Car Dealer News: A recent study conducted by Startline has revealed that a significant majority of used car dealers in the motor trade industry are growing increasingly concerned about the potential erosion of profit margins in the future. According to the July Used Car Tracker poll, 66 per cent of the 50 dealers surveyed expressed apprehensions about their profitability being impacted by the soaring values of used cars, which are currently squeezing their margins.

Furthermore, the research highlighted that 52 per cent of the used car dealers surveyed are worried about the escalating costs associated with electrification, which includes expenses related to the installation of chargers. In addition to electrification costs, the same percentage of dealers are also troubled by the rising staffing expenses in the industry.

The study also sheds light on other significant concerns voiced by used car dealers. For 36 per cent of the respondents, compliance has emerged as a major issue, given the growing complexities surrounding regulatory adherence. Additionally, the same proportion of dealers expressed concerns about the costs associated with maintaining the necessary infrastructure, including showrooms.

Paul Burgess, the CEO of Startline Motor Finance, noted that the rising concern over margin erosion among used car dealers has become evident in recent months, and the latest survey reinforces the genuine worry prevailing within the community. Burgess pointed out that the industry is currently experiencing numerous challenges, including increasing staffing and infrastructure costs, investments required for electrification, and the resources consumed by compliance efforts. Moreover, the ongoing issue of stock shortages and its impact on vehicle prices and values is adding to the threats faced by dealers, making it difficult to identify new profit opportunities.

The research further disclosed that only 27 per cent of the dealers surveyed were apprehensive about losing sales from warranty and other aftersales products. Interestingly, a mere 15 per cent of the respondents believed that the new Consumer Duty regulations, set to take effect on July 31, would adversely affect their ability to sell motor finance.

Burgess also highlighted that a notable trend among dealers is the concerted effort to increase motor finance presence, with many viewing the Consumer Duty regulations as an opportunity to rethink their approach to this aspect of the business. This includes exploring ways to better match car buyers with suitable finance products, thereby positively impacting sales in the motor finance sector.

In conclusion, the Startline Used Car Tracker research indicates that a substantial majority of used car dealers in the motor trade industry are deeply concerned about the erosion of their profit margins in the future. High values of used cars and the costs associated with electrification and staffing were identified as the primary sources of apprehension. The study also highlighted dealers' worries about compliance challenges and the expenses related to maintaining infrastructure. As dealers navigate these challenges and seek new profit opportunities, many are focusing on expanding their presence in motor finance, leveraging the upcoming Consumer Duty regulations to reshape their approach and boost sales in this domain.

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