Car retailers fear for survival ahead of energy cost support 'cliff edge'

More than a third of car retailers claim that their business’ survival will be put at risk if the UK Government does not step in to provide support with their energy costs.

Ahead of a March “cliff edge” in Government support which could see some bills rise by as much as 80%, 38% of respondents to the latest Forecourt Foresight research from Close Brothers Motor Finance said their business will struggle to survive without further assistance.

Of those, 35% stated that their business won’t survive if energy costs remain high. 

Close Brothers’ findings come just five months after car retailers told AM they were preparing to “wear jackets in the showroom” ahead of former Prime Minister Liz Truss’s pledge of support in October.

Lisa Watson, director of sales at Close Brothers Motor Finance, highlighted that the car retail sector’s energy concerns have returned after a period of significant headwinds. She said: “For car dealers, the past few years have brought challenge after challenge – the pandemic, war in Ukraine, and Britain’s cost of living crisis.

“In addition to this, there have been more industry specific complications, such as the global chip supply issues.

“Our research data highlights the genuine business concerns of car dealers about energy costs and their potentially business impact.

“2023 has brought much more positive sentiment to the industry and it’s important that momentum is maintained, and dealers are supported through business pressures like rising energy costs.” 

Last October’s Government pledge of energy bill support for businesses runs until the end of March, but its replacement, which will last until April 2024, is much less generous.

The Financial Times (FT) reported that, although wholesale gas prices have declined by about half since late October, they are still roughly three times their pre-pandemic level.

Energy consultancy Cornwall Insight warned the FT of a “precarious cliff edge when the business support scheme comes to an end”, with some businesses facing a 70 to 80% increase in their power and gas bills.

Robert Buckley, Cornwall’s head of relationship development, said: “The more you pay on your energy bills the less you have to invest in your current business.”

In March last year AM reported that car retailers had been told the only way they could avoid rising energy costs was to go “off grid”.

Darren Riva, the chief executive of Journey Energy Solutions, said: “Realistically, the only way for car retailers and other businesses to ensure energy savings is to go off the grid.

“In recent times the conversation has been very much about carbon reduction, but that is very much shifting back towards cost savings as energy prices rise.

“The only way to do that is by reducing your reliance on electricity and gas.”