Car dealerships up and down the country may be forgiven for wondering what awaits when they finally reopen their showroom doors on Monday (April 12), says motor trade expert Fraser Brown.
However, he predicts that customers are ready to return in their droves – eager to abandon laptop and phone screens in favour of a close encounter of the real kind.
“There may well be less pent-up demand than dealerships experienced after reopening their showrooms last June following the first lockdown, but buying a car remains an enduring and very personal experience,” he said.
That view is supported by a Motor Ombudsman study that reveals just over half (53%) of franchise dealerships and independent car retailers forecast that new car sales will be higher during the April to June period, compared to the same pre-Covid quarter two years ago.
Fraser, the founder and managing director of Richmondshire-based consultancy MotorVise Automotive, which provides a range of services designed to maximise sales and profits, said dealerships can rest assured customers are itching to get back inside car showrooms.
“People will always want to see, touch, and test drive vehicles – an experience that is completely lacking online, especially when you consider it’s such a major purchase.”
He points to the fact that some of the pure online retailers have not found the concept of treating a car as a simple commodity as easy as expected whilst dealing with such narrow profit margins.
Meanwhile, one positive effect of the pandemic has been to force dealerships to up their game when it comes to their online services. This, he argues, may well lead to the development of a hybrid system where people choose their new car online, and then visit the showroom to view the vehicle and conclude the deal.
Fraser believes that how the reopening of showrooms is managed in terms of staffing is pivotal for the long-term profitability of dealerships.
“Many dealers have shed sales staff over the past 12 months, either through redundancy or through people leaving to take up new opportunities. That has meant some dealerships have been operating with a much smaller team and the danger is that they are exhausted.
“Some dealers believe they can operate with a reduced sales team but continuing this policy will only drive down profit per unit. Dealerships must hit the ground running and properly manage those customers returning to their showrooms.
“That means managing demand to maintain social distancing, firstly by having systems in place to ensure that customers can book an appointment beforehand, and secondly by having the correct number of staff on the ground to ensure a high level of customer service – otherwise they risk losing those customers permanently.
Fraser says that the other bump on the horizon surrounds used car sales – which so far has driven dealership profits.
“Interest in used cars is falling due to a rise in screen prices. Meanwhile, the drop in the sale of new cars means that in two years’ time there will be a 40 percent reduction in the number of vehicles coming through to the used market.
“We absolutely need to stimulate an increase in new car registrations so that the industry is able to replenish the future used car market.”