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Guest blog: Market changes place emphasis on importance of digital strategy

Despite a good start to the year we’ve now endured our third month of falling new car sales.

In Sept we saw a drop of nearly 9% on the previous year although the SMMT still predict a 2 million unit new car market, up slightly on last year despite us losing the Scrappage scheme earlier this year. Bolstering the New car market have been some terrific performances by;

• Renault +83% YTD
• Land Rover +39% YTD 
• Skoda +28% YTD 
• Kia +36% YTD 
• Hyundai 27% YTD

There has also been recovery within some of the prestige brands, notably from;

• Porsche +27% YTD 
• Bentley +28% YTD

But the outlook is still proving difficult to call, the Bank of England have maintained the Bank Rate at 0.5% since March 2009 and their programme of Quantitative Easing remains at £200 Billion so it’s fair to say that any green shoots of recovery need to be nursed very carefully.

We also know that we have the prospect of a VAT increase to 20% from 1st January 2011 it will be interesting to see if we see a flurry of new car registrations in the next few weeks with many franchises short of new car stock this could be a challenging time as the industry battles to convert orders into deliveries from available stock whilst protecting profit.

The used car market has been a little more predictable than last year but the future again looks interesting.

A lack of one and two-year-old cars due to the sustained downturn in new car sales will almost certainly lead to a shortage, whilst dealers handling the 3-5 year old stock are likely to fair slightly better, albeit with pretty solid second hand values. The key to all used car operations will be sourcing good stock, marketing it effectively and pricing it correctly.

Why having a great website is imperative - All this places even more importance on the role of websites and mobile applications for marketing stock.

We’ve seen from this years’ Click Award research customer expectations continue to rise and as users become more savvy they expect more from the websites they visit. Navigation and search functions are naturally very important but so too is the levels of customer service they experience when they engage with the brand.

What has been particularly interesting is the marked increase in consumer’s confidence to transact online.

Every Amazon purchase, every e-bay auction and every TicketMaster sale has contributed to a building confidence amongst online users that it’s both safe and convenient to shop online.

And as confidence has grown so too has the value of purchases that they are comfortable to transact.

There are now more than 31 million online shoppers in the UK and shoppers In August 2010 they spent a total of £4.4 billion pounds online, equivalent to £72 per person.

That’s a year on year increase over around 14%. But most noticeably it’s the multichannel business’s (those with a high street and online presence that are growing online sales most quickly).

Those businesses have seen online sales grow by around 24%, virtually double the sector average with John Lewis and Argos both posting online growth of around 30. We believe that this maturing of the market place now works in the automotive industry’s favour.

After years of trying to sell both new and used cars online, each with varying degrees of success we now think the time is right to plan for and offer the ability for your customers to transact with you directly over the internet.

And we are not alone, Fiat have already offered limited edition models that are available to purchase via online only, initially the distinctive Pink and Diesel special editions and more recently the special edition the Fiat 500 BlackJack.

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