The cost-of-living crisis is the biggest challenge for 7 in 10 car dealers, according to research from Close Brothers Motor Finance.

The survey, which looked at dealer’s views of the current landscape and the challenges they’re facing, found that more than half of dealers (54%) believe stock availability will be a challenge over the next six months, despite month-on-month growth in production levels over the course of 2023.

Over the past few years manufacturing levels and capabilities have been hit hard by the pandemic, war in Ukraine and other supply chain shortages. Whilst manufacturing recovers, the wider impacts persist, continuing to lead to a shortage of quality second-hand stock in the used car market.

Energy costs were also a growing concern amongst 42% of car dealers – a 10% increase compared with previous Forecourt Foresight data from November 2022.

Low consumer confidence also ranked highly for more than a third (35%) of dealers, followed by the ULEZ expansion for well over a quarter of dealers (27%). Increased competition from online car retailers was also considered one of the biggest challenges for 19% of dealers and issues with staff recruitment and retention for 13%.

Dealer challenges

  1. Cost of living crisis – 70%
  2. Lack of stock availability – 54%
  3. Energy costs – 42%
  4. Low consumer confidence – 35%        
  5. ULEZ (Ultra Low Emission Zone) expansion – 27%        
  6. Regulatory changes – 25%        
  7. Increased competition from online car retailers – 19%        
  8. Staff recruitment and retention – 13%
  9. Current Brexit/EU deal – 8%

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Lisa Watson, Director of Sales at Close Brothers Motor Finance, said: “Dealers continue to be hit by a constant chain of new and persisting challenges. Though some problems appear to be easing, such as supply chain disruptions, ongoing issues like rising costs remain pressing concerns for car dealers.

“Rising overhead costs are becoming an increasingly major barrier, preventing them from investing in key business areas such as staff training, infrastructure, and stock. Such little investment possibilities will have a detrimental effect on business growth and consistent cash flow.

“Throwing another spanner into the works, many dealers will understandably be concerned about the pressures sky-high inflation has on consumer demand in the near future. A tricky task ahead will be balancing rising overhead costs, whilst keeping their forecourt stocked with affordable vehicles that meet demand.”

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