It’s not rocket science – everyone needs to play their part

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Another day in car building and retailing, another 850 workers laid off, this time without warning at BMWs mini plant in Oxford. The frightening thing about this announcement – apart from the human side of the story – is the fact that although these staff members were agency workers they also worked in a plant where the cars being built there are amongst the most popular selling models in Europe and indeed the second hand values are probably the best in the UK. If this can happen here it can surely now happen anywhere, the disturbing aspect of this whole thing is that since the government announced the huge multi-million pound bail out (sorry “assistance package”) what has changed? People continue to lose their jobs, factories continue stalling production, customers continue not to buy new cars and the ones that attempt to can’t buy them on finance because high street lenders will not fund customers unless they are absolutely sure that there is no risk.

Surely by now the aid package should have started to kick in? Dealers and car makers should have started seeing the shoots of recovery no matter how small, buyers would be telling their friends and colleagues what a great finance deal they have received to go with their great priced new car. Sadly they are not and as we move to March – traditionally the second biggest month for new car sales – dealers are already scaling back their forecasts and predicting more carmmegedon!

Of The cars purchased annually in this country more than 70% of them will be funded in some way, so it doesn’t take Albert Einstein to work out that if this funding is largely removed from the majority the car market will seize up like an engine without oil. We keep hearing about how well used cars are selling because this is one of the only routes to profitability many dealers have, but unless new cars start selling the supply of quality used cars will slow to a trickle pushing up the price and leading to more dealer closures and job losses.

What we need is to see how and where this money will be spent and when, because all the KPI’s tell us that there are buyers in the market for buying cars, indeed one dealer I spoke with exclaimed that if he carries on with the enquiries he is currently handling he will need to employ more sales staff to look after them and ensure his current team don’t start ‘cherry picking’. This will of course always happen if there are demand vs. supply issues but the business needs staff to ensure that every enquiry is maximised especially at present. New cars are being sold across the country so cheaply that they are almost loss leaders, used as a means for dealers to sell ‘bolt-ons’ in order to justify selling the metal in the first place.

But as everyone keeps saying we all need to do our bit, well buyers are trying and sellers are trying even harder so what we need is for the lenders to come to the party now and get the market going again otherwise look forward to more disastrous numbers at the end of march and more dealers shutting the doors for good.