Something has to give

As we reported in the February edition of Black Book, this is a classic squeeze in which dealers are forced to pay more than they did yesterday for cars they can only sell for less than they did yesterday.

Something has got to give – and that looks likely to be the number of dealers.

We are very carefully watching the new car registration figures because they reflect a dynamic that is critical for dealer survival – even outside the franchise networks.

With the latest SMMT information in January highlighting a drop in registrations for a number of manufacturers compared to 2011, this opens up more questions for the forthcoming year.

Are dealers going to continue to be under pressure to tactically register vehicles to achieve their objectives?

Are the incentives going to improve to entice the buying public and where will this leave sub 12 month vehicles and demonstrators? Put simply, will they still hold a profit?

In summary, dealers again face a challenging year ahead with new car objectives to achieve while maintaining profitability in both the new and nearly new sectors.

They will need to create inventive ideas that will attract buyers with the retail part-exchanges back through their doors and quality staff will be essential to handle the extra pressure that is bound to arise.

It will also be essential to plan for each quarter.

Tactically they will need to take early decisions on marketing strategies to ensure that those inevitable late plate cars can still turn a profit.

Next month we will compare the challenges faced by independents and franchised dealer used car departments.