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As we know, pre-registrations are without doubt topical at the minute, as to be expected with us at the 90-day stage since March and the new-plate on the horizon for many dealers. As the sentiment from this month's survey illustrates, we are in a very diverse market, with many dealers highlighting continual pressures on margins. In excess of half of those surveyed this month reported further compression. When you begin to investigate the route cause for this tightening, it’s very clear there isn’t a simple solution as costs are increasing, along with consumer expectations and direct costs, such as buyer's fees, advertising costs, etc. Another area not clearly identified here is where the chassis profit is increasingly becoming the main area for retained margins as controls, transparency increase through finance and add-on income. What is evidently noticeable is the positive improvement in July, with a retail market that generally could be referred to as steady or even healthy, with a favourable improvement in both physical footfall and retail and consumer demand. Dealer Survey Summary: - July sees a slight rise in those respondents reporting an increase in physical footfall from 15% in June to 21% in July; whilst those feeling it has declined dropped by -3% to 48%. In a period where over the preceding two, it’s felt tough. This is positive news for those experiencing a rise in this area. - Interestingly, unlike the physical footfall, the online activity hasn’t seen the equivalent level of respondents reporting an increase, with a drop from 29% in June to 23% this month. However, the remaining majority is reporting no noticeable change, as 40% report that it is about the same. The activities for both physical and online have without doubt eased since May this year. - The pressure on retained margins doesn’t appear to be easing soon, with once again 56% reporting they have been experiencing compression again since last month and 7% feeling they have seen some improvement. The question will be whether we will see an increase on the back of September in October, as we did in April? - From the dealers' perspective, the stock availability has remained much very similar as last month with 35% reporting they feel it’s improved; whereas 44% feel they’ve seen little or no change. The question remains in many conversations around whether the increased volumes are actually the ‘right’ stock and how much this is impacting on the continual pressures on retained margins. - Even with the changes in stock availability throughout the first half of the year, the quality of stock continues to remain reasonably stable. This is illustrated with as much as 73% of those surveyed reporting they have seen little or no noticeable change, and this has maintained above 50% throughout the year. The only increase was in March where 21% felt it had worsened; this will be an area to observe in September, and whether the new plate has any influence. - Those reporting that current trade values are reflective of the market have seen a slight change this month, with those reporting they feel they are too high has increased from 49% in June to 52%. However even more intriguing is that 7% felt they were actually too low. A comment that seems to resonate with those I speak to, is that ‘little and often’ is working with values, and they don’t want to see any extreme or reactive unnecessary movements of values. - Again, as we’ve seen with the physical footfall, this month retail and consumer demand, according to 24% of those surveyed, has seen an improvement. Similarly, those reporting it has worsening has dropped from 58% in June to 51% in July. As we approach a new plate month, could we experience an improvement close to that reported in March of 66%? - This month we asked which costs are impacting on retained margins, and is it directly related to increased costs? Interestingly only 33% felt this was the reason and as much as 51% didn’t feel that was the case. Whereas much of the sentiment was relating to costs, such as buyers fees, transport and on many dealers' agendas currently – advertising costs; others felt that the fact that footfall has been tougher and the overall market competitiveness are a key driver to retained margins. Generally a mix of ‘less traffic = reduce margins’, along with increased purchase, repair and re-marketing costs in a market where stock is reasonably easy to replace, and the retail buyers are given even more choice with ever more attractive new car offers. Notwithstanding the added pressures from the amplified volumes of pre-registration vehicles in the market, resulting in compression on nearly new prices and profit opportunities. The Market Survey – for Dealers, by Dealers Why has this survey been done? This market survey has been created in response to dealers hankering for a more holistic current sentiment of the questions they ask themselves daily, so they can understand the temperament of the wider market. Who is it for? Respondents cover a very diverse sector of the automotive industry, from the larger franchise groups, supermarkets, independents, single site owner-driven operations, through to auctions and remarketing. When is it undertaken? The survey is done monthly, within a very small open window. This ensures that the responses are market relevant and current. The data in this survey is for July 2015. Get involved! If you want to be involved in next month's Dealer Survey – for Dealers, by Dealers - then please contact CAP's Black Book Editor and Retail & Consumer Specialist, Philip Nothard. philip.nothard@cap.co.uk 07702 382 025 With over 27 years’ experience in the motor trade, Philip brings an informed eye to developing industry insight and market commentary. He joined CAP Automotive in 2010 as Retail & Consumer Black Book Editor, where he was responsible for analysing pricing data and interpreting strategic trends in retail, consumer and trade markets. A widely experienced and highly successful automotive specialist, he has a wealth of knowledge gained at the most senior levels whilst working for blue-chip businesses within this sector. His experience helps him to interpret trends and raw data into contextual and meaningful insight. Philip’s career includes managing dealerships for independents, supermarkets and large PLC groups. 07702 382 025 Philip.Nothard@cap.co.uk