Olympics and new car registrations papering over the cracks

The Olympics seems to be the word on everyone’s lips and whether you were a spectator or an armchair viewer the event certainly caught the imagination of the entire country. Depressingly however the promised boost for business especially in London and the surrounding areas failed to deliver, unlike many of our esteemed Olympians.

The fact that we were all warned to avoid a gridlocked London appeared to have been heeded for a change and the west end was more quiet than perhaps it has ever been with trade some 30% down in many areas. Tourists who arrived specifically for the games were not venturing far from the magnificent Olympic park and with the games being such a resounding success it actually meant that everybody’s attention was taken up with them rather than finding out what other parts of the country were all about.

Boris, Seb and David all told us the games would knock us bandy and it looks like they were right, however behind all the smiles the economic gloom continues to grow; house prices are slipping back again, the Eurozone crisis continues to deepen and jobs are still hard to come by. The rumblings in the car trade are that things are about to get a whole lot harder, behind the headlines of better new car sales and steady if unspectacular used car numbers is the fact margins are in free-fall and the only real area of any great success is the bargain sector which is perceived to deliver the best value when everyone is looking to tighten their belts.

In my experience if it continues it can only mean one thing, especially where the big boys are concerned, and that is cost cutting which almost certainly means reducing headcount. Back in 08 there was a major cull in the motor trade and in some businesses that is likely to happen again unless there is some good news. When share prices have to be protected to safeguard the long term future of the business and when dealers have already cut costs in every other way but are still falling short of targets, people are the inevitable next step in the cost cutting process.

So as much as the London Olympics made us forget all our troubles for a few weeks unless there is a knock on which produces a feel good factor which in turn leads to an increase in confidence and showroom footfall we are in for a long hard second half of the year in many businesses.

The good news is that the advantage of the motor trade is that it is fairly battled hardened to this kind of economic gloom and can generally find a way of finding those sales through a resilience which goes back many years.


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One Response to Olympics and new car registrations papering over the cracks

  1. Ling Valentine August 16, 2012 at 2:57 pm #

    You say: “the only real area of any great success is the bargain sector which is perceived to deliver the best value when everyone is looking to tighten their belts.” – well no. That’s wrong… In fact I am finding sales VERY buoyant. Most of my cars are premium brand stuff, all are new. My margins are high, sales are almost doubling year on year and due to fixed costs, that means my profitability is jumping. For instance, by 14th August this year, my sales had already exceeded the WHOLE of August 2011. Every month has been up on 2011, big time. So, I kind of disagree with the tone of the article. I would say that many dealers are not making the most of the internet and all the sales possibilities. For instance, I often get car orders at all times of the night: what dealer can do that? Your phrase “showroom freefall” says it all. In this day and age, you should be concentrating on website traffic, not showroom traffic. …Ling, LINGsCARS.com

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