September’s 20.5% decline in new car registrations will have a “brutal impact” on some franchised car dealers’ Q3 and full year profitability, according to Coachworks Consulting.
The independent consultancy said the decline, made clear in results published by the , reported by the Society of Motor Manufacturers and Traders, (SMMT) today had played-out against a backdrop of dealers reporting high levels of customer enquiries during the key ‘plate change month.
As the SMMT acknowledged, many franchised dealerships were hamstrung by stock shortages resulting from the introduction of the new WLTP (Worldwide Light Vehicle Harmonised Test Procedure) regulations on September 1.
How has the introduction of WLTP affected your franchised car dealership? Click the tab to tell AM about your dealership's experience of managing the shift to WLTP and RDE fuel economy and emissions test regimes by taking this month's 'one minute' multiple-choice survey.
Coachworks Consulting’s managing director, Karl Davis, said: “The introduction of WLTP at the beginning of the 68 plate-change always had the potential to have a disruptive impact on registrations in the second biggest sales period of the year but the ability of manufacturers to manage the impact has been mixed.
“The impact on retailer profitability in September will be brutal as each delayed delivery will be compounded by the loss of revenue from finance, GAP and aftersales; it’s not just about chassis profit.”
Davis said that the seriousness of the situation had been demonstrated by one OEM’s move to cut its dealer sales targets for September and Q4 by around 50% because it knows it will not have sufficient stock for its network and that will also have a major impact on dealer profitability.
However, according to Davis some retailers had mitigated the situation by self-registering units.
He said: “Some dealers anticipated shortages and got their arms around as many desirable new cars as possible ahead of September and traded more successfully as a result.
“However, I’ve spoken to one retailer boss who was given an incentive by their brand partner to self-register 100 cars and has ended up with models he described as ‘all rubbish’ which he will struggle to trade out of profitably in Q4 because customers will not want them.”
Davis added: “The supply of new cars will improve over the coming months but the pressure is now on all dealers to close Q4 as strongly as possible, otherwise it’s not only the share price of the PLCs that could be negatively affected by less than forecasted full year results, but even the very survival of the highly geared smaller players, where lender confidence plays a crucial role in maintaining cash-flow.”
If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.
Login to comment
No comments have been made yet.