James Baggott

COMMENT Bounce backs should be celebrated but take care you don’t burn out

We’re deep into results season and as we sift through the numbers from dealer groups across the country, it’s pleasing to read that although the lockdown was punishing, many dealers have rolled with the punches and come out fighting. As showrooms reopened in June, dealers have been awash with customers in new and used car departments. The result has been monumental bounce backs. The more directors’ reports I read, the more I see predictions from dealers that this year they’ll be ahead of last. I can’t quite believe I’m even writing that, given where we were just a few short months ago. It’s nothing short of staggering. While some dealers are generating less revenue, they’re making more profit as a combination of cost cutting, government support and excellent margins on used cars compound to boost balance sheets. Many have realised that, sad as it may be, they don’t need quite as many staff to do the job as they had before the pandemic, and when you add in the cost savings of online sales, the cost of sales has reduced considerably. Let’s look at some of the facts. While the 10-week shutdown was painful, with many dealers racking up multi-million-pound losses in April and May, they have quickly rebounded. Most made a healthy profit in June and that has continued throughout the summer and into September. Why? Well, take a look at your own personal circumstances. Are you going out to eat as much as you did before? Have you been on holiday? Chances are – like the rest of the working population – you haven’t and are saving more money than ever before. I bet you’re pretty fed up with the hard work you’re putting in and in need of a release. It’s pleasing Vertu’s Robert Forrester summed it up nicely when we chatted this month. ‘They’re spending it on cars, or their homes – or both,’ he said. And he’s right. Customers are to read that although the deciding that they’re pretty cheesed off and need cheering up. Marshall boss Daksh Gupta called it ‘revenge buying’, but, more accurately, it’s ‘reward buying’. Be that a new car or a used one, people are deciding they fancy a treat and are going lockdown was out and buying one. It’s pushing prices up and resulting in strong sets of results for an industry that desperately needed some good news. punishing, many dealers Then there’s a swathe of the market that’s being driven into a car purchase because of need. Lots of people out there are unsure of what their future holds. One minute we’re allowed in pubs, the next some people aren’t. The future is as confusing as the have rolled government advice. It means that as PCPs and lease deals come to an end, many are deciding not to renew and heading to the used market instead. with the punches and There are also huge numbers of people who’ve discovered they’re not using their cars as much as they did before. Some I’ve spoken to are thinking of giving them up completely and hiring a car when they need one, such has been their dramatic plummet in usage. come out With commuting cut back and nowhere to really drive to, many customers are staring at cars on their drives costing them lots of money and wondering why they’ve even got one fighting. in the first place. While some are giving them up altogether, most are taking the pandemic as an opportunity to reassess their budgets and deciding, with job uncertainty on the horizon, a used car is a far safer option. There are plenty of sales drivers out there, and if it’s not pent-up demand, which surely has long since been satisfied, it must be something else. And if it is people cheering themselves up, then with the winter we’re facing, chances are that isn’t going to change any time soon either. Anyone outside the industry looking in thinks it’s remarkable how dealers have bounced back – and in many ways it is. Market forces are driving much of it, but with most dealers operating on fewer staff than before and achieving more, there are some pretty frazzled people out there. We really need to be careful we don’t burn out.

Speaking out JAMES BAGGOTT

AGAINST OUR BETTER JUDGMENT, WE LET THE CEO HAVE HIS SAY EACH MONTH

James Baggott

founded Car Dealer Magazine and is the chief executive officer of parent company @BaizeGroup, an automotive services provider. He now spends most of his time on Twitter @CarDealerEd and annoying the rest of us. CarDealerMag.co.uk | 21