Dealerships must act quickly to counter the effects of a huge shortage of new and used cars, says motor trade expert Fraser Brown.
Sales teams are already coming to terms with delays of up to six months in new car deliveries, while the sector has seen its business cycle upended due to the long-term fall out from last spring’s lockdown.
Fraser said: “With new car supplies largely on a sold order only basis, particularly the popular models, and screen prices of used cars at a premium, dealer groups need to carefully manage the situation and set expectations.
“With long delays in the supply of some brands of new vehicles, dealerships must make their customers aware that they need to order now if they are thinking of changing their car in the next six months.
“They should use their data base and start communicating. This is especially important for those customers with personal contact purchase agreements who need sufficient time to replace their vehicle ahead of the guaranteed minimum future value date.”
Car production has taken a massive hit due to the pandemic. Initially, automakers shut down factories, then recovering production was hampered by a global shortage of microchips – while at the same time current car stocks were depleted by a resulting boom in pent-up demand.
Fraser, the founder and managing director of North Yorkshire-based MotorVise Automotive, which provides a range of services designed to maximise dealership sales and profits, said: “Quick-thinking dealer groups are already staging new car sales events, which means sold new car orders can be placed immediately.
“Getting ahead in the queue for new cars will ensure a dealership secures its supply, generates orders, and drives ongoing profitability during what could be a potential sales famine over the coming months.
“As a result, deliveries and handovers will begin to take place in the weeks and months ahead, which in turn will provide a ready drip supply of part exchanges to feed the demand for used cars.”
Many dealer groups are also coming to terms with a seismic shift in their business calendar.
The traditionally busy periods of March and April, plus September and October – grouped around the bi-annual new registrations – have now been thrown out of sync.
During last year’s spring lockdown, many dealerships closed or where service departments remained open, a significant number of customers chose to stay away.
Once restrictions eased, dealerships then had to cope with a huge backlog of work in the usually quieter months of June and July.
This phenomenon continues to have a knock-on effect in 2021 – with many service departments having worked hard to generate business in April and May, given that servicing and MOT anniversaries have now permanently shifted by two months.
Fraser said: “Businesses have been so used to organising their resources in line with their traditional calendar, and there will now be a period of readjustment. It does appear that June is tracking well, and service departments are enjoying a busy month.
“Manufacturers and dealerships are working hard to adapt to the challenges around supply, and it may be that we see a return to something approaching full capacity as early as the end of this year or by the second quarter of 2022.
“In the meantime, customers wanting to buy a new car may have to be both patient and flexible, but dealerships can ensure they are able to secure their new car by planning ahead.”
