The future of the automotive retail dealer

The outlook for dealer networks and the future of automotive retailing has caused a stir amongst the industry of late. An influx of media headlines regarding diesel, electric and autonomous vehicles, have created a significant level of uncertainty for those outside the industry looking in, and have proved to be far from helpful.

Despite the obvious developments and changes that have taken place – such as the internet, monthly payment programs and service plans – the UK automotive market has been one of the country’s most successful industries for many years. The motor trade has proven itself to be an extremely resilient sector, even during the recent economic climate.

The industry remains a relatively straight-forward and traditional retail model. Manufacturers require a dealer network to supply their vehicles, and consumers want to purchase though a dealer to get more enjoyment from their buying experience. Consumers need a dealership to service their vehicle and dealerships need to exist to deal with any trade-in or used car disposal when the consumer wants to change.

Personally, I believe that despite the fact that the shape of the networks may change over the coming years, with smaller dealerships in non-core locations perhaps falling away, the need for quality dealership operations is here to stay for the medium term. The banks and financial institutions are still willing to fund the significant build costs as dealers continue to develop and expand their facilities, which certainly doesn’t match the press suggesting dealership operations are a thing of the past.

We continue to see buoyant transaction values and numerous new entrants looking at acquiring UK dealership groups. The outlook is positive and, whilst dealers will need to adapt, the fundamental elements of the business are unlikely to change in the short term.

About the Author

David Kendrick is lead automotive partner at UHY Hacker Young. UHY provides expert advice to dealers on business management from audit and taxation to mergers and acquisitions and other specialist support such as business valuations, forensic investigations and strategic reviews.

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