Panto season is upon us and the year-end is around the corner. Manufacturers are out there, busy ‘negotiating’ the targets for 2017. They are hearing from franchisees that the new car market has toughened and dealer profitability is under pressure. To which the manufacturers respond with cries of: “Oh no it isn’t”.
Well, “Oh yes it is”, according to plenty of AM’s sources.
The national sales companies should not be in denial. They can be the ones moving quickest to affect dealer profitability, with a swift move of a percentage point of margin from CSI or standards onto volume-related bonus to ensure the network helps them to maintain that retail market share and keep their factories busy.
But even some NSCs concede we have probably reached the peak in the UK’s car market cycle, after two years of 2.6+ million registrations. Forecasts predict a 2.5m market in 2017, and the same again in 2018. The drop will be relatively gentle, and dealers will still have plenty of new stock coming through.
Many dealers tell us the greatest opportunity in the next few years will be in used cars. Despite supply returning to normal levels, wholesale values have not slumped. Dealers able to fill their forecourts with desirable cars, market effectively and turn stock quickly and profitably could see their investment rewarded in 2017.
The December issue of AM magazine is out now
The December issue of AM - Automotive Management magazine is out now. Are you a franchised dealer who would like to receive a copy of the automotive industry's most influential and valued media publication every month? Click here to subscribe.
Merry Christmas from the AM team
The staff of AM would like to wish our readers (an early) Merry Christmas and a prosperous New Year. Our festive cover illustration this month was by George Williams of Spot On Caricatures.