who want to get out, but then others have gone to government and have amassed themselves what in football terms would be called a war chest, and they want to go shopping.’

One questioner during the show wanted to know what the top five groups would look like in the future. While Jones wasn’t prepared to name names, he confirmed the elements he would expect to see in the strong groups coming out of this.

‘The crisis has pushed fast-forward on quite a few things. I think it’s pushed us forward about five years on digital adoption from a consumer point of view,’ he said.

‘To my mind, the businesses who make that digital leap successfully will be the ones that thrive as we come out of this. We’re going to get true omnichannel retailing coming out of this. People have had to have digital journeys on their websites and be able to complete that transaction.

‘I’m looking at who is doing that best because I think they’ll be the true successful players to come out of this.’

Clarity around a scrappage scheme was also high on Jones’ agenda. He said: ‘We need to make a decision on whether we’re having one or not and we need to get clarity.

‘The rumour of one doesn’t help, because people put off purchases in case one is going to turn up, and don’t want to buy a car today that could be cheaper tomorrow.’

He added: ‘I think that it would definitely be beneficial. Now, whether it’s a scrappage scheme or a scheme to promote electric vehicles… The downside of electric vehicle promotion is we don’t really make them in the UK, so it’s not helping UK manufacturing – that’s why the SMMT have come out and said they want a wider scheme.

‘Obviously in Germany we’ve seen a drop in VAT and I was watching Rishi Sunak on Andrew Marr at the weekend, and he intimated that they might look at some consumption tax decreases, which again would help – anything that creates a bit of a feel-good factor, gives people the idea that they can go out and spend.’

See the whole broadcast by clicking play on the video at the top of this page. 

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Coming up this week on Car Dealer Live we have: 

    • Tuesday: Redgate Lodge’s Scott Sibley
    • Wednesday: Collecting Cars’ Edward Lovett
  • Thursday: P&A Wood’s Georgina Wood
  • Friday: Auto Village’s Paul Boyce

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Rebecca Chaplin's avatar

Rebecca has been a motoring and business journalist since 2014, previously writing and presenting for titles such as the Press Association, Auto Express and Car Buyer. She has worked in many roles for Car Dealer Magazine’s publisher Blackball Media including head of editorial.

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