Brexit continues to provide a confusing state of affairs for car dealers. 

Our most recent research reveals that a significant number of car buyers – somewhere in the region of 400,000 – are considering putting off buying a new car until they know what Brexit really means.

The Government is yet to start negotiations in a meaningful way so any sort of clarity could well be months or even years away.

Combine this with the threat of rising inflation and slower wage growth, and the prospect of customers delaying the purchase of big ticket items could become a reality.

On the other hand, the availability and popularity of car finance continues to drive buyers into dealerships. Despite suggestions that the FCA are looking at the potential mis-selling of products, such as PCPs, these deals are increasingly popular and widespread. 

In addition, nearly one in ten (7%) drivers have said they'd be more likely to buy a used car while the full impact of leaving of EU is still up in the air.

Regardless of whether these stats actually play out over the next couple of years, dealers have to the face the very real prospect that they could well be selling to a smaller pool of consumers – and as a result, competing more fiercely for a diminished share of the market.

This will prove to be a true test of agility for new and used car dealers. If, for example, demand drops steeply, dealers will need to be savvy about picking stock – budget cars are likely to continue in popularity as plummeting consumer confidence hits the amount car buyers are willing to pay.

The luxury end of the market is unlikely to be hit as hard by a drop-off in demand – it will be the mid-range market that could struggle the most

Dealers, particularly of secondhand cars, still face the uphill struggle of coping with a somewhat blighted public impression. This isn’t going to be fixed simply because car buyers are looking to cut costs and are more likely to head to used car dealerships.

Dealerships could hand themselves a competitive edge here. By looking to overcome continuing consumer uncertainty in the industry, used dealers now have the option to partner with big brands which can help to boost the public perception – the AA, for example, launched Approved Dealer earlier this year in a bid to support independent and franchised dealers through pre-sale car inspections.

Digital options will also provide fertile ground for dealers looking for greater exposure – after all, car buyers are increasingly looking online before they head to a dealer.

Having a digital presence – whether that’s through your own website or via a listings site – plays to the way car buyers are now shopping around for vehicles including buying and finance options

While dealers have every right to be cautious while the UK negotiates its way out of the European Union, the most versatile dealerships will have an opportunity to thrive in these untested times.

For dealers to make the best out of this steadily unfolding situation, they will need to act now – rather than when the tide of consumer confidence turns.

Author: Simon Benson, director of motoring services at AA Vehicle Inspections