Inventory shortages are emerging as the number one concern for auto dealers in the coming year, according to a new study from Close Brothers Motor Finance.

The Dealer Satisfaction Survey found that nearly one-third (31%) of auto dealers view lack of inventory availability as the biggest threat to their business, with the global semiconductor shortage having an impact on their business. significant training in the automotive industry.

Despite the lifting of lockdown restrictions in the UK, the pandemic continues to wreak havoc around the world. Semiconductor shortages and the impact of restricted manufacturing continue to block the new car market, but car buyers are flocking to the used car market instead. Demand is high, with the SMMT reporting that the used car market had its best second quarter – growing 108.6%, with more than 2.2 million vehicles changing hands.

The shortage of chips, coupled with increased demand, has drastically increased the price of raw materials, posing unique challenges for car dealerships as they battle online car sellers for business.

Dealers also cite the recovery of the coronavirus or the prospect of another as a continuing threat, with more than a quarter (28%) saying it is a concern, while the economic downturn and unemployment are a threat to one in ten (10%) dealers.

Despite the threat of a lack of inventory availability, dealers appear to have an overall optimistic outlook for the near term future, with more than half (59%) of dealers saying they feel “very confident For the next six months.

Seán Kemple, Managing Director of Close Brothers Motor Finance, said: “While we may start to see the semiconductor shortage abate, the impact on the industry has been severe. There is a limited choice of vehicles that people can order right now, causing consumers to look elsewhere for the car they want.

“Small dealerships can find it difficult to keep their doors open due to inventory issues. The increase in demand contrasted with the limited supply is putting the industry in difficulty, and there is a real possibility that a domino effect could make the second half of the year even more volatile.

“Used car dealers face tough choices in today’s climate. Consumer demand is high, but with big supply issues they will need to think carefully about how to store their forecourt and how to price their vehicles during a volatile time. In this environment, it is also essential that dealers are digitally savvy and continue to improve their online showrooms so that customers can research their options from home. As the industry eagerly awaits recovery and stability, customers will rely on trusted advice from dealerships when they search for their next car. “


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