All seems superficially rosy, yet Digital Acumen is predicting a tough year for Franchised Car Dealers in 2010. Here are some good reasons why…

The Context of 2008

Firstly, late 2008 was the weakest final quarter for sales for many years, so comparing year on year is rather like comparing the next Atlantic crossing after the Titanic.

If car sales were the same or worse than 2008, then it would have been catastrophic for all those dealers who struggled through much of 2008 and early 2009.

The Tailing Off of the Scrappage Scheme

The scrappage scheme which has, on the face of it, single-handedly resuscitated the UK car market has mostly passed. Not just because the government has merely topped it up, but also because there aren’t many people left with bangers who can afford to trade them in for new cars.

If nothing replaces Scrappage, then 2010 will go swiftly downhill.

New Car Price Rises Continuing

Running a new cars website as we do, it has been clear that even from January 2009 car prices have been going upwards. With a further suite of price increases due in 2010, the average rise has now reached four figures. This more than compensates for the scrappage scheme – it was as if manufacturers knew it was going to happen…

With most cars more than £1,000 up on last years’ prices, they are even less affordable.

The VAT Increase Returns

From January 2010 VAT goes back up to 17.5%. The addition, whilst not meaning much on smaller purchases, means a lot when it comes to a car. This pushes the cost up further for the motorist wanting to buy a new car.

The NET price of a car in 2010 will be 2.5% more expensive to the consumer even if the pre-VAT price is not increased.

Supply is Increasing, Demand Will Fall

In mid-2009 there was a strange situation. Manufacturers who had shut down, or slowed production to a crawl because of the predicted doom of 2009 were having to respond reactively to the effect of the Scrappage scheme.

They had a situation of strong demand and no products. Lead times were getting longer for delivery (up to six months on certain models like the Ford Fiesta, Fiat 500 and Hyundai i10), particularly on smaller cars.

This has now started to change, with demand tailing off, supply catching up and with a weak start to 2010 predicted – suddenly there will be oversupply again.

The Economy is Still Fragile

We are still officially in recession and, even if we are out of it early into the new year, we still face a very uncertain 2010. Even the optimists are scratching around for the green shoots of alleged recovery.

The economy is not going to drive increased car sales.

So, bearing all this in mind, we predict a tough 2010 – unless Peter Mandleson comes up with something creative and dramatic… which he probably won’t. It’s going to be a tough time for all in the trade…

It’s one of those things that you watch and, whilst it doesn’t mean absolute success or failure, it’s rather like a barometer or a thermometer – it is a measure of popularity.

We often get asked ‘how do people find CarQuake’ and whilst we can point them to searches like Best Car Deals, New Cars for Sale and Cheap New Cars as indications of good search engine performance… it’s still not enough.

So, Where Do We Stand?

Well, just another observation to add to the mix – CarQuake is now Page Rank 6. Whilst this doesn’t mean anything in terms of business performance it is a testament to where we’ve got to that when comparing with much ‘bigger’ brands, we hold our own nicely…

Page Rank 6 (same as CarQuake): Autotrader, Yahoo! Cars, Top Gear

Page Rank 5 (lower than CarQuake): Exchange and Mart, Autoquake, Moneysupermarket

Page Rank 4 (considerably lower than CarQuake): Broadspeed

Page Rank 3 (very low): UK Car Discount

We’ve even got a higher ranking than some of the Manufacturers (we won’t mention any names!).

To be fair, we still have a long way to go… but the signs are very encouraging.

So, it’s happened in September following a pretty miserable August… we get the feeling it’s going to be a long winter with March months away and little evidence that anything will change soon in the marketplace.

At least some of the car manufacturers are trying to slow down production, but even then the gap between the real market and what they would like it to be still seems to be too wide.

So, how can we help?

Well… firstly CarQuake is still open for business. Very much so.  Having launched in September 2006, it has steadily grown to the point that it has become a destination site for many new car buyers. Yes, they are still out there, but are probably more price-conscious than ever. And dealers, yes, franchised dealers are still benefiting from using the easiest way to sell a new car – because customers find it the easiest way to buy – no nonsense, just great deals!

Secondly, Approved Used Cars is here… because when the new market is tough, then the second hand market needs to perform… and here is a site which, at last, will provide all franchised dealers a proper route to market – as it educates the customer fully on all the benefits of buying approved used cars… rather than lumping approved in with ‘trade’ and hoping that no-one will notice (and then charging you through the nose for doing so).

Rumour has it, too, that Approved Used Cars has a free trial on the go… so sign up and give it a go – before the trial expires.

It may be a tough time, but we are genuinely here to help!

It’s as if someone just flicked a switch… and the lights came on! January has already started off with a real explosion of activity at CarQuake.

Someone tell our visitors that the market is wobbly! We need help as we’re still looking for dealers to take advantage of the sheer volume of business we generate… so pass the message round – or just contact us.

… get in touch with us here, or through the CarQuake website, and we’ll make sure that you’ve get a strong finish to Quarter 3!