Dealers are cutting back on spending as the cost of living bites.
That’s a key finding of a survey from Close Brothers Motor finance which found 78% of dealers singled out inflation as the biggest problem they face.
One in five (17%) dealers are spending little on staff numbers, and 13% plan to cut back further. In contrast, a mere 1% are spending heavily on staff numbers and the same number plan to increase spending further.
A fifth of dealers (22%) are planning to cut heavy spending on stock, compared to 16% who are planning on increasing spending. 45% dealers also stated that they are going to continue spending little on upkeep on premises in order to save money.
A third (35%) of dealers believe that low consumer confidence is going to be a challenge, and 35% said their business would struggle to survive if energy costs remained high.
More than half (53%) of dealers believe that lack of stock availability is going to be a challenge in 2023.
And more than one-in-five dealers are also concerned with increased competition from online retailers, and 6% are concerned by government and industry regulation. 5% of dealers also have concerns around specific upcoming regulatory changes such as consumer duty.
But, things may be getting better. Given recent economic growth, 39% of dealers cited an improving economy as an opportunity for their business. 35% also view the growth of online sales as an opportunity, and 34% for easing supply issues.
Despite a growing market share of AFVs (alternative fuel vehicles), only 16% agreed that the growth of electric cars and other AFVs presented an opportunity for their business during the cost-of-living crisis.
Lisa Watson, director of sales at Close Brothers Motor Finance, said: “As the whole of the UK continues to grapple with the cost-of-living crisis, it’s clear that it is having a significant impact on the motor industry. Costs are rising for consumers and businesses alike, meaning demand is constrained and prices have no scope to fall.
Spending heavily right now, and will increase further | Continue to spend heavily | Spending heavily right now, but will cut back | Currently spending little and will cut back further | Continue spending little | Currently spending little, but will increase spending | Don’t know | Not relevant | |
Staff training | 0% | 3% | 5% | 16% | 19% | 5% | 6% | 45% |
Number of staff | 1% | 1% | 3% | 13% | 17% | 6% | 14% | 44% |
Website | 3% | 13% | 13% | 13% | 34% | 9% | 6% | 9% |
Social media | 0% | 6% | 10% | 10% | 42% | 6% | 6% | 18% |
Upkeep of premises | 1% | 10% | 12% | 14% | 45% | 9% | 1% | 6% |
Stock | 6% | 21% | 22% | 16% | 13% | 16% | 5% | 1% |
Advertising | 1% | 22% | 21% | 17% | 27% | 1% | 5% | 5% |
Sponsorship | 0% | 1% | 5% | 13% | 26% | 5% | 4% | 45% |
Subscriptions | 0% | 1% | 3% | 10% | 25% | 3% | 3% | 56% |