Dealers worried by margin erosion

THE latest report from Startline suggests dealers are becoming increasingly concerned by a squeeze on margins.

According to its latest survey, conducted by APD, two-thirds of car dealers (66%) were worried about future margin erosion affecting their business.

The biggest concern were high used car values squeezing margins (mentioned by 66%), cost of electrification such as installing chargers (52%) and rising staffing costs (52%).

Other major worries included increasing compliance (36%) and the cost of infrastructure including showrooms (36%).

Paul Burgess, CEO at Startline Motor Finance, said:

“We’ve been seeing increasing concern about margin erosion among the used car dealer community in recent months and this month’s Tracker shows that it is a genuine worry for very many.

“There is simply a lot going on in the sector at the moment. There are many areas where costs are rising, such as staffing and infrastructure; where investment is needed, such as electrification; and where resources are being consumed, such as compliance.

“Add to this the ongoing difficulties generated by stock shortages and the resulting high prices and values of vehicles, and it is clear that profits are being threatened from many directions, while new opportunities are perhaps currently more difficult to identify.”

The research also indicated that just 27% of dealers were worried about losing sales from warranty and other aftersales products while only 15% thought the new Consumer Duty regulations would affect their ability to sell motor finance.