Car manufacturer predictions for 2011 may be unrealistic

There is a genuine feeling among some dealers that bullish estimates from manufacturers about the size of the new car market in 2011 will ultimately be made up of too many forced registrations.

One of the good things that came from the initial downturn was the realisation that having fields full of unsold cars was not really the answer and asking dealers to pre-register thousands of cars to massage market share was doomed to failure and nearly caused dealers to go out of business.

Not to mention the effect this had on residual values as when the market is awash with too many of a certain make and/or model it will only distress the values of existing models.

Car dealers are, in general, predicting a new car market of around 1.8 million units whereas many manufacturers are putting that figure at over the 2 million unit mark and this is leaving dealers nervous in a market which is without scrappage this year and facing a whole range of economic handicaps which, common sense tells us, will only lead to a stable market at best.

Naturally the other fear is that by trying to meet volume expectations there will be huge pressure on profit margins which will be even more under pressure from an increased overhead. This could in turn lead to job losses and closures as dealers look to run their businesses as lean as they can but at what cost to the customer in terms of service and experience?