The world is changing fast - and the way we buy, sell and service vehicles is changing, too. New or used cars? Petrol, diesel or electric? What does the future hold?
If you’re a motor trader you may have concerns about the state of the market this year. With confusion surrounding new diesel car purchases, the ever-present Brexit negotiations, rising inflation and low household expenditure, there are a few challenges ahead. Dealers must now use innovative methods to adapt to alternative markets.
In talking to car dealers across the country, our motor trade insurance teams are hearing many people’s concern about the future of the motor industry based on recent forecasts and growing uncertainty in the face of Brexit and its possible impact on the UK economy.
While there are some very real issues that must be tackled head on, such as the need to adapt traditional business models and the necessary refocus towards used cars and after sales services, there is still much optimism in the industry.
The overarching factor underpinning the survival of motor traders and car dealers will be their ability to ride out the storm and evolve their businesses to cater to growing opportunities in the market. Motor trade insurance will certainly play a role in this, but what else can traders be doing? While new car sales are undeniably down, consumer demand is still high – the challenge now is to find a new way to reach your market.
A tough year
“Now, more than ever, we need a strategy that allows manufacturers time to invest, innovate and sell competitively.” - Mike Hawes, SMMT Chief Executive
New car sales declined by 5.7 per cent since 2016 according to the Society of Motor Manufacturers and Traders (SMMT). Much of this can be attributed to the fear mongering around diesel cars and potential new surcharges, as well as concerns about Brexit.
Hesitation and uncertainty among potential car buyers is the largest obstacle for car dealers with both business and consumer confidence seriously impacted. While many still desire a new vehicle, it is unlikely this hesitancy to buy will abate until the UK’s economic future is clearer.
The demonisation of diesel
“Euro 6 diesel cars on sale today are the cleanest in history.” – Mike Hawes, SMMT Chief Executive
With the announcement of government surcharges such as the VED car tax rise and the threat of low emissions zones across the country, consumers are wary when it comes to buying a new diesel vehicle.
It was announced in last year's Autumn Statement that anyone who buys a diesel car from April 2018 that doesn't meet a new emissions standard will be liable to pay a higher band of road tax. For many it just isn’t worth the risk – regardless of announcements that this year’s new diesel cars are the “cleanest in history” and will be exempt from these taxes.
Educate your customers
One of the first ways for motor traders to survive the current climate is to educate their customers. Try and unravel the complicated discussion that surrounds the buying of new diesel cars for your customers.
Interestingly, there has been a rise in CO2 emissions according to the SMMT’s 2018 CO2 report since the drop in diesel cars which can likely be attributed to the increased purchase of petrol vehicles with low fuel economy and higher emissions. Probably something your customers don’t know about? The fuel efficiency of new diesel cars still makes them a good option for fleets of vehicles, for example, and there are some real bargains where used diesel cars are concerned right now.
As a team of motor trade insurance experts, we understand that getting this message across is not the easiest thing to do, especially as climate change becomes such a contentious issue, but if nothing else you can help your consumers understand that due to recent changes in the market, there are many competitive deals to be had.
A shift to used car sales
“We are entering a period where the used car is king, more than the new car. So demand from the trade driven by used vehicles and the profitability from these moves us into a time where values will remain pretty strong.” - Jonathan Brown, Glass Editor
It’s essential that dealers across the country evolve with buying trends in order to cater to consumer demand. This year, Glass’s forecast predicted strong used car sales for 2018 as the new car market declines. The job of car dealers now is to make their offers more attractive for buyers and consider how reliable after care packages can sway a final decision.
Consumers will now want as much life out of their existing models as possible and will increasingly look for trustworthy partners to help them maintain and repair their vehicles. Creating a full package for buyers is important here - the buying journey shouldn’t simply end when customers walk out the door. Think about what your business can do to develop an ongoing relationship.
This is also good news for those who already work in motor service and repairs who can now maximise their service offerings to pull in a greater market share while new car sales are low and people are running their existing vehicles for longer.
Change got you worried? Make sure your business is backed by the motor trade insurance experts at Bollington. For more information call 01625 854458.
Raise your online game
“An amazing showroom isn’t worth half as much as it used to be.”
The internet is the foremost source for consumers looking for vehicles. This is something that can’t be stressed enough. Customers will often start with the search engine and look for reliable dealerships in their area.
An amazing showroom isn’t worth half as much as it used to be. Put your focus into creating a great online experience instead – or ideally, as well as a showroom. This includes an easily navigable website platform with working links and plenty of helpful information and visuals.
Consider working with an SEO or content marketing service to make sure your site is correctly indexed and highly visible for people who are searching in your area – there is even the opportunity for dealers to monopolise their area through a focus on online visibility.
Social media is another great way of tapping into local demographic pockets to spread the word about your deals. A strong network of affiliations and connections is also recommended to generate sales leads, for example, through classified websites like Ebay and Autotrader.
Motor trade Insurance
“Cover your bases as you make your strategic move to stay relevant and successful this year.”
Finally, make sure you’re covered! As your business evolves so too must your motor trade insurance. Whether your insurance is due for renewal or not, now is a good time to fully assess your business requirements and cover your bases as you make your strategic move to stay relevant and successful this year.
“Once the cloud of uncertainty has risen, it is likely that the market will revert back to its previous form.”
Although it’s clear there will be challenges ahead for the motor trade industry, dealers on the whole remain positive. A recent survey found that 92 per cent of car dealers said that they were confident of their business prospects in 2018.
Dermot Corrigan, Direct Sales Manager at Bollington, said: “It is clear that consumers remain interested in buying cars in general and once the cloud of uncertainty has risen, it is likely that the market will revert back to its previous form.
“In the meantime, dealers must be smart and innovative in their strategies if they want to run the course.
"Bollington will be here to provide quality insurance to those involved in buying, selling and servicing vehicles, however the market might change in the months and years to come.”
If you’re unsure what your future holds, or you’d like to talk to an expert about your circumstances to find out more about your motor trade insurance options, call Bollington today on 01625 854458 or fill in our quick online form to receive a quote.