Cash flow and health dominate dealers’ concerns

Cash flow and health dominate dealers’ concerns

Dealers have ranked the health and wellbeing of their employees and customers as their greatest concern as ‘normal’ trading returns across the UK.

Dealers responding to the latest sentiment survey from Cox Automotive rated cash flow and a reduction in sales volumes as their second and third most pressing concerns, followed by the prospect of recession, further lockdown measures and devaluation of stock assets. They ranked access to capital as their lowest concern.

Not unexpectedly, 79% of dealers confirmed that they are changing their business plan for the balance of 2020 as a direct consequence of Covid-19. When asked if they expect to return a profit in 2020, 43% said yes, while a third thought not and 24% are still unsure.

Philip Nothard, Customer Insight & Strategy Director at Cox Automotive comments: “It’s absolutely right that health is top of this list for dealers as we continue to navigate this global pandemic, but no surprise to see cashflow ranking a close second. Despite sales rising quickly as lockdown restrictions eased and the raft of financial measures put in place by government, many dealers are facing a cashflow challenge after several months with no discernible income to speak of. Their concern about further lockdowns and the risk of recession will be sharpening their focus on this business-critical challenge.

“Many industry analysts are advising that dealers have a three-month rolling operational budget, which they should revisit as a priority and roll forward a month at a time and this is advice we’d endorse. In this respect, it’s reassuring to see the majority of dealers are adjusting their business plans in light of Covid-19. That two-fifths think they will return a profit this calendar year is also encouraging and is perhaps a higher proportion than many would estimate at this stage, but we mustn’t overlook the fact that a third say they won’t return a profit this year. For some, that will have ramifications for their longer-term viability.”

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