UK car dealerships allowed to reopen in June

27 May 2020

27 May 2020

UK Prime Minister Boris Johnson has announced that dealerships in the UK will be able to open from 1 June as the county eases its lockdown restrictions further.

Following the coronavirus (COVID-19) outbreak, dealerships across Europe closed their doors along with other retail outlets. However, while many have now reopened, albeit with social distancing and increased hygiene measures in place, the UK has been reluctant to allow its car showrooms to follow this pattern, instead authorising them for ‘click-&-collect’ sales only.

Johnson said car showrooms would be able to reopen if they can meet the COVID-19 secure guidelines to protect shoppers and workers.

In an emailed statement, the Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes commented: ‘The Government’s decision to reopen car showrooms on 1 June is very welcome and recognises the importance of automotive retail to manufacturing recovery and the need to reboot the economy. Showrooms have the space to enable social distancing more readily than some other retail environments and dealers are ready to welcome staff and customers back safely.’

Industry cost

Last week, the SMMT highlighted that every day of car-dealership closure is costing the UK Treasury £61 million (€68 million).

The industry body calculated that VAT, vehicle excise duty (VED) and other taxes on new-car sales to private buyers alone, amounts to roughly £5.4 billion annually. However, as the COVID-19 lockdown forced showrooms to stay closed, this figure will have been cut by 23% by the end of the month.

The SMMT, together with the National Franchised Dealers Association (NFDA), has been planning for showrooms reopening and has published a series of guidelines on how dealerships in the country can reopen safely. The best-practice guidance covers the entire customer experience, from booking appointments to showroom interactions, test drives, click & collect, part exchanges and aftersales, and includes advice on staff training, signage, sanitation and personal protective equipment (PPE).

Dealers ready

‘The guidance will allow automotive retailers to provide the best possible service in sales and aftersales while protecting staff and guests,’ commented NFDA director Sue Robinson. ‘Automotive retailers are resilient and will be working hard to overcome any challenges to safely welcome customers back to the showrooms.’

David March, network development director of PSA Group, whose dealerships have put plans in place to ensure they can reopen quickly, added: ‘To ensure the safest possible environment for our customers and staff, we have already made the required changes to our retail network, so we will be ready to safely open our doors when the Government lifts lockdown restrictions. We have taken many of the same hygiene and social distancing rules established at our factories, which are set to reopen soon.’

Sales impact

The move to reopen will come too late for May registrations, which are expected to follow the dire position the industry found itself in during April, with a 97.3% drop compared to the same month last year. As other countries allowed their dealerships to open during May, the UK could see the worst performance of the big European markets. German car dealerships were given the go-ahead to reopen in April.

‘Although UK dealers can reopen on 1 June, I estimate that the UK will have lost 500,000 registrations between March and June 2020,’ comments Autovista Group senior data journalist Neil King. ‘A recovery period is expected to follow, with growth in new-car registrations from July to September as the backlog is cleared and pent-up demand is released. However, the underlying weakness in demand is expected to result in market contractions in the final quarter, and my latest forecast estimates 1.77 million registrations in 2020, 23% down on 2019.’