Car sales bouncing back as lockdown eases

Car sales bouncing back as lockdown eases

After an 89% drop in new car sales in May, according to figures from the Society of Motor Manufacturers and Traders, car dealers in England were reporting strong trade within the first few days of the coronavirus lockdown easing, reported The Guardian. While figures for June are not yet available, a survey from WhatCar? found that almost a fifth of car buyers were poised to make a purchase from the first of the month.

With car showrooms now back open for business, buyers are free to browse and make a purchase in person once again, pulling the “trigger to restart the £200bn automotive economy”, according to Rachael Prasher, managing director of What Car? and Haymarket Automotive.

A poll of 4,000 consumers by What Car? found that buying a car in person is still preferred by more than two-thirds of consumers, despite the risks posed by Covid-19. Just 11% said they want to buy their car via email and only 4% over the phone, showing the importance of showroom trading. 65% of respondents said they are more inclined to complete part of their purchasing journey online than pre-lockdown. Directing customers towards financial aftercare product information online is likely to become an increasingly important part of the buying process – even for those who purchase a new car in person, as customers may want to minimise the amount of time spent at the dealership.

Over £60m daily cost of closure

According to calculations from the Society of Motor Manufacturers and Traders (SMMT), the closure of car dealerships has cost the Treasury £61m a day. This figure includes the annual tax-take from VAT, VED and other taxes on new car sales to private buyers which  dropped by almost a quarter in May. It also takes into account the cost of furloughing the retail sector’s 590,000 workers under the Job Retention Scheme.

Opening dealerships has got the new car market moving again, boosting the UK’s £82bn automotive manufacturer sector, which has been hit by more than £8bn in losses by the lockdown, according to the SMMT.

Mike Hawes, SMMT Chief Executive, said: “Government measures to support the critical automotive industry during the crisis have provided an essential lifeline, and the sector is now ready to return to work to help the UK rebuild. Car showrooms, just like garden centres, are spacious and can accommodate social distancing easily, making them some of the UK’s safest retail premises.”

Guidance to support dealerships during Covid-19

To help dealerships and other businesses keep staff and customers safe as they begin to re-open, the government has published guidance on social distancing measures, regular cleaning, the use of personal protective equipment, and the management of inbound and outbound goods, among other areas. You can read the guidance on the government website.

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