New figures recently released by the Society of Motor Manufacturers and Traders (SMMT) revealed that the UK new car market fell by 20.5% in September 2018, with year-to-date performance 7.5% behind 2017.
According
to the Restructuring Advisory practice of Duff & Phelps, there are
resources and strategies available to independent dealers to confront the
challenges posed by this declining market.
According
to the SMMT report, new and more rigorous emissions testing requirements
continued to affect supply and distorted the market as manufacturers underwent
delays in getting their cars approved. The new restrictions affected private
consumers, fleets and businesses, with only 338,834 vehicles registered in
September 2018, declining by 87,000 from the previous year.
Michael
Bills, Managing Director, Restructuring Advisory, Duff & Phelps, commented:
"For dealers, September is what Christmas is to high street retailers.
They need the bonuses that come with hitting and exceeding targets in September
to firstly get them through the large VAT bill payable at the end of October /
beginning of November, and then through the leaner winter months."
Paul
Smith, Managing Director, Restructuring Advisory, Duff & Phelps, added:
"In addition to the Worldwide Harmonised Light Vehicle Test Procedure
issues, the performance of the UK new car market is strongly linked with
consumers' confidence and access to credit, so it is no surprise there's a
decline. Additionally, recent interest rate rises, the depreciation of sterling
pushing up prices, the drying up of PPI payments - which gave consumers
additional spending power - have all had a significant impact on the
industry."
"It's
been a tough year for the UK automotive market, but it is worth noting that
there are some manufacturers performing well, so arguably this is not an industry
wide trend."
"Manufacturers
will not want to see long standing dealerships suffering and possibly even
disappearing as a result of an economic slowdown.
Accurate
forecasting, planning ahead and embracing of the rescue principles promoted by
Duff & Phelps will be necessary to manage a challenging economic period.
Our UK advisory team is uniquely positioned to advise dealerships and their
stakeholders in a variety of distressed and special situations. Our team has
sector experts, recruited from the industry and with real 'workshop floor'
dealership experience and we understand the challenges being faced, so we would
urge those dealerships facing tougher trading conditions to contact us,"
concluded Paul.