Out of the woods? How car dealers will operate after lockdown
"Following a savage 2020, the reopening of dealerships is an opportunity to make up lost ground"
As we enter a post-lockdown world, the car industry is preparing to open its doors again. We wonder what to expect
From Monday 12 April in England and Wales, and 5 April in Scotland (Northern Ireland has yet to reveal its hand), car dealerships will be allowed to reopen. Sounds good, doesn’t it?
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), certainly thinks so: “Over the past few months, click and collect has been a lifeline for the sector, but nothing replaces the face-to-face customer experience. Since March 2020, the industry has recorded a £23 billion loss, so the importance of retailers being open for business should not be underestimated.”
Our advice? Get in early. According to a poll of 3000 people by our friends at What Car?, car buyers are emerging from Covid-19 hibernation in their droves. Visits to What Car?’s new car deals pages have grown by nearly a fifth (18.1%) compared with the first 14 days in February, while almost a quarter (22.9%) of those polled plan to buy a car in the next three months. It’s going to be busy.
It’s also the start of a new business quarter, so look out for those generous deposit contributions, low APRs and subsidised servicing packages. Here’s all you need to know for a car-happy 12 April.
*WHAT WILL DEALERSHIPS BE LIKE?*
Expect to find one-way systems, hygiene stations and limits on customer numbers. Face coverings and social distancing will be enforced. On arrival, your temperature may be taken. Supported by the government furlough scheme, which has been extended to September, dealerships may be limiting staff numbers, so you may have to wait longer to be seen. When you are, handshakes and elbow bumping won’t be allowed.
*WHAT ABOUT ACCESS TO CARS AND TEST DRIVES?*
Showroom cars will be locked and their interiors wiped down after each viewing. The same will apply to used cars on the forecourt. Test drives will be allowed but will be unaccompanied.
*HOW SHOULD I PREPARE?*
Arrange your visit in advance and, because sales people’s time is likely to be limited, research the cars you’re interested in before you arrive. If you want a test drive, establish what you will and won’t be able to do. Bring a face mask and wear a coat if it’s a cold day – dealership windows may be open to encourage ventilation.
*WHAT DO CAR MAKERS THINK OF REOPENING?*
Most believe that click and collect has been so successful that it won’t be like throwing a switch.
“The reopening of Ford showrooms is an important and welcome step,” says Paul Singleton, Ford dealer operations director. “However, online browsing and vehicle selection, fulfilled by ‘click and collect’ and home deliveries from dealerships have been increasingly used by our customers over the past 12 turbulent months.”
Despite click and collect’s success, the savage decline in new car registrations in 2020 (down 29% to 1.63 million compared with the year before) and, more recently, the sharp fall this February when they sank 35.5% ahead of the March plate change, means car makers will see reopening as an opportunity to make up lost ground. Jeremy Thomson, Mazda UK’s managing director, says the brand plans to “claw back” 50% of the sales it lost from January to the end of February in April, May and June. “We’re placing a lot of emphasis on those months because the opportunity will be far bigger [than March],” he adds. “Stock levels we built up for March give us a great opportunity for a rapid recovery."
*WHAT DO DEALERS THINK OF REOPENING?*
“We’re super-excited,” says Duncan McPhee, chief operating officer of Lookers PLC. “We found last year that at each reopening there was a release of pent-up demand.” Cars he expects to fly out of his showrooms are EVs and hybrids. “Reopening will give customers the chance to try all the new technology. Even last year, EVs and PHEVs accounted for 13% of our business compared with 10% across the industry, and this year there’s an avalanche of new product arriving. I think we’ll have a monumental 2021.”
*WHAT WILL THE USED CAR MARKET BE LIKE?*
“Fuelled by pent-up demand, prices are picking up as we approach 12 April,” says Derren Martin, head of valuations at Cap HPI. “Sales rates have been at an impressive 65%, so the market only needs them to rise 35% for prices to start rising.”
The biggest climbers will be anything niche or that puts a smile on faces. They include sports cars, convertibles and large SUVs; in short, anything fun or aspirational. Mazda MX-5s are up by £500, Porsche Cayennes by £2000, BMW 4 Series by £2500 and Range Rover Sports by £3000. Diesel car values are holding up on the basis that some people still need to drive long distances, pull a boat or go farther on a tank.
Chief among the fallers – or bargains – says Martin, are MPVs, with values of Ford Galaxys and Seat Alhambras down £1200. Also down are some EVs, which Martin says are too plentiful and expensive. Hybrids such as the Toyota Prius and Auris are well down as people shun the private hire market.
Martin concludes: “Despite everything, used car stocks are well balanced, although there are fewer one-year-old models. Looking ahead, the market will enjoy a short period of strength as supply improves before values begin to fall, in part driven by the end of furlough.” So pay more for anything niche or fun, grab an unloved or EV bargain or hold your nerve until autumn when prices start to slide (but expect less for your part-exchange).
*WHAT ABOUT DRIVING LESSONS AND TESTS?*
From 12 April, in England and Wales, those learning to drive will be able to resume their driving lessons and take the theory test. They will have to wait until 26 April to do so in Scotland. Again in England and Wales, driving tests will restart from 22 April. Scotland has yet to say when driving tests can restart. In Northern Ireland, the date when driving lessons and practical and theory tests can resume will be reviewed on 15 April. These dates may change so check the DVSA and NIDirect websites. To sit the driving test, candidates must wear a face covering, sanitise the car’s interior and leave the windows partially open.
*10 GREAT NEW CARS AND WHAT TO PAY*
*DACIA SANDERO 1.0 TCE 90 COMFORT *Target price: £7870 Roomy, comfortable, decent to drive and great value.
*SEAT LEON 1.5 TSI 130 EVO FR *Target price: £21,176 A big boot, bags of rear cabin space and a punchy engine.
*TOYOTA GR YARIS 1.6 CIRCUIT PACK* Target price: £33,495 We awarded it five stars. What else do you need to know?
*VOLVO XC90 B5D 235 MOMENTUM AWD AUTO *Target price: £52,255 Forget the showroom – 3500 people bought an XC90 online.
*BMW 330E M SPORT *Target price: £41,683 The default choice for anyone seeking unbridled excellence in this sector.
*SKODA OCTAVIA 1.4 TSI iV SE TECH ESTATE* Target price £31,745 Great-value PHEV with a 40-mile electric-only range.
*TESLA MODEL 3* Target price: £40,490 A great blend of range, performance and technology at a keen price.
*MAZDA CX-5 2.0 165 SE-L* Target price: £26,030 Efficient engine; comfortable, spacious and good to drive car.
*BMW 420i M SPORT* Target price: £40,461 The Four is no dressed-up 3 series: it’s wider, stiffer and lower for a sharper drive.
*PORSCHE 718 CAYMAN GTS 4.0* Target price: £66,385 Return of the flat six lifts the Cayman to the next level.
*10 GREAT USED CARS AND WHAT TO PAY*
*SKODA CITIGO 1.0 60PS SE 5DR *2018/68, 35k miles, £6400 A great urban runaround, but avoid tired, unloved hacks.
*VOLKSWAGEN GOLF 1.4 TSI MATCH *2016/65, 57k miles, £9750 Stylish and tough as old boots, but beware silly prices.
NI*SSAN QASHQAI 1.2 DIG-T ACENTA *2018/67, 33k miles, £8995 A perennial favourite, but watch out for crumbling family chariots.
*NISSAN LEAF ACENTA 40KWH *2019/19, 11k miles, £17,950 Make sure all the kit comes with it.
*BMW 320D M SPORT AUTO* 2019/19, 22k miles, £18,240 Be sure it has a full service history. Walk away if it doesn’t; there are lots more to choose from.
*FORD FIESTA 1.0 ECOBOOST ZETEC 5DR* 2019/19, 18k miles, £9999 A great-value supermini, but check for casual dings.
*VAUXHALL INSIGNIA 2.0 TURBO D SRi VX-LINE NAV* 2019/19, 39k miles, £13,000 Don’t fear high mileages as long as the service history is full.
*MAZDA MX-5 2.0 SPORT NAV 160* 2018/18, 16k miles, £15,950 Look out for tyre wear, kerbed wheels and rear-end scrapes.
*VOLKSWAGEN GOLF R *2017/67, 14k miles, £19,990 Prices seem to be all over the place, so shop around.
*KIA SORENTO 2.2 CRDi KX-2 AUTO* 2018/67, 50k miles, £18,995 Still with four years’ manufacturer’s warranty remaining.
*READ MORE*
*Dealers report huge drop in luxury used car prices in 2020 *
*New moves: How dealers are trying to stimulate car sales *
*The man who saves buyers from tricky car dealers*