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Guest blog: Turning uncertainty into business opportunities

Andrew Ballard, product & propositions director of Experian Automotive explains how the current challenging trading environment could bring opportunities for dealers to strengthen their business.

Although the phrase ‘with challenges comes opportunity’ is frequently overused, it is an apt sentiment for the automotive industry in the current economic climate.

Concentrating on what can be gained from the challenges ahead could help maintain the confidence the automotive market needs to reassert its growth potential.

Despite new car sales having dropped in 2011 and endless speculation around the UK’s growth prospects and the fortunes of our Eurozone neighbours the recent new car figures from the SMMT presented a positive outlook for 2012.

New car registrations rose 0.03% to 128,853 units in January and diesel and alternatively-fuelled cars increased volumes, up 6.3% and 17.7% respectively.

Experian’s recent dealer survey also showed an encouraging level of optimism among car dealers who seemed confident about the year ahead and had a growth plan in place.

Experian’s research demonstrated that car dealers are adjusting to the changing market dynamics, and most are predicting that they would turn a profit and even see growth in some areas during 2012.

Tactics included specifically targeting the used car sales and aftersales business opportunities, reaching customers with the right offer and better managing the risks attached to their business.

62% of dealerships predicted that their used car sales activities would grow in 2012, and when you consider the strong used car sales of premium brands and the increasing popularity of fuel efficient diesel and hybrid vehicles, it is clear that growth opportunities exist for those that are able to optimally match their stock mix to the local market needs.

Using market insight data should encourage dealers and maintain confidence but the essential question is: how can dealerships best identify and exploit the existing profit opportunities and adjust to the new market dynamics quickly and cost-effectively?

A lot of dealers we work with have showed they are willing to invest time and resources in reviewing and seeking to build an optimal stock mix that is relevant to their immediate market as well as becoming savvier with the way their reach out to their customers and prospects.

Minimizing risks and having complete transparency on their stock’s history and re-sale value is also a high priority. Tough trading conditions mean dealers just can’t afford to make ill-informed decisions when acquiring used vehicles for stock and resale and waste hard fought marketing budgets by targeting the wrong customers with the wrong offer.

Looking at the challenges ahead as an opportunity to refocus and tighten business strategies will help dealerships stay concentrated on growth and improve the way they operate.

Communicating more effectively with customers and prospects, improving stock management processes and having a better handle on both customer and vehicle risk are critical for maintaining a profitable and sustainable business.

Whatever comes to pass economically over the coming months, many of the tough steps taken by dealerships over recent years mean that they are leaner, more adaptive and better prepared than ever before, having been forced by austerity to build upon their core strengths and clearly identify the best way to stay ahead of the game.

Many of the dealers Experian talks to are hugely focused on targeting profitable segments as well as looking for ways to improve their business practices. 2012 may well be a challenging year but by becoming savvier in seizing sales opportunities and more resilient to risk, it could also be the year when car dealers return to growth, become more profitable and prepare to make hay when market optimism returns.

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