(Image: Getty Images)
A motor industry chief has highlighted mounting pressures pushing car dealers over the edge amid a series of forecourt closures in Scotland.
It comes after we revealed the collapse of two Scottish car sales firms in the space of a week, with 26 jobs lost at one company with showrooms across the country.
Speaking in general terms around the motor industry and not in relation to specific cases, Alan Gall, chief executive of the Scottish Motor Trade Association, has outlined key issues that include staff costs and recruitment.
On Tuesday, Edinburgh-based Cars4you Limited was placed into administration after the company “experienced ongoing cash flow challenges”.
Set up in 2016 and operating from “several sites” in central Scotland, the business had an inventory of up to 1,500 used cars and light commercial vehicles.
In that case, Thomas McKay, managing partner of administrator BTG in Scotland and Northern Ireland, said: “The used car retailing sector is facing increasing pressure as consumer spending tightens, and this means that we are seeing some retailers struggle across the market as others can still thrive.”
Also reported in The Herald this week, Inverness-based Next Car Limited was placed into liquidation after a petition for the firm to be wound up and a liquidator appointed was lodged in court.
In another case in August, a liquidator was appointed to Fife-registered Carnegie Cars Limited.
When asked what the main issues are and what is pushing companies over the edge, Mr Gall told The Herald: “The main issues are the recruitment and retention of staff, especially apprentices and technicians.
“The cost of staff, primarily related to National Insurance contributions, and the cost of doing business are increasing at pace.
“In addition, interest rates effect both trading businesses and buyers of cars, whilst the cost of living is an ongoing concern to the general public.”
The mounting pressures that are closing Scottish car sales forecourts – from inside the industry (Image: Getty Images)
He said of the outlook: “There will be a change in buyers’ priorities, but the industry is mature and can manage these in the short-term. But the cost-of-living crisis will be an ongoing issue meaning that the mid-term outlook is more concerning.”
The commercial sector is “under significant pressure due to the increased costs of both buying new product and maintaining products”.
He continued: “This sector is negatively impacted faster than the consumer market. The increase costs are either limiting their competitiveness as business operations or forcing significant price increases onto the consumer.”
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He said there are wider implications, adding: “The automotive industry in Scotland, which does not include manufacturing, is an industry that everyone uses multiple times per day.
“Our industry ensures ambulances are on the road, or people can get to their place of work. Motor vehicles are used for business to deliver goods and services, and people to meet friends, family or for recreation.
“If our industry is not considered as a critical industry, then the entire social and economic underpinnings of our society will grind to a halt.”
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He points to increasing spending and support of apprenticeships by the Scottish Government, alongside reduced local-level taxation and resistance to tariffs.
The UK Government could move to reduce National Insurance contributions, and “ensure fairer electric vehicle charges between people who can home charge and those who cannot”.
Mr Gall also said: “Scale is not the most significant point. There are hugely successful small, medium and large-scale businesses. The critical factors are the management and financial efficiencies of how businesses are run when you consider rising costs, cashflow and attempts to lower debt.
“In the case of sales stock, it is important to ensure the stock is what the market wants ‘today’ not what they have wanted in the past.”