After a challenging last six months of 2009, the first few months of 2010 has provided an upturn in fortunes, writes
Michael Neary.
According to SIMI date, the first half of 2010 has seen a 45.23% increase in new car registrations. This represents an actual increase from 46,715 during the same period in 2009 to 67,846 in 2010. This dramatic year-on-year increase in volumes has been driven by the Scrappage Scheme incentives offered, increase consumer confidence and stabilisation in the wider community.
Market outlook
On a positive note, the ERSI predicts the economy to show modest growth in 2010 before growing by over 2% in 2011. This growth coupled with a stabilisation in the rate of unemployment and improving customer sentiment can have a positive impact on demand in the motor industry.
However, Market indications are that the next six months will be challenging for most dealers in the industry. Traditionally, the last two quarters are the most difficult for dealers. In addition, the initial surge in demand fuelled by the introduction of the Government Scrappage Scheme should begin to settle as the year progresses.
Reassess your business plan
All dealers should now reassess their business plans and reforecast. Although many retailers have aggressively driven down costs and restructured, the reforecast for the year will show if further action is necessary. The reforecast should show that cash is available for the business until the end of the year.
Speaking with several debtors this is top of their priorities, as cashflow will dictate who will survive 2010.
Conclusion
In accessing the next six months some of the key questions for Irish motor dealers are:
- have you prepared a revised forecast for the remainder of 2010?
- are you being realistic?
- do you need to refocus costs?
- have you realigned for lower costs?
- have you realigned for lower volumes?
- have you appropriate levels of stock?
- is your after-sales margin sufficient?
- have you sufficient cash to trade for 2010?
- are you making profitable trades?