Car Retailing – is it time to dust down ‘volume is vanity profit is sanity’?

In 2019 UK vehicle sales volumes remain strong at around 10 million units. New car registrations will be around 2.3 million and used sales will pitch in at approximately 7.9 million.

 

Yet, the UK retail sector, based upon both dealer feedback and more significantly published financials is, on the whole, not in rude health. The position is not UK specific, Grant Thornton recently noted; “sales were also continuing to decline significantly across Europe, the US and China.”

The reasons for the challenges facing motor retailing and other parts of the broader automotive value-chain are many. In short, they include: overproduction globally, the shift from fossil-fuel to electric cars, which is creating market and buyer uncertainty and which will mean less aftersales/servicing activity in the future, increasing competition including online marketplace providers, rising costs, notably in people and marketing and a well-informed and protected consumer.

This unhealthy focus on lower prices is not unique to the automotive market; ‘Sales discounts on clothing and products in the lead up to Christmas could be the biggest in almost ten years,’ according to Deloitte noted the BBC online (16/12/19). The greater challenge facing car retailers is that in used car stock, they have to manage a depreciating asset. Surely something has to change to provide greater sustainability? A war on costs seems likely and then there is the question about product pricing. Sanity dictates that price rises need to happen, or will the sector see a wholesale consolidation?


Sources:

https://www.bbc.co.uk/news/business-50807879
https://www.am-online.com/news/used-cars/2019/12/02/time-to-review-costs-investments-and-used-car-processes-say-grant-thornton-and-cox-automotive

Latest Insights

Return to Growth in July

The consumer new car finance market reported growth in new business of 20% by value and 9% by volume in July 2020 compared with the…

Find out more

Press Release – Mann Island Finance named as Credit & Collections Technology award finalists

2 minute read

This award focuses on the use of innovative technology and showcases the valuable recognition of Mann Island’s products and services.   “These awards are judged…

Find out more

Press Release – Mann Island Finance Joins the ‘Bounce-Back’ With Record Volumes

The continuing reports of an encouraging bounce-back in used cars, coupled with a level of pent-up demand have helped Mann Island Finance to achieve two…

Find out more

Treating customers fairly

Find out more about our commitment to treat our customers fairly and to lend responsibly.

Discover more

Customer Security Check

Carry out a security check quickly and securely by completing our online form.

Get Started

Need to make a complaint?

All the information you need on our complaints process.

Complaint Process