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UK returns to recession

Time 9 years ago

THE UK economy is officially back in recession latest figures from the Office of National Statistics show today.

In the first three months of 2012, the economy decreased 0.2 per cent and follows a 0.1 per cent decrease in the last three months of 2011.

Recession is defined by two consecutive quarters that have contracted, and now means the UK is experiencing a double-dip recession.

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But what does this mean to the car industry? Today Car Dealer will be reporting on what this big news means to dealers.

What the industry says…

Paul Everitt, SMMT, chief executive:

‘Demand in the UK vehicle market remains stable and while today’s GDP figures are disappointing they will have little impact on future demand for new cars. Manufacturers and their dealer networks continue to offer outstanding products and services that saw first quarter registrations remain strong, up almost one per cent on 2011.’

Paul Williams, SsangYong Motor UK, CEO:

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‘A double-dip recession is inevitably a bad news headline the media will exploit to the full, but I don’t think anyone is hugely surprised. A percentage point here or there won’t affect those businesses that have anticipated and planned for this.

‘Whether you’re selling cars or baked beans, the consumer will increasingly be attracted to the value brands. Competitive pricing, great service and reassuring features such as long warranties will win the day.’

Chris Mason, Motor Codes, managing director:

‘While the recession means that price is one deciding factor in terms of where people turn for car service and repair, confidence in a product or service is just as important.

‘Today’s consumer is an empowered consumer and businesses should be using the internet and transparent, online feedback mechanisms to their advantage. This is where potential customers are increasingly looking to compare, contrast and either select a product or disregard it – often in a matter of minutes. This is equally applicable to the garage selection process as it is in any other retail environment.’

Daksh Gupta, Marshall Motor Holdings, chief executive:

‘I have to say that I am very surprised by the news we are back in recession, particularly as the industry does appear to have a good quarter one underpinned by positive retail performance. For me, the news doesn’t change anything though. I think we have to continue to trade in a manner which focuses on the customer, maximizes every opportunity that comes through the door in all areas of the business and watch our costs very tightly.’

Weather the storm and emerge stronger fitter and well placed to take business from less agile competitors.

‘It is now more important than ever to understand what you get for your marketing and how this converts into ROI.’

Phill Jones, Motors.co.uk, commercial director:

‘The good news is that while dealers face harsh trading conditions, a car is still an essential purchase for most families and people are looking more than ever for value for their next car. There are a number of dealers out there doing a roaring trade despite the harsh economic climate, so it’s not all doom and gloom for everyone.

Roland Schaack, Codeweavers, managing director:

‘Any recession should be seen as an opportunity to continue the never ending process of making your business leaner and fitter. Weather the storm and emerge stronger fitter and well placed to take business from less agile competitors.’

Tim Smith, GForces, commercial director:

‘A double-dip recession might now be a reality, but the internet can still help dealers flourish. We’ve just seen one dealer grow sales by 40 per cent, year-on-year, largely as a result of having a new online marketing strategy and a website that better encourages visitor engagement.

‘Car dealers have more money-making online tools available than ever before.  Now is the time to use them.’

‘People have regained some confidence to spend their money.’

Tim Peake, Trader Media Group, group strategy director:

‘More than ever, dealers that will be winners will be those that: focus on how they are pricing their vehicles, using retail-minus rather than cost-plus pricing; are highly geared towards closely monitoring stock turn and use local market intelligence data and tools to source vehicles where there is a clear local demand; and ensure that their online presence is fully integrated into their entire business proposition with the objective of becoming true internet car retailers.’

Carys Henshaw, UK Shell Helix, marketing manager for franchise workshops

‘It is a tough market out there, and car dealers are looking carefully at their margins to determine where they can make the most difference. Drivers want to know where they can save on costs and it is worth reminding them that the correct lubricant can minimise the time between top-ups and improve engine efficiency.

‘We also work closely with workshops to ensure that the oils they are selling make a good return on investment, while allowing them to offer their customers good value for money.’

Graham Bushby, head of motor, Baker Tilly Restructuring and Recovery LLP:

‘Today’s announcement from the Office of National Statistics that the UK economy has ‘double dipped’ will be another severe blow to the motor retail industry.

‘Successful dealerships will not only acknowledge the current market challenges but go further in demonstrating a month-by-month flexibility and innovation in proactively tackling the challenges of a rollercoaster economy.’

Jeremy Evans, Marketing Delivery Ltd, managing director:

‘Drivers with cars bought on finance plans still have decisions to make, regardless of the wider economy. The dealers who are pro-actively staying in touch with them will reap the rewards. It’s never been more important to keep the relationship going with your customers.’

‘The reality is that people are still buying cars in large amounts’

Jonathan Skinner, Gemini Systems, business development manager:

‘I strongly believe that since the national news reporting has scaled down it’s stories, and frankly biased scaremongering, on the world economy people have regained some confidence to spend their money.

‘Land Rover have 1000 new jobs for the Evoque, Nissan creates 2000 new jobs for the building of new hatchback – there are many more examples of these and they should be the main talking points in the motor trade, and of course every other market in the UK.’

Harry Bott, Mediahawk, sales and marketing director:

‘It easy to shout recession and after three years and be frightened into a sense of gloom and doom. The reality is that people are still buying cars in large amounts (albeit reduced from a heights of the boom) and they still need looking after.

‘The more interesting dynamic going forward is how some of the smaller manufacturers can continue to maintain networks to support their small parc. So if you are a franchise dealer the challenge is not so much recession but making sure you are in the right brand.’

Philip Raby, @rabyporsche:

‘I’m having my best month ever and the future is looking good too. It’s all down to attitude. People always need cars.’

Rob Purfield, motor industry profit consultant: 

‘Recession is a ‘Macro’ definition of market performance – for an individual business it is a matter of out performing competitors for what their share of what is potentially a slightly smaller customer pie – high value service, pro-active marketing in the ‘micro’ local market – there is always enough business for individual businesses who adopt the right attitude, have the right processes and offer value for money.’

‘Switch off the TV, radios, the news, stop buying newspapers and blank off negative news’

Jamie Garrett, national accounts director, CV Wow:

‘We talk to automotive dealerships every day. With the impact of the economy and recession we’re finding that dealer groups are dramatically cutting back on departmental budgets, including recruitment. The days of dealerships having carte blanche to utilise expensive agencies are in the past and automotive businesses are now looking towards more cost effective alternatives.’

Umesh Samani, @specialistcars1:

‘We need to stay positive and ignore the news/media hype. A positive attitude is what we ALL need; head down keep going.

‘Switch off the TV, radios, the news, stop buying newspapers and blank off negative news – as soon as consumers see the bad news they stop spening and start worrying. POSITIVE ATTITUDE , lots of business doing better than ever.’

David Stockman, via email:

Daryton Bird says: ‘It’s the economy between your eyes which matters most’. I suggest you heed the great man’s advice, instead of negative scaremongering.

Richard Lawton, ContactHireAndLeasing.com, marketing manager:

‘While on the surface the announcement of a double-dip recession is disappointing, the industry needs to focus on areas of growth potential. There is significant demand for vehicles here in the UK, and demand for UK-produced vehicles abroad. There are areas of the new car market performing well despite the tough conditions.

‘Main dealers need to ensure that they are working with the right partners and ensure lead generation and allocation systems are top notch.’

@Hands3Comms:

‘From our perspective we have seen an increase in hands free car kits & tracking units as people are keeping their cars longer.’

Great Escape Cars, @ClassicCarsHire:

‘Economic uncertainty is the problem. If the government had a clear strategy on jobs and growth, customers would be more confident to spend. Small businesses get less help than two years ago. Banks risk averse. We won’t see growth unless we support people with drive and ideas.’

‘The motor retail sector is very resilient, and will survive any double or even triple dip recession’

Jim Reid, Jim Reid Vehicle Sales:

‘We have had our BEST start to a year EVER; the most sales, best finance penetration, most warranties sold and most importantly best PROFIT, so if this is recession let it roll on!

‘Recession is only a WORD, given height and weight by the ‘doom and gloom mongers’ that monopolise the press on TV and in the papers.

‘The good times will be back, and in the meantime if you keep delivering great customer service, they will be back sooner than you think.’

Neil Lakin, Cash in the Garage, managing director:

‘The motor retail sector is very resilient, and will survive any double or even triple dip recession – but not without a few more casualties on the way.

‘Success, or even just survival, will depend on maximising income from every available stream and reducing costs right across the board. And one of the crucial areas is used cars. And yet economic gloom seems likely to stagnate new car sales and limit part exchanges further, making quality used cars with the right specification and condition hard to source.’

Neville Briggs, Pinewood, managing director:

‘Marginal contraction in the economy should not any affect how dealers are currently approaching their business any more than marginal growth.

‘Really, the biggest danger is that this will send a shudder through already fragile consumer confidence but dealers who are working with the technology at their disposal to create new sales opportunities will continue to make worthwhile profits, whatever the economy brings over the next few months.’

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@lessismoremike:

‘We are screwed if manufacturers don’t cut capacity. Shipping metal around the globe and then offering zero per cent APR isn’t a business model.’

Keep coming back to this post throughout the day to find out more.

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer.

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