Recent articles in the mainstream press suggest consumers may be considering their options, and from speaking to dealers over the past couple of weeks they have seen a downturn in EV orders taken. Lets not however forget that increasing interest rates, and the fact many customers will have been waiting months if not years for their new car, means the monthly PCP or lease cost will have substantially increased, which may have something to do with this. Either way, the substantial investments made for EV charging by many dealers, coupled with uncertainly regarding the 2030 deadline set by the government, does pose some questions. There is also the big question around residual values and where these will land for some of these complex vehicles….another big risk area for funders.
Alongside the EV side of things sits the manufacturer agency proposal which is probably the most talked about point in the industry on a day to day basis. Many manufacturers appear to be heading down this route over the coming years, with Mercedes launching their agency model as of 1st January this year. Confusion, uncertainty, concern and questions have all been asked over and over again regarding this change, which appears to be focussed on reducing cost of distribution and stabilising pricing across the brands. What hasn’t been transparent or understood is what this means for dealership profitability and more importantly viability – many brands are yet to release their actual agency terms and proposals. The other big question is what happens when oversupply returns to the UK – where does the OEM turn at that point to move the vehicles…..some say it plays perfectly into the brokers hands, others think the agency model will fail and things will revert back to how they are now.
Lots of questions and no clear answers…..
The next step
If you have any further questions please contact David Kendrick or your usual UHY adviser.
