I wouldn’t assume that things are going to get better for the automotive industry next year. Yes, we’ve seen record sales and production in recent years, fueled by a cleverly designed payment system, and a resurgence of UK-built vehicles—but times have changed.
In 2020, I expect consumer confidence to dip further, and motorists to become much less inclined to take up PCP financing. Dealerships will see the volume of new car sales fall, as more second-hand cars enter the market, putting further pressure on distribution networks. The potential rise of clean-air rhetoric, as mayoral elections are contested in May, could spook vehicle buyers and further shift buying behavior. Broader political uncertainty will also affect supply chains and impact the viability of component production plants in the UK. While there will be some winners here, who will run with the opportunity for "on-shore" production, others may find that their businesses become much less attractive.
Whatever the driver for the re-evaluation of automotive businesses, it’s simply what industry players should be doing now anyway. Those who make bold decisions sooner rather than later, while they still have cash in the system to fund new strategies, will be the winners. Dealers, manufacturers and suppliers should take a proactive approach in realigning their portfolios and industrial footprints to remain on the front foot.
In this saturated market, the risks are that much higher, so it’s time to do everything they can to streamline, improve and restructure. Those who don’t are likely to regret it.
—Andrew Bergbaum, Managing Director, London; Stefano Aversa, Managing Director, London; and Sean O'Flynn, Director, London