Early indicators suggest dealerships are experiencing the first signs of faltering footfall, motor trade expert Fraser Brown warns.
The managing director of MotorVise Automotive has recorded a 15% drop in enquiries at franchised dealerships, a figure rising to as high as 25% at non-franchised used car sites.
This, he says, is in response to the UK’s rising living costs, a situation exacerbated by sanctions imposed on Russia – which is why dealerships need to accurately respond to a recent realignment in used vehicle prices.
“Demand has outstripped the supply of both new and used cars since the end of last year’s first covid lockdown,” adds Fraser. “However, for the first time we are now seeing used car prices starting to normalise, in as much as they are now falling month on month.
“The previous upward spiral in values had reached a point where it was a deterrent to customers.
“Interestingly, those non-franchised sites operating a policy of starting at 97% of a used car’s recommended retail price continue to perform well in terms of both enquiries and sales, while those asking more are experiencing a slowdown.
“No-one anticipates used car prices are about to fall off a cliff because supply remains tight due to the fact there are so few two year old cars about due to the effects of the pandemic.”
MotorVise Automotive has systems in hundreds of UK dealerships measuring enquiries and sales.
Fraser predicts those dealerships adopting a realistic pricing policy while investing in stimulating the market through sales events and promotions and engaging with their customer database can continue to enjoy a strong order book and achieve high profitability levels well into next year, even if demand begins to slow.
He also says that finding, keeping and up skilling dealership staff is a must for a successful 2023.
“Increasingly we are seeing dealers investing in people, adds Fraser. “Since the Covid lockdowns, attracting people into the automotive sector has been increasingly difficult with many turning to proven recruitment days to find the right calibre of customer-facing staff.
“In a recent LinkedIn poll, it became clear automotive leaders are investing in up skilling their people and in making great efforts to retain them.
“Creating a good culture in automotive businesses and providing an environment for team members to thrive is key to providing good customer experiences. Dealerships may be all about selling cars, but it’s a people business.”
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