Despite rosy turnover figures, Bovag expects that car dealers will soon end up in a crisis.
Things are not that bad at car companies, if you look at the latest figures from Bovag. The trade association reports today that the average turnover per location has increased by more than one million. Very nice. Yet the Bovag the near future is not rosy.
First the good news: the average turnover per location increased by €1.2 million. You would expect that the average profit has risen considerably, but that is disappointing. It has only increased by a mere €2,000. And the increase in turnover is mainly due to previous orders, not new orders.
The disappointing profit has everything to do with the skyrocketing costs. Dealers mainly pay for labor costs. “Just like in any industry, it is difficult for car dealers to attract suitable people. Remuneration has already risen considerably due to these market conditions, which has a significant impact on the companies’ results,” says Bert de Kroon of Bovag.
The situation will not improve in the near future, Bovag expects. According to them (in good Dutch) a ‘perfect storm’ is coming. In addition to the increasing costs, there are a number of factors that play a role.
For example, Bovag notices that customers are not eager to purchase a new car, despite the fact that waiting times are decreasing. According to them, this is due to rising interest rates and inflation, but also to “uncertainty about the tax policy for EVs.”
To make matters worse, dealers are faced with high costs for digitalization and competition is increasing. At the same time, many dealers are faced with the transition to an agency model, which can be detrimental to them. In short: it will be a dull misery for car dealers in the near future. According to Bovag.
Photo: cool line-up at the Renault dealer, spotted by @wouterb
This article Bovag foresees tough times for car dealers first appeared on Autoblog.nl.
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