London, United Kingdom (PRWEB) February 11, 2013
The past five years have not been easy for the New Car Dealers industry. Industry revenue is expected to fall at an annualised 5.1% over the five years through 2012-13 to reach £84.7 billion. According to IBISWorld industry analyst Aries Nuguid, “new car demand slowed as high fuel prices drove consumers away from cars to public transport”. As a result, the non-replacement market moved fast towards saturation point. At the same time, car technology improved, lengthening the life of new vehicles and leading to longer replacement cycles. Consequently, the replacement market also slowed down.
In the aftermath of the global downturn, car sales crashed due to lower incomes, poor business and consumer confidence, higher unemployment and difficulty in obtaining financing. The government intervened by providing a car scrappage scheme to boost new car sales. However, its effect was not enough to offset the downturn's effects on vehicles sales.
Car sales are forecast to grow only moderately in 2012-13 because the scrappage incentive scheme brought car purchases forward. The economy will continue to be sluggish during the year, which will not improve demand. As such, industry revenue is forecast recover at a slow 2.7%.
Industry profitability has diminished over the past five years. Margins contracted as overcapacity and low demand caused operators to shoulder higher inventory costs. Many of the less efficient firms suffered operating losses, which dragged down industry margins. Operating profit margins contracted to a low during the global downturn as demand plummeted and inventory costs eroded margins. Most operators took severe measures to cut costs. These included slashing employee numbers, closing outlets and revamping stock management.
Nuguid adds, “the shift towards more fuel-efficient vehicles will continue over the next five years and petrol-electric hybrid vehicles and pure electric cars are expected to become more popular”. Government policies and subsidies will support demand for alternatively fuelled vehicles. IBISWorld expects industry revenue to return to modest growth over the five years through 2017-18. The exit of unprofitable dealers, recovering demand and more stable conditions will lead to slightly wider operating margins.
The New Car Dealers industry has a low level of market share concentration with the top four major players estimated to account for less than 20% of industry revenue. No major players dominate the industry; the largest player accounts for only an estimated 8.2% of industry revenue. Major companies include Volkswagen and Honda.
For more information on the New Car Dealers industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Companies in this industry sell new cars and other light motor vehicles to end consumers. Wholesalers that sell directly to fleet markets are included in this industry. Vehicles sold include passenger cars, SUVs, jeeps, specialised vehicles (such as ambulances) and any other vehicles weighing less than 3.5 tons. The sale of used vehicles is not included in this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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