11:43 am, September 26, 2022
New car margins will be the saviour for car dealership results in 2022 as the buoyant used car market comes to an end.
That’s the opinion of Vines BMW boss Sean Kelly who spoke at length about his firm’s performance on the latest episode of the Car Dealer Podcast.
Kelly spoke about rising interest rates, his dealership’s huge energy bills and his thoughts on the government’s mini budget.
The BMW and Mini dealership boss told Car Dealer his firm was forecasting to close September up on last year, but used car sales had dropped.
He said: ‘Used cars are down compared to last year, but it’s no surprise because it was the halcyon days of favourable conditions.
‘But what’s absolutely evident is where new car supplies have been constrained earlier in the year, we’re now seeing a release of some of those vehicles coming through our business.
‘And the business that we’ve written on those new cars is very strong because of the supply and demand matrix.
‘So the improvement in writing new car business is offsetting any of that used car degradation, even though used cars are still at a really, really high level of profitability.’
Last week, used car dealership group Pendragon revealed that margins on new cars in the first half of the year had risen £956 to £2,576. It’s likely to be a similar story for franchised dealers across the country.
Listen to the episode below
Kelly said his dealerships are beginning to see signs of consumer confidence dipping with enquiry levels down – and in particular worries about rising interest rates.
He told the podcast: ‘In terms of consumer confidence, there’s no doubt it’s going to be affected across the board. But I think some of the stuff that the government’s done will shore up that confidence to a point.
‘I think the biggest concern for me is where we’ve got people that are on fixed rate mortgages. Apparently, there’s about 2 million of them that finish in the next 12 months.
‘That’s a material amount of money increase per month out of everybody’s disposable income that’s gonna go up and I think that might actually have a more detrimental challenge for us rather than just general inflation or the cost of energy or even indeed, fuel prices.’
Kelly said he thought Friday’s mini Budget was a ‘bold and ambitious’ move by the government, but remains unconvinced as to whether it will have the ‘economic impact they want’.
You can listen to the Car Dealer Podcast on all good podcast platforms, including Apple Podcasts and Spotify.
