Better than we dared hope?

  17 December 2012

Journalists make a habit of writing ‘end-of-year’ blogs. It’s something that I’ve tried to avoid; partly because it always seems a rather lazy choice of topic and partly because there’s an implied assumption that you’re interested in my ‘end-of-year’ opinion.

However it strikes me that this past year does merit some comment, if only because it has turned out far better than most people in our industry dared hope.

The figures speak for themselves. New car retail sales up almost 13% (with December still to be counted) and the industry as a whole set to break the two million registrations threshold. Just a year ago, some respected analysts were predicting only 1.8m units.

Profitability has been good too. The latest ASE figures only take us to the end of September but the national average net profit of 1.3% is well up on last year’s 1.0% with improvements at both ends of the spectrum. Even the poorest performing dealerships are losing less money.

I don’t think anybody in the industry has a clear reason why the year has been so much better than anticipated. Yes, the deals on the table are exceptional value; yes, there is an element of pent-up demand; yes, customers are wanting to switch to cheaper, more fuel-efficient cars.

But consumer confidence is low and even the government is struggling to sound upbeat about the economy. Indeed, if we start to believe the economic forecasts, then we might as well all pack up now and save ourselves a whole heap of trouble.

It’s also important to recognise that it hasn’t been a good year for everybody.

A significant proportion of the industry is struggling to make any money at all and, in these difficult economic times, several businesses have buckled under the strain. For cash-rich groups looking to consolidate the issue has been which business to buy, not where to find the opportunity.

I guess the key question is: will any of this change in 2013.

And, of course, I don’t have an answer to that but I am optimistic about the year ahead. The past 12 months have shown that, even in the toughest times, this is an industry that can trade its way out of trouble. I don’ think that will ever change.

Rupert Saunders

This is my last Blog before Christmas but we recognise that you (and many other retailers) will be working over the holiday period. We’ll be keeping an eye on the industry and will alert you if any important news breaks. Here’s to a peaceful and prosperous New Year.

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