Ups and downs in the motor trade

With Honda, Nissan, General Motors and Jaguar Landrover all pulling back on vehicle production while dealerships sales slow down, Helen Smith asks is Motability bucking the economic trend

As the recession continues to put the brakes on the economy, the outlook for the car industry remains bleak, according to the Society of Motor Manufacturers and Traders (SMMT), which is forecasting that sales for the year overall will fall by a fifth to some 1.72m vehicles.

In comparison to this Motability, who provide cars to disabled people in exchange for their mobility allowance, recorded a record level of growth in 2008. Last year another 35,000 people joined the scheme bringing their total number of customers over the 500,000 mark. Many people are finding getting unsecured loans for car purchase is becoming almost impossible due to the credit crunch, so more eligible motorists have turned to Motability rather than buy vehicles privately. Motability is now the biggest car scheme in the world, and since the majority of customers renew their car every three years it’s not hard to see how Motability sales are having a big impact on the numbers of cars sold.

So could Motability help save some car dealerships? Network Automotive Management’s MD, Colin Bruder, thinks it could certainly help. He has put together an action plan to help dealerships which includes selling into Motability to help increase their sales. He said: ”Motability represents by far the greatest opportunity for dealers not only to shift some metal, but also to put something back into the community”.

It seems his advice has been taken on board as Motability has had an increased number of inquiries from dealers about pursuing Motability customers, and questions from dealers about how to make their showrooms more appealing to disabled people. Mike Betts, Chief Executive of Motability Operations, said: “Dealers recognise that customers paying through their mobility allowance are not subject to the problems of reduced access to credit. Motability business is a significant and attractive customer base for the dealer to win”.

Although customer numbers have increased this means the number of second hand cars that have to be sold on has also increased, and sales of second hand cars have slumped. Motability told me: “We are not immune from the economic climate and we have seen a significant downturn in the value of the used cars we sell”. However, although the value of the cars has fallen they say they are still succeeding in finding buyers for ex-Motability vehicles.

With about two million people receiving the qualifying benefit for joining the Motability scheme there is plenty of scope to recruit even more customers. So, for car dealers fighting to make sales in the recession, selling to this market can only be a good move.