Is the future shaky for other car brands and dealers?

The coronavirus pandemic is likely to make many car companies rethink their position in the market. And while we haven’t heard of any others who are thinking of pulling out of the UK altogether, there are rumours that Nissan – which is part of the Renault - Nissan-Mitsubishi Alliance – might reduce the number of models it sells in European countries, with the Micra small hatchback thought to be one of those at risk. In addition, we expect many dealer groups to reduce their presence in British towns and cities, accelerating a process that has been happening for the past decade or so.

Almost one in 10 car showrooms in the UK closed between 2010 and 2017, according to research carried out for the Government by Altus Group. It found that in April 2010, 6320 car showrooms were liable to pay business rates, but the number had fallen by 9% to 5746 by April 2017.

Our own research specifically focusing on franchised car showrooms demonstrates that these have fallen in number in the past decade, too. Our data shows that there were 5314 dealerships representing 45 brands in 2010.

By contrast, today this number has dropped to 4444, which equates to a 16% dip. The number of brands on offer has also declined by 10 to 35.

Although Ford and Vauxhall have consistently had more showrooms than any other brands, it is these two that have shed the highest number of showrooms over the past decade: about 150 each. However, if you look at the percentage of dealers that have disappeared, it’s Peugeot and Renault that have lost the most; each has culled a third of its showrooms, closely followed by Vauxhall and Citroën with 32% and 31% drops respectively.

By contrast, most premium brands have remained relatively stable, with the likes of Audi, BMW, Jaguar and Lexus losing only between 1% and 9% of dealers. And at the other end of the spectrum, Korean brands Hyundai, Kia and Ssangyong have added to their dealer counts by between 15% and 30%. Others that have expanded include Jeep (up 27%) and Porsche (up 29%), although neither of these has an extensive dealer network.

The continual decline in the number of dealers will be a concern for car buyers in areas where coverage is already sparse or the lack of representation locally means they would have to travel for an hour or more to see potential cars and return there for servicing.

However, the good news is that online car buying has become far more widespread this year – a fact confirmed by the chief executive of the National Franchised Dealers Association, Sue Robinson. “A strong digital strategy is vital in today’s market and the process of digitalisation for many retailers has been accelerated by the pandemic,” she said.

GForce, a company that specialises in designing car selling websites for dealers, has reported an 800% increase in online car sales since January, with the average number of sales per month up by more than 300%. It believes the growth is being driven by consumers who aren’t that comfortable about going out to buy things, even big-ticket items such as cars.

The feeling within the car industry is that the pandemic has provided the kick-start that was needed to make online car buying a more viable option for many consumers.

Our research in August revealed that 43% of car buyers didn’t see any negatives about buying online, and the same percentage cited a number of benefits to buying online, including the fact that it would save them time, money and hassle and they wouldn’t have to deal with sales staff face to face.

How dealer numbers have changed

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