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There is still a need for quality dealerships, says UHY Hacker Young

David Kendrick UHY Hacker Young

The future of automotive retailing has been in question as car buyers have uncertainty around diesel, electrification and autonomous cars.

Despite this, accountancy firm UHY Hacker Young believes the UK automotive market has been an extremely resilient sector.

It feels that while there has been the obvious developments and changes in the market such as the internet, monthly payment programmes and service plans, the industry is still a relatively straightforward and traditional retail model.

David Kendrick, automotive partner at UHY Hacker Young, said: “Whilst the shape of the networks may change over the coming years with smaller dealerships in non-core locations perhaps falling away, the need for quality dealership operations is here to stay for the medium term. 

“The banks and financial institutions are still willing to fund the significant build costs as dealers continue to develop and expand their facilities which certainly doesn’t match the press suggesting dealership operations are a thing of the past.”

According to the firm, manufacturers still need a dealer network to supply their vehicles, the consumer needs a dealership to service their vehicle and the dealership needs to exist to deal with any trade in and used car disposal.

Paul Daly, also an Automotive Partner at UHY Hacker Young, added: “There appears to be a real disconnect between the hysteria of media headlines and the reality of where the sector is at. 

“Investment levels in dealerships have never been higher and whilst the network size and structure will always be in a state of flux with winners and losers across the brands represented we have not seen any concrete signs of a step change in how the manufacturers work with their networks. 

“The one constant factor is that the manufacturers have significant surplus manufacturing capacity and hence must deploy a scaled and efficient distribution system to ensure volumes are maximised.”

UHY Tracker Young continues to see buoyant transaction values and numerous new entrants looking at acquiring UK dealership groups, therefore it believes the outlook is positive and while dealers will need to adapt, the fundamental elements of the business are unlikely to change in the short term.

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