Rising staff costs and vehicle sales woes to impact dealers in 2025, research finds

Research from Startline Motor Finance reveals that rising staff costs are the greatest concern for UK car dealers in 2025, with 40% of dealers identifying this as the factor most likely to negatively affect their business.

The findings come from Startline’s January Used Car Tracker, which highlights a range of challenges dealers are facing heading into the new year.

Dealers expressed additional concerns about rising costs across various areas, including stocking (38%), premises (38%), compliance (34%), and vehicle preparation (33%).

Paul Burgess, CEO of Startline Motor Finance, commenting on the findings, saying: “It seems dealers are concerned about a whole range of costs in 2025, but staffing is the biggest. While pressure for pay rises is probably lessening, the increase in employer National Insurance announced in the Budget is no doubt a worry for many.”

He added: “Seeing concerns over stocking, premises, compliance, and preparation costs is perhaps not a surprise, but it is noteworthy that dealers believe they will continue to face ongoing rises in these areas at a time when inflation has fallen back to much lower levels than we have seen in recent years.”

The research also sheds light on other challenges dealers are anticipating in 2025. A significant number cited declines in vehicle sales (34%) as a major concern, while 21% of dealers are worried about reduced servicing income. Other issues such as finance commission (19%), add-on sales (19%), and aftersales income (12%) were also highlighted.

“It's interesting that vehicle sales are the top concern when it comes to reduced income and perhaps suggests there is a degree of worry over the economy in general in 2025. Some dealers clearly think the general used car market could take a turn for the worse,” Burgess explained.

Additionally, the looming Zero Emission Vehicle (ZEV) Mandate is expected to pose challenges for dealers, with 14% of respondents expressing concern about the mandate’s impact. The ZEV Mandate requires an increasing number of EV sales, which could affect the sales of traditional vehicles.

Burgess said: “The ZEV Mandate is also on the minds of dealers, and we are hopeful that the current consultation will provide effective and practical help when it comes to both new and used electric car sales. The government says it is in ‘listening mode,’ so let’s hope the motor industry’s concerns are being heard.”

The results also draw comparisons to last year’s Startline Used Car Tracker, where the same question about cost worries was asked. In January 2024, 47% of dealers cited staff costs as the top issue, followed by premises (33%), stocking (30%), vehicle preparation (27%), and advertising (22%).

Startline’s Used Car Tracker is compiled monthly by APD Global Research, known for its business intelligence and customer experience programs. This month's research included 329 consumers and 58 dealers.