The way cars are bought is changing! The emergence of online retailers and manufacturers starting to sell direct to the public. What does this herald for traditional car dealerships?

The wholesale price of used cars has soared over the past year with increases of more than 30% being reported over the 12 months to the end of May on some models. These increases have been fuelled in part by the shortage of semiconductors that has hit the production of new vehicles together with consumers that, having saved during lockdown last year, have been treating themselves with a car upgrade.

What does this mean for dealerships? Many industry experts believe that the soaring wholesale used prices cannot be completely passed on to the consumer resulting in shrinking margins for the dealerships.

We now buy cars differently and this change in consumer behaviour has been accelerated during the pandemic with the emergence of online dealerships like ‘Carwow’ and ‘Cinch’ gaining market share. Consumers have a far easier way of researching both new and used car prices using web portals rather than just negotiating face to face with their local dealer.

Adding to the woes of traditional dealerships, has been the emergence of car manufacturers selling directly to customers in large shopping malls such as Westfield in London and the Trafford Centre in Manchester which will inevitably fuel further pressure on margins for traditional dealerships.

These changes in buyers’ habits and direct selling both online and from manufacturers suggest that a squeeze on margins and an operational potholed road ahead awaits car dealers.

We would urge any dealer that currently has concerns over their margins or any other aspect of their business to talk with us now. We offer an initial consultation at zero cost to you and the sooner we start talking the greater the possibility that we can find a solution that will keep you trading. What do you have to lose? Contact Sam Talby by emailing sam.talby@sksi.co.uk or call him on 07812 583612.