Car finance products have been highlighted as a key driver of profits as 65% of car dealers told a survey by Close Brothers Motor Finance that they expected to achieve growth in 2017.
The business’ annual Dealer Satisfaction Survey revealed that the majority of UK car dealerships were positive about their business prospects for 2017, despite many industry figures predicting the sector will contract.
Over half of the 514 new and used car dealers surveyed pointed to the proliferation of new finance products (58%) as the main factor in their optimism – an 11% increase on the previous survey.
Over two in five (42%) dealers also pointed to changing consumer behaviour as a reason for their optimism, with just under half citing the rising affordability of motor vehicles (46%).
Paul Kaye, sales and marketing director at Close Brothers Motor Finance, said: “It’s promising to see such a large number of dealers positive about the prospect for their business over the coming months, particularly given the heightened economic and political uncertainty that has become the norm as of late.”
The survey also asked dealers to assess how their business has performed over the last six months (July-December), with 45% stating their dealership is performing better than it was in July.
The previous Dealer Satisfaction Survey showed that only 33% of dealerships thought their business was performing better than it was in the previous six months.
Despite the positive sentiment, dealerships still recognise the wider economic risks that could stifle their growth for the rest of the year.
A potential recession as the biggest threat to their business, with 58% of dealerships citing the threat as a key risk – a rise of almost 20% points from November’s survey.
In addition, 41% of dealers said that Brexit was also one of the main threats to business growth, up by 4 percentage points from November.
Kaye said: “It’s also interesting to see that, for the second time in as many months, dealers have cited the availability of new financial products as the greatest opportunity for growth over the next 12 months.
“With the fall in the pound making manufacturing of cars the cheapest it has ever been, it is important that smaller dealerships remain competitive against their larger manufacturer-sponsored franchises.”