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Franchisees feel the pressure
Page 59
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As the market tightens and new registrations slow, where does this Leave francised CV dealers? Kevin Swallow finds out
GEORGE ALEXANDER, editor of
Glass's Guide to Used Commercial Vehicles,
says that in the next 12 months "franchised dealers will be the hardest hit of all used commercial vehicle retailers".
He believes a slowdown in new vehicle registrations and a fall in residual values will impact "on already-dwindling profitability-, with the "likely fate for franchise holders dictated primarily by the restrictions on the vehicle types that can be offered loan increasingly selective market".
Independents, on the other hand are "relatively well placed to respond quickly to the changing economic climate".
"Franchised dealers are vulnerable to a market downturn," he says. "The franchise agreement encourages dealers to invest in big sites, meet corporate standards and take on massive amounts of debt.These commitments, however, leave dealers poorly placed to trade their way out of difficulty.
"To make the most of the prevailing economic conditions, dealers need the freedom, and the necessary finances, to stock older vehicles, which represent a profit opportunity, rather than just new and late-plate examples that rapidly become distressed sales... •