Rallying the industry: Return of the dealerships approved to boost economy and fuel the bounce back

The Society of Motor Manufacturers and Traders (SMMT) recently claimed that every day that the country’s 4,900-strong network of new-car dealerships remain closed is costing the UK Treasury £61 million. The various taxes on new-car sales to private buyers alone amount to roughly £5.4 billion annually and this is thought to have been cut by 23% by the end of the month, with every additional day costing £20 million. It is currently thought that this, combined with the furloughing of the retail sector’s 590,000 workers, costing an estimated £41 million a day, has contributed greatly to the expense.

Mike Hawes, chief executive at the SMMT, explained: “Government measures to support the 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 are spacious and can accommodate social distancing easily, making them some of the UK’s safest retail premises.

“Allowing dealers to get back to business will help stimulate consumer confidence and unlock recovery of the wider industry, boosting tax revenue and reducing the burden on government spending. Unlike many other retail sectors, car sales act as the engine for manufacturing and reopening showrooms is an easy and relatively safe next step to help get the economy restarted.”

He added: “The government’s decision to reopen car showrooms on 1 June is very welcome and recognises the importance of automotive retail to manufacturing recovery and the need to reboot the economy.”

The news, however, will prove to be too late for new-car registrations in May which are forecast by Autovista Group to follow the trend established in April this year, with a 97.3% drop compared to the same month in 2019.

Neil King, senior data journalist at Autovista Group, stressed: “Although UK dealers can reopen on 1 June, I estimate that the UK will have lost 500,000 registrations between March and June 2020. A recovery period is expected to follow, with growth in new-car registrations from July to September as the backlog is cleared and pent-up demand is released. However, the underlying weakness in demand is expected to result in market contractions in the final quarter, and my latest forecast estimates 1.77 million registrations in 2020, 23% down on 2019.’