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Much has been said about the shortage of stock facing the sector, and just as dealerships begin to cover, they could well be hit with a crisis even worse than coronavirus itself.
Vehicle manufacturers are facing raw material shortages on multiple fronts with semiconductors, rubber and aluminium all trading at a premium.
This will further dent new vehicle production cycles and restrict the volume of stock into the used market, causing considerable challenges for the lease and contract hire sector where a lack of available product prolongs de-fleet schedules.
This is also a challenge in the LCV market where manufacturers are quite literally being forced to choose between van and car production in many cases, pushing up wholesale prices, which continue to rise.
Dealers could be faced with a perfect storm in a few months once furlough ends and many continue to pay back recovery loans.
With prices high, demand is likely to transition from the new market to the used market, further raising prices to potentially exponential levels. As a result, dealers that have multiple options for stock sourcing and strong finance partnerships in place will be in the best position to steer these murky waters.
Philip Nothard is VRA chair, and insight and strategy director at Cox Automotive. This blog is tan extract from a briefing from the VRA published on 8 June.