MHA Motor Dealer Report suggests dealers remain confident

MHA’s Motor Dealer Report 2016 has revealed that dealers remain positive about the second half of the year, despite vehicle registrations being on a downward trend in Q2.

As Motor Trader reports, the survey, which was carried out prior to the Brexit vote in June, suggests the majority of UK dealers are optimistic about prospects and profitability in the next 12 months, with more than two thirds (68%) forecasting profits to be static or grow.

The majority of dealers also expressed plans to grow their business within the next 12 months. These plans included increasing the number of new sites (13%), redeveloping or relocating their current premises (34%) and acquisition of new brands or franchises (9%).

When it comes to new car sales targets, more than half (53%) of motor dealers believe these are achievable, although the majority (84%) of dealers rely on pre-registrations to meet those targets.

Discussing the findings, director of the NFDA, Sue Robinson, said: “It is encouraging to see that the majority of franchised dealers are positive about the outlook for the retail motor sector for the remainder of the year.
“Although dealers feel their manufacturer targets are tough, many believe they are achievable, even if pre-registrations are part of the ‘mix’.”

It seems recruitment is also a key plan for dealers’ growth, with 87% of respondents expressing intent to recruit.

It is expected that operational areas of the business will be the main areas of recruitment, with nearly three quarters (72%) looking to hire trained technicians. Dealers are also looking for apprenticeship technicians (57%) and vehicle sales staff (57%).

However, the recruitment process doesn’t go without concerns. Staff recruitment and salary rises were the top cost concerns for dealers in the next 12 months, cited by 62% and 48%, respectively.

Other cost concerns included compliance costs (46%), meeting mandatory corporate identity requirements (42%), and rising DMS costs (38%).

It is thought among car dealers that business models could be significantly impacted by alternative fuel vehicles (AFVs) as a result of the associated potential long-term reduction in aftersales revenue and even the infrastructure requirements.

Demand for AFVs is outpacing the market, up 21.3% when compared with the first six months of 2015. As of June this year, AFVs account for 3.2% of the overall new car market.

When motor dealers were asked if they think it’s likely that AFVs will gain significant market share, nearly three quarters (73%) thought it would, with two thirds (66%) thinking it would happen within the next 10 years.
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