Cox Automotive said “volatility” is expected to define the auto retail industry in 2022, as stuttering car supplies combine with rising inflation and shifts in relationships with OEMs and consumers.
The specialist in vehicle remarketing and automotive retail services said “VUCA” – an acronym that stands for volatility, uncertainty, complexity and ambiguity – will become a common term in a year that will pose challenges for new car dealers. and used.
Echoing the sentiments expressed by Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), after the release of new car registration data for the year 2021, Cox suggested there was no return to a pre-COVID business climate in sight.
“VUCA is used to describe the situation of constant and unpredictable change that is now the norm in many industries as businesses prepare for a new year that continues to pose challenges for all organizations,” Cox said in a released statement. today.
“In our opinion, we will still have to get used to a VUCA business climate for some time. As an industry, we need to think beyond the traditional and embrace it because there is no silver bullet to getting back to the previous normal. Given the outlook for the industry in a post-pandemic world, we expect VUCA to continue. “
AM’s recent Outlook 2022 survey of auto dealers in partnership with JudgeService showed that auto dealers were looking at this year with uncertainty, but the National Franchised Dealers Association (NFDA) stressed that there were “reasons to be optimistic”.
Cox pointed to the November 2021 consumer price inflation report released by the Office for National Statistics, which said the largest increase in contributions to the CPIH’s 12-month inflation rate at 1.34 ppts came from transport.
The report not only coincided with the highest UK average gasoline price on record at 145.8 pence per liter – down from 112.6 ppm a year earlier – but also with an increase in the contribution of used cars from 0.01 ppt in April 2021 to 0.32 ppt in November 2021..
Cox Automotive chief analytics and strategy officer Philip Nothard said the post-pandemic era has seen retail car companies forced to acclimate to a new standard that “making profits in the first quarter and then focusing on sustaining profits in the second and second quarters “was no longer a fixed trend.
The new standard for 2022 is likely to focus on retailers’ emphasis on retention of margins and profits, he added, saying: Many have shown they can keep their margins even with stocks. increased in the wholesale market.
“There are also opportunities to make money even outside of normal trade values. These lessons are of great benefit to many retailers, regardless of what 2022 holds for the industry.
“Cox Automotive’s advice is to adapt to VUCA and embrace change.
“The expected rise in energy bills will continue to weigh on disposable income, inflation is not yet in sight, we will see a new digitization of retail and digital assisted sales, changes in the way OEMs sell.” new and used cars are accelerating, an increase in subscription / mobility products is imminent, and we will continue to switch to electric vehicles as the year 2030 approaches.
“To adapt to this, companies need to be resilient, continue to price cars correctly, market them correctly, image and promote them correctly, and make the most of the new standard. In this way, their products will remain attractive to consumers despite changing background market forces. “
