Franchised dealers fared better against economic headwinds in 2019 than independent dealers, according to a report from UK automotive shopping site CarGurus.
The report looks at topics including profitability, digital retailing trends, stock location, speed of sale and lead management following a survey of more than 700 used car dealers.
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The survey found in assessing car profitability, that just over 50% of all dealers reported margins were down in 2019, but franchised dealers outperformed their independent counterparts. Some 51.1% of independents reported a fall in margins last year, compared with 44.2% of franchised businesses. One fifth of independent retailers said margins were up on the previous year, and for franchised operators, the figure was higher at 28.4%.
According to the report the blame for the downward trend in 2019 was heavily centered on Brexit and political uncertainty, as two thirds of retailers reported this having a negative impact on the market.
However, used car dealers were optimistic about 2020, with just 24.7% saying they expect margins to fall again in 2020.
CarGurus also looked at digital trends for 2020, and revealed that consumers were willing to buy used cars online and retailers were investing to support this trend. In 2019, 13.6% of dealers reported they had customers who had bought a car entirely online before visiting a showroom. The report also found that paying a deposit online or gaining finance qualification and reserving a car online was a less common occurrence (10%) than a full online purchase.
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By GlobalDataAs a result of progress in digital sales, online finance completion and click-to-buy topped the list of digital investments retailers are planning for 2020.
Looking as stock location the report found dealers were struggling to find the right cars for their forecourts, and said they expect finding the right stock to continue to get harder.
Wendy Harris, VP European sales at CarGurus, said: “Cost control and pressure on margins are always at the core of a used car dealer’s operation and are clearly key areas of concern, but 2019 saw this focus intensify. The marked change from the first One Voice Report released in January 2019 is that Brexit and the surrounding political environment is now taking the brunt of the blame for dealers’ lack of market confidence.
“Looking beyond Brexit, the picture is encouraging, particularly for online sales and the digital tools to help guide buyers to the right car at the right price. However, with two-thirds of enquiries coming by phone or email, retailers need to have the right systems, tools and processes in place for 2020 to make sure there’s no lead leakage.”
