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Analysts expect very slow recovery for car dealerships
publication date: Nov 9, 2009
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author/source: Robin Roberts
Plummeting car sales, heavy discounting of new vehicles and lower levels of servicing work have combined to catastrophic effect on the automotive retail market in the UK, which has seen franchised dealership insolvencies double year on year. This is according to a report released by Ernst & Young, which reveals a total of 24 dealer insolvencies up to the end of August of this year, compared to 12 for the same period in 2008. UK Car Dealerships – Lessons from the last recession provides a perspective on the current and future trends in the UK automotive retail market and highlights the different effects on the sector between this economic slowdown and that of the 1990s. Eric Wallbank, UK head of Ernst & Young’s automotive team, said the severity of the recession on the wider automotive sector is well documented but its effect on the dealer industry has been equally severe. “Production shut downs, GM and Chrysler filing for Chapter 11 Bankruptcy and a string of component suppliers going to the wall have dominated the headlines in recent months. But UK franchised dealerships, the last link in the global automotive chain, are suffering an equally severe effect. “A cocktail of falling sales and diminishing profit margins has led to unprecedented levels of dealer closures. But the true extent of distress facing dealer groups is being masked by the closure of many loss making sites which would have not been reflected in the overall insolvency numbers.” |
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