Survival of the fittest in a car retailing shakedown

This year has been a surprising one for the trade in many ways. Even the most optimistic of car dealers could never have predicted the rapid uplift in used car prices between late 2008 and most of 2009.

Even though the scrappage scheme was in effect a government subsidy for an ailing business sector and kick started demand for certain new cars, the general feeling in the trade has been one of optimism and profitability.

However although this may be the case for many large dealer groups with a diverse spread of brand partners what about smaller dealers in more rural or depressed regions of the UK? How about the independent dealers? They have suffered from the fact that car supermarkets, with massive financial muscle, have made it very difficult to make a living during the better times never mind when there is a recession.

The story always has a different middle and a different end for different dealers and although in many main dealers there have been redundancies and wage caps they have been able to be resilient enough to cope with the change.

At the other end of the scale people have, quite simply gone out of business and lost everything. With dealer funding withdrawn for only the very safest of bets many businesses have not even been able to borrow their way out and good traders who have been in the trade for decades and who possess a wealth of knowledge and experience have just not been able to cope with all the factors threatening them. These people have either been lost to the trade forever or have had to go back to where it all began in a dealership working for someone else.

We have heard from many people this year who dispute that lots of cars are being sold very profitably, because they reside in places where there are a distinct lack of chimney pots and unemployment is way above the national average. To them it has all seemed like a sick joke, but the reality is the big will survive and thrive and grow and the smaller, weaker dealers will get taken over or fall by the wayside and certainly if you look at both franchised and independent dealers there will be without doubt a fraction of the amount there was even 10 years ago.

With the rise of internet marketing car makers don’t need to close off open points and with more competition generally and customers prepared to travel further perhaps this is just part of the natural evolution that the car trade is going through.

In a retail motor trade shakedown the smallest will inevitably fall through the cracks.

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3 Responses to Survival of the fittest in a car retailing shakedown

  1. Lee Collins December 17, 2009 at 2:20 pm #

    Whilst there is no doubt some sense in whats being said you are wide of the mark. We are a single Independant Main Dealer who with 40 staff will make close to half a million pounds this year and in addition to that, I can almost see Motorpoint from my forecourt!

    Its the same old story, if you work hard, employ and motivate good staff, invest in your team and your marketing, you will always make money and you will survive. Yes some years you make more than others but I have never lost money no matter what outside influences I have been up against. Most large plc’s would give anything to match our results and when asked why, my reply is always the same. How many of your DP’s & Senior Management work six days a week (i do but we close on Sundays for the benefit of our team and their families) from 8.30am to 8.30pm – answer hardly any!

    If you want to play golf all week or weaken your balance sheet with boats in spain then why be surprised when the you lose the faith and credit of your bankers. Run a tight ship, assume the worst could happen and that the sun wont shine perminantly and WORK for a living and the market, the large and the supermarkets make not one single bit of difference. Trust me, we are living proof!

  2. Mark Robbins December 17, 2009 at 10:39 pm #

    Lee, what you are saying makes perfect sense, however, if you are working Twelve Hours a day six days a week when do you get to enjoy the benefits of the half a million? if i asked my Sales Manager and team to work 72hrs a week i wouldnt have any staff left ! work to live, or live to work? I know which one i would choose.

  3. Lee Collins December 18, 2009 at 9:40 am #


    I dont expect my staff to do what i do as I am the main beneficiary and i take an opposing view to them hence we close Sundays and do a miriad of other things for them, it is also worth noting our sales staff have a pay plan that ensures they have earned not a penny less in this recession; in return we have a stable, loyal workforce and a solid business.

    I’ll get to enjoy the fruits of my labour when the market gets back to normal, although my management team may prefer your views as i expect at lot from them given what they receive in return.

    But we are missing the point – my point was simply that I dont agree that independants have to go out of business nor that the Large plcs and car supermarkets have to impact on your business. Its simply a matter of running a tight ship and mainting a strong team and a strong balance sheet. Most the business I have seen fail have been run poorly or have been leveraged beyond belief by the owners. So in my view the author of the orginial article is wide of the mark!

    Seasonal best wishes to all .

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