Franchise partners ready networks for ‘make or break’ September

The pressure is on for car retailers to make a success of September ahead an uncertain Q4.

Several manufacturers have told AM how the second plate change month, usually the second busiest sales period of the year, will hold the key to helping dealers get through what could be an even more challenging winter.

Dale Wyatt, Suzuki GB director, wants dealers to be able to make the most of Q3 now they are back up and running.

He told AM there is a lot riding on a healthy September.

Wyatt said: “If you want to catch a wave, you need to start paddling early.

“I think the whole industry is looking at September as a make or break month and then we’ll review.

“We were focussed on the low hanging fruit in June and July but now we need to be more proactive in the run up to the plate-change.”

While Wyatt said he’s not hoping for a difficult Q4, the industry needs to be prepared due to the potential for a second wave of Covid-19, another national lockdown or further redundancies as the furlough scheme ends in October.

The Society of Motor Manufacturers and Traders (SMMT) chief executive, Mike Hawes, urged caution in celebrating the increased July new car registrations, stating that a far clearer picture of the UK’s new car market should emerge “by the end of September”.

A total of 174,887 vehicles were delivered to customers in July, but new car registrations remain 41.9% down year-to-date, at 598,054 units.

A 26% increase in June profits helped the average UK car dealer to claw-back COVID-19 losses which amounted to around £100,000, according to ASE’s latest market insight.

Peter Allibon, Mazda UK sales director agreed that September was also ‘make or break’ due to March sales being cut in half due to the lockdown.

Allibon said: “Historically September is what helps dealers get through the remainder of the year financially.

“We don’t know what is round the corner, particularly with the lockdown measures in the North and the potential for other local lockdowns.

“Whether there is a second wave or other local or national lockdowns, I think the view remains the same that September will be a really important month.”

Allibon said those dealers that are being more defensive or cautious may miss out on the opportunity that is available right now and those that are investing in a recovery are going to reap the benefits.

Allibon does foresee a tough Q4, particularly for some dealers that may be struggling more with cash flow as the furlough scheme comes to an end.

Allibon said: “Cash has been hit hard, maybe not as hard as we thought it would be, but there will be some dealers that need operational support and we’ll do all we can do to help.

“I think that period from October 2020 to March 2021 will be challenging and the pressure will be on but I’m confident we can get through it.”

Lexus UK boss Ewan Shepherd said the sentiment within his network has been really positive, even “bullish” for Q3.

He said: “We expect some more purchases to be brought forward for those that may be thinking about changing later in the year.

“We will of course keep our eyes on Q4.”

Simon Hetherington, commercial director at Kia, AM’s Franchise Partner of the Year 2020, said that while the level of casual browsers in the showroom has dropped since lockdown, those that are making appointments are ready to buy more than ever.

He said: “Despite all of this we have seen a really positive July on new and used.”

Hetherington isn’t sure if this level of footfall will be maintained even after a vaccine or time goes on as customers get more comfortable with even less time in the showroom.

He said: “It’s something we’ll monitor. I still honestly believe coming to the showroom is the best place to qualify your needs and to experience the product.”

Online deliveries during lockdown hasn’t been a huge trend for Kia and while Hetherington thinks some customers may ask for it, he’s doubtful it will become commonplace.

However, he does expect the trend toward a greater mix of plug-in vehicle sales to continue.

Kia had a goal to have three in 10 sales by plug-in as a longer-term goal for its sales mix, but it has already reached that level in some locations.

Hetherington said: “I think that’s a trend that will only continue to be exaggerated based on the feedback we’re hearing from customers.”