Over half of dealers (52%) have identified the minimum wage increase in April as having the biggest single impact on profitability this year, according to Startline’s Used Car Tracker which surveyed 308 consumers and 66 dealers.
More expensive stock (45%), premises costs (41%) and increased employer national insurance contributions (38%) were also highlighted.
Paul Burgess, CEO at Startline Motor Finance, said: “The increases in minimum wage have been quite substantial – 6.7% for over 21s and 16% for 18–20-year-olds. While there are probably limited numbers of people in dealerships being paid this minimum, the move does create general upward pressure on all wages and is clearly felt to be an issue.
“Concerns over rising stock costs are unsurprising. Especially in the 3–5-year-old area of low supply caused by the pandemic, both values and prices have been going up and there is no way for dealers to sidestep this trend. The same is true of premises, where everything ranging from maintenance costs to business rates continue to rise.
“However, it’s perhaps interesting to see that employer national insurance isn’t more prominent in the research. This increase received a very negative reception from dealers when it was announced in last year’s Budget.”
Dealers are concerned about rising costs in marketing (33%), technology (33%), upward pressure on wages (32%), training (23%) and equipment needed for electrification such as (20%).
Burgess added: “This relatively long list of expenditure shows how large numbers of dealers are worried about rising costs in a wide range of areas.
“It’s quite difficult to cut spending substantially under any of these headings and dealers no doubt feel that they are having to absorb increases arriving from almost every direction.”
