Finance the key for many smaller dealers

If you ask anyone’s opinion on almost anything they will generally start by looking at the subject of conversation totally from their own perspective. However once you ask them to look at the bigger picture they will invariably soften their stance and concede that maybe there is a different way of looking at things.
In the motor trade, like many other forms of retailing, this is an absolute constant.

If anyone visited Woolworths shortly before they went under you couldn’t help but notice that an old favourite that had been with us for decades had somehow lost its way and the s failure of the management to come up with a clear modern strategy which would enable Woollies to compete in an ever changing world ultimately saw to their demise.

We can see in car retailing that the investment in showrooms, marketing, branding and staff has achieved radical results in recent years and interestingly, given the competition, many smaller chains and independents have used their experience and expertise to adapt what they do too. They continue offering customers what they want but also have no fear when competing against the might of franchised main dealer groups and all their collective financial muscle.

This year we have heard of many smaller dealers who just haven’t been able to remain profitable and have given up the ghost or downsized their businesses to decrease costs. Although we know that there are many regional exceptions where this is not the case, it will clearly be a factor next year that if credit is not made more readily available and the finance facilities offered by the smaller dealers more competitive it will be a very challenging time indeed.

A long standing business acquaintance that runs a 30 car pitch near Heathrow told us that it’s only his ability to “wheel and deal” and trade-in cars he may not usually wish to that has kept him afloat. Although he has a good local presence and adequate web listings he has seen his finance income fall significantly as he cannot find lenders who can compete with the manufacturer backed subsidised finance rates available on new and used cars in main dealer showrooms.

He thinks next year will be even tougher because many dealers who understand that sourcing quality retailable stock will be harder will still look to retail older cars creating more trade demand and pushing up prices.

It will certainly be a case of heads down and many managers will need to get in the trenches with their sales teams to maximise every potential sale and service opportunity in order to navigate through this downturn and keep those units rolling out!