The Motoring Industry in Preston slams on the brakes...
December 2008
Car Sales in Preston, both for new and second hand vehicles is at a low ebb. The drop off in sales numbers, for new cars especially, has dropped by a huge margin and is responsible for a crisis in the automotive industry in Preston.
Selling your car in this financial climate is hard work
Preston is far from exempt from the terrible financial difficulties being faced by those involved in the automotive industry. Car sales in Preston, like anywhere else, have dropped by a huge amount. The national statistics for car sales that were released a few days ago show that in November of this year, car sales in the UK had dropped by nearly 37% over the same period last year. This crisis even drove one car salesman to offer a 'Buy one get one free policy' on new cars in his showroom!
Short of giving away cars for free, is there much that can be done to reverse the trend that Preston car dealers are suffering at the moment? I spoke to several car dealers in the area, both new and second hand, and what became very clear whether they were selling Ford Fiestas or brand new BMW's, that unless a dramatic turnaround occurs in the near future, people will lose their jobs and businesses will go bust.
I first spoke to the owner of 'Penwortham Garage' in Penwortham, Mr Alec Gabbatt. He has been running a car dealers for over 26 years, making him one of the most established second hand car dealers in Preston. He says that as of 5-6 months ago, customer traffic through his showroom 'completely shutdown'.
'Usually in July, August I can sell anything up to 12 cars in a month,in July of this year, I sold one.'
This is a truly shocking decline in sales, it may not be totally typical, but for many second hand dealers in the Preston area, this will be unpleasantly familiar. It is no wonder then, that the automotive industry in Lancashire is struggling to such a degree.
Mr Hardman also says that due to the crunch, the customers that are buying are asking to much for their money. He has had several families who are searching for a car for as little as a thousand pounds, and want the world for it.
This is also the case for the new car showrooms, with many of the luxury brands seeing their sales nose dive. This is directly related to two different areas of the financial crisis, personal financial difficulties and businesses suffering as a result of the crunch. I went to Bowker BMW near Preston and found that the 26% loss of sales being felt world wide by the company is certainly affecting sales in the Preston area.
The majority of which is due to the dramatic decrease in company car sales. BMW's are very popular as a company car as they meet many businesses specifications and also provide the owner with a bit of affordable luxury. However, while the financial crisis is gripping the business world, companies are very reluctant to allow employees to spend so much money on company cars. Hence, the luxury car manufacturers all show declining sales, so much so that many are forced to reduce manufacturing. This in turn causes huge problems, as it means that the factories have to lay off staff to keep costs low. It is a vicious cycle, one which shows no signs of slowing down in the current climate.
The automotive industry as a whole has suffered massive blows in the last year, so much so that the American giants General Motors had to ask the American government to keep them afloat. In Preston, though the manufacture of vehicles doesn't occur here any longer, the local automotive industry is in dire straights. Neither the Luxury Showrooms or the local second hand dealer is safe.
May 2009
It has now been five months since I last looked at the motor industry in Preston and the UK, and thankfully the garages that I visited last December are still open. I was genuinely worried that the two second hand showrooms I visited, Priory Car Sales and Penwortham Garage may have become victims of the decline in car sales.
Unfortunately for the owners, the fact they are still open is probably the best news they have had since my last visit. Business is still slow, motionless at times, and again I am reminded how few cars the garages are selling compared to a normal year. Mr Hardman, of Priory Car Sales has seen little improvement in the last five months: "Business is still on its arse, to be blunt. Normally we could have sold five or six cars on a typical summer weekend. This month I've sold four in total. Its desperate stuff."
Mr Gabbatt tells a similarly depressing story, quoting sales figures that been stagnant for the last six months. He said: "Myself and colleagues are doing all we can to stay adrift at the moment. That is all we can hope to do."
Nationwide, the plans created by the budget to revitalise the motor industry seem to have received a mixed reaction. The car scrappage scheme introduced by this years budget has not made the impact the government was expecting. The idea is simple, if you have a car which is over ten years old and scrap it, the government will give a two thousand pound discount on a new car. Intended to push people into updating their wheels, the scheme is not popular with most manufacturers, especially at the top end of the scale.
It is true that there has been a rise in orders and test drives, but this is limited to the lower end of the spectrum and only a handful of manufacturers have seen the benefits. Small cars, at the cheapest end of the scale seem to be the only benefactors, with budget Korean manufacturer Kia reporting 4000 new orders for their 'Picanto' minicar. This has also been seen by French manufacturer Citreon, whose tiny C1 car is certainly benefiting from a government backed price reduction, meaning the little car is one of the cheapest new cars on the market.
The Kia Picanto is benefitting from the governments scrappage scheme
However, as I mentioned earlier the scheme is far from perfect. Though it may benefit the small, fuel efficient cheap cars, you do not have to look much further up the price range before you hear complaints from manufacturers. Mini, BMW and other luxury car companies have seen almost no impact. One spokeswoman for Jaguar said: "If you've got a 10 year old car you'd like to trade in for scrap, you're not going to buy yourself a new Jaguar."
This is the problem with the scheme, it does not go far enough. Two thousand pounds, though a lot of money is only the fraction of the cost of a new luxury saloon, where it is a large percentage of the cost of a small car. This scheme was always going to be more beneficial for cheaper cars. There is also the problem that affects the likes of Mr Hardman and Mr. Gabbatt. Which is most second hand car showrooms do not have models less than a year old, and therefore the majority of second hand showrooms will not benefit from this scheme at all. Both car salesmen agree that extending the age of the new car would benefit some second hand dealers, not just the car showrooms. Mr Hardman said: "If the government extended the age to a car that is two or three years old, the whole industry could benefit from it, not just the big dealers who are able to sell the cars cheaper in the first place."
The tough times continue in Preston, as they do nationwide. It makes me wonder, if I returned again in another five months, how many of these dealers would still be around? How many small businesses and car showrooms will shut down in the next five months? It has come to the point where you have to do everything possible just to stay afloat. As Mr Hardman put it: "Somebody is going to shut down, but I promise you that if I have anything to do with it, it won't be us."
'Some customers don't play fair, they come looking for a car for a grand and are looking for totally unreasonable deals. Am I supposed to make just £200 profit on a vehicle and then provide a warranty? What is the point?'
It is easy to understand this mentality, the profit margins are so slim, if you even manage to get a sale at all. It makes dealers like Mr Hardman wonder whether it worth getting out of bed in the morning. Now, not all will be suffering in exactly the same way, but we can sure that all those in the industry will be fearing what the future holds, no car dealer can rest easy.
Many dealers will face sleepless nights as business grinds to a halt...
This is also the case for the new car showrooms, with many of the luxury brands seeing their sales nose dive. This is directly related to two different areas of the financial crisis, personal financial difficulties and businesses suffering as a result of the crunch. I went to Bowker BMW near Preston and found that the 26% loss of sales being felt world wide by the company is certainly affecting sales in the Preston area.
The majority of which is due to the dramatic decrease in company car sales. BMW's are very popular as a company car as they meet many businesses specifications and also provide the owner with a bit of affordable luxury. However, while the financial crisis is gripping the business world, companies are very reluctant to allow employees to spend so much money on company cars. Hence, the luxury car manufacturers all show declining sales, so much so that many are forced to reduce manufacturing. This in turn causes huge problems, as it means that the factories have to lay off staff to keep costs low. It is a vicious cycle, one which shows no signs of slowing down in the current climate.
The automotive industry as a whole has suffered massive blows in the last year, so much so that the American giants General Motors had to ask the American government to keep them afloat. In Preston, though the manufacture of vehicles doesn't occur here any longer, the local automotive industry is in dire straights. Neither the Luxury Showrooms or the local second hand dealer is safe.
May 2009
It has now been five months since I last looked at the motor industry in Preston and the UK, and thankfully the garages that I visited last December are still open. I was genuinely worried that the two second hand showrooms I visited, Priory Car Sales and Penwortham Garage may have become victims of the decline in car sales.
Unfortunately for the owners, the fact they are still open is probably the best news they have had since my last visit. Business is still slow, motionless at times, and again I am reminded how few cars the garages are selling compared to a normal year. Mr Hardman, of Priory Car Sales has seen little improvement in the last five months: "Business is still on its arse, to be blunt. Normally we could have sold five or six cars on a typical summer weekend. This month I've sold four in total. Its desperate stuff."
Mr Gabbatt tells a similarly depressing story, quoting sales figures that been stagnant for the last six months. He said: "Myself and colleagues are doing all we can to stay adrift at the moment. That is all we can hope to do."
Nationwide, the plans created by the budget to revitalise the motor industry seem to have received a mixed reaction. The car scrappage scheme introduced by this years budget has not made the impact the government was expecting. The idea is simple, if you have a car which is over ten years old and scrap it, the government will give a two thousand pound discount on a new car. Intended to push people into updating their wheels, the scheme is not popular with most manufacturers, especially at the top end of the scale.
It is true that there has been a rise in orders and test drives, but this is limited to the lower end of the spectrum and only a handful of manufacturers have seen the benefits. Small cars, at the cheapest end of the scale seem to be the only benefactors, with budget Korean manufacturer Kia reporting 4000 new orders for their 'Picanto' minicar. This has also been seen by French manufacturer Citreon, whose tiny C1 car is certainly benefiting from a government backed price reduction, meaning the little car is one of the cheapest new cars on the market.
The Kia Picanto is benefitting from the governments scrappage scheme
However, as I mentioned earlier the scheme is far from perfect. Though it may benefit the small, fuel efficient cheap cars, you do not have to look much further up the price range before you hear complaints from manufacturers. Mini, BMW and other luxury car companies have seen almost no impact. One spokeswoman for Jaguar said: "If you've got a 10 year old car you'd like to trade in for scrap, you're not going to buy yourself a new Jaguar."
This is the problem with the scheme, it does not go far enough. Two thousand pounds, though a lot of money is only the fraction of the cost of a new luxury saloon, where it is a large percentage of the cost of a small car. This scheme was always going to be more beneficial for cheaper cars. There is also the problem that affects the likes of Mr Hardman and Mr. Gabbatt. Which is most second hand car showrooms do not have models less than a year old, and therefore the majority of second hand showrooms will not benefit from this scheme at all. Both car salesmen agree that extending the age of the new car would benefit some second hand dealers, not just the car showrooms. Mr Hardman said: "If the government extended the age to a car that is two or three years old, the whole industry could benefit from it, not just the big dealers who are able to sell the cars cheaper in the first place."
The tough times continue in Preston, as they do nationwide. It makes me wonder, if I returned again in another five months, how many of these dealers would still be around? How many small businesses and car showrooms will shut down in the next five months? It has come to the point where you have to do everything possible just to stay afloat. As Mr Hardman put it: "Somebody is going to shut down, but I promise you that if I have anything to do with it, it won't be us."
Chris Terris Taylor
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