Tuesday 25 February 2020 2:08 pm

Car dealers confident for coming year as Brexit fears dwindle

An overwhelming majority of UK car dealerships are confident about the outlook for their business, despite a challenging 2019 for the motor industry.

A new survey by Close Brothers Motor Finance shows that 98 per cent of dealers were optimistic about the future, with almost two-thirds (63 per cent) describing themselves as “very confident”.

Read more: Chinese passenger car sales fall 92 per cent in February

The surge in enthusiasm, which comes despite a 2.4 per cent drop in the sales of new cars in 2019, is largely down to dwindling fears over Brexit.

Although the UK’s departure form the EU is still considered by far the biggest threat by dealers, with 35 per cent of respondents highlighting it, the number has fallen from nearly 50 per cent in the last three months.

Sean Kemple, director of sales at Close Brothers Motor Finance said: “2019 was a challenging year for the motor industry. The 2.4 per cent drop in year on year new sales reflected the impact of Brexit uncertainty continuing to loom over consumer confidence.

“But the results of our Dealer Satisfaction Survey show that hope is far from lost. We’ve driven past the first bump in the Brexit saga, and dealers are excited about the growth of their business and the opportunities for expansion of stock. Used dealerships have seen a boost with drivers looking to cut costs, a trend expected to continue this year”.

Sign up to City A.M.’s Midday Update newsletter, delivered to your inbox every lunchtime

Other key drivers of optimism, besides general opportunities for growth, are Brexit, which nine per cent see as an opportunity, and bringing in new vehicles to broaden their offering, which was cited by seven per cent of respondents.

In contrast, nine per cent said that they were worried about a general economic downturn, with stock availability, regulation and the growth of electric vehicles also named as concerns.

Kemple added: “With the petrol and diesel ban coming into effect in 2035, all eyes will be on the new government to help stabilise the industry as the market shifts, offering increased investment in infrastructure and clarity on regulation and taxes”.

Sue Robinson, director of the National Franchised Dealer Association (NFDA), also welcomed the figures, but said that it was crucial for the government to avoid any tariffs on the industry when it negotiates its trade deal with the EU:

“Following a challenging period due to the continued political uncertainty, it is encouraging to see that franchised retailers are optimistic about their business outlook in 2020.

However, it is important that businesses and consumers are supported to restore full confidence as soon as possible. Following Brexit, a tariff-free trade agreement is vital to ensure that the automotive sector continues to thrive”.

Read more: Only five car battery tech patents filed from the UK in 2019, says BDO

She added that firms would also need support when it came to the integration of electric vehicles into the UK industry.

“The electric vehicle sector, which is experiencing significant growth, brings opportunities, but the government must continue to work closely with the industry to support this transition while also providing incentives to the consumer”.