Car dealers can ride the storm of soaring energy prices, opinion

This year has seen a perfect storm for energy prices. Unfortunately, the situation looks likely to worsen.

Experts say that wholesale energy prices will continue to rise, and because there is no energy price cap for businesses, many will be exposed to the full impact.

The British Chambers of Commerce has warned that thousands of UK businesses will go to the wall without help but help looks unlikely to be forthcoming.

Dealerships interviewed by AM Online for a recent story spoke of fears that they will have to cut costs elsewhere, or even switch off the showroom lights for good. As if that wasn’t enough, car retailers also face the challenge of decarbonisation.

As-a-service: the 21st century solution

But there are ways to steer your business through this multitude of challenges and protect yourself from energy price volatility.

Many businesses recognise that the quickest way to cut energy costs is to use less of the stuff in the first place, which means leaning into energy efficiency.

This is also the fastest way to get started on any climate goals you may have. But the catch-22 is that although energy efficiency is a route to long-term cost and carbon savings, you may be reluctant to invest in it when cashflow is an issue.

One increasingly popular solution to this problem is the “as-a-service” model for energy efficiency upgrades. It works in a similar way to contract hire and fixed cost motoring, for example. It’s all about predictability, taking away hassle and keeping operational costs under control.

Take lighting for example. Because it is such an important element of the sales experience, many retail businesses in the motor world and beyond are switching on to Lighting-as-a-Service.

Replacing existing and outdated halogen, fluorescent metal halide or filament lamps with energy efficient LEDs can achieve savings of 60%. Add intelligent lighting control into the mix and the savings unlocked could be as much as 80%.

But rather than pay for all those improvements upfront, you sign up to a service-based contract with fixed monthly payments. Of course, the reduction in running costs, not to mention carbon savings, kicks in straight away.

Alongside energy efficiency, having the right lighting can change customer perceptions of your business, and many retailers will find that swapping to more sophisticated LEDs brings a sales boost as well as cutting costs.

One company who has deployed and benefited from Lighting as a Service is Rygor - the largest dedicated dealer group for Mercedes-Benz commercial vehicles in the UK.

By upgrading to the latest LED lighting at eight of its sites, the organisation in on course to reduce operational costs by more than £95,000 over 12 months with carbon savings amounting to 980 tonnes.

Focus on what you do best

In challenging times, it makes sense to concentrate on the core business that is key to your success. This is why, for other areas of the operation such as energy efficiency, it pays to partner with a specialist who can guide you through the process and take a lot of the work off your plate.

Working with an experienced Energy-as-a-Service specialist provides a hassle-free approach to energy efficient upgrades.

From the initial audit of existing energy use and systems - giving an accurate forecast of how much businesses can save, through to the design, installation and ongoing maintenance it allows businesses to focus on what they do best.

EV opportunity

Some dealerships see the shift to electric as yet another unwelcome change during challenging times.

Others are keen to benefit from the EV revolution, but are aware that they don’t have experience in this area and are dismayed by the heavy upfront costs of installing charging infrastructure.

Again, the as-a-service model is the most practical solution allowing businesses to benefit from having the facilities on site.

There is no doubt that big changes and challenges are coming in the auto world. But with the right strategy, and the right partner, many dealerships will actually come out stronger.

To download Journey Energy Solutions ‘How to cut costs, save energy and deliver decarbonisation: a guide for motor dealers’ click here.

Author: Terry Reeves, operations director of Journey Energy Solutions (Journey)