An optimistic Robert Forrester presented on what he saw as the challenges and opportunities for the franchised dealer sector.
He sees the one big issue being manufacturer profitability in the UK. Rising commodity prices and exchange rates are changing the way manufacturers approach the UK market and fundamentally changing their ability to stimulate the market, said Forrester.
New car prices have risen 25% in the past three years and at this level it’s not a two-million unit market.
“The retail component is decreasing at a rapid rate and until we see a change in dynamics of manufacturer profitability, and in the exchange rate, we’re in for a period of pretty low new car sales.” said Forrester.
He suggested an interest rate increase would strengthen sterling, and having inflation of 5% is not a good position to be in.
The issue of training management for consistency is also important. “As an industry we’re not doing the basics exceptionally well,” he said.
Other threats are a massive structural change to the bodyshop sector, and the competition from the independent aftermarket, car supermarkets, Tesco Cars and the rising cost of pay-per-click marketing.
However, he pointed out several opportunities.
UK property prices have declined significantly, so if dealers invest in property today their future return on capital employed (ROCE) should be higher.