Two-thirds of car dealers (66%) are worried about future margin erosion affecting their business, new research shows.

Startline’s July Used Car Tracker shows the biggest concerns are high values of used cars squeezing margins (mentioned by 66%), cost of electrification such as installing chargers (52%) and rising staffing costs (52%).

Other major worries include increasing difficulties surrounding compliance (36%) and the cost of infrastructure including showrooms (36%).

Paul Burgess, Startline Motor Finance chief executive, said: “We’ve been seeing increasing concern about margin erosion among the used car dealer community in recent months and this month’s Tracker shows that it is a genuine worry for very many.

“There is simply a lot going on in the sector at the moment. There are many areas where costs are rising, such as staffing and infrastructure; where investment is needed, such as electrification; and where resources are being consumed, such as compliance.

“Add to this the ongoing difficulties generated by stock shortages and the resulting high prices and values of vehicles, and it is clear that profits are being threatened from many directions, while new opportunities are perhaps currently more difficult to identify.”

Interestingly, the research also indicates that just 27% of dealers were worried about losing sales from warranty and other aftersales products while only 15% thought the new Consumer Duty regulations would affect their ability to sell motor finance.

Burgess said: “Certainly, we are seeing efforts across our dealer base to increase motor finance presence with many viewing Consumer Duty as a way to positively rethink their whole approach to this area through better matching of car buyer to finance product.”

The Startline Used Car Tracker is compiled monthly for Startline Motor Finance by APD Global Research, well-known in the motor industry for their business intelligence reporting and customer experience programs. This time, 319 consumers and 50 dealers were questioned.