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% |