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3 Supply concerns troubling the auto industry in the UK – and how to keep them from impacting the car buying experience

Posted by Meg Bernazzani on June 1, 2021

The Covid pandemic remains top of mind for most people in the UK as infections continue to spread. However, car dealers have been allowed to reopen as of April, customers are once again able to browse showrooms in person, and demand has surged for vehicles in the UK.

Even with optimism growing, several issues threaten the stability of the new vehicle market in the UK in the coming months though. Since it pays to be prepared, here’s a look at the anticipated supply concerns for the UK auto industry.

Microchip shortages are becoming a long-term problem

The global shortage of microchips has become a serious issue for many industries that depend on integrating computing power into their products, including automotive. As a result, the production of new vehicles has been hampered worldwide, the UK notwithstanding.

The crisis is just kicking in in the UK and is affecting almost every manufacturer. According to a statement from Jaguar Land Rover, the production schedule has been revised for two of its three UK factories, with the locations operating a limited period of non-production. Similarly, Ford’s UK component factories have also suffered. The brand announced plans to bring forward its annual planned summer shutdown and suspend production at a second plant in Turkey. Overall, they said they’ll produce 1.1 million fewer vehicles than expected this year. Though these brands manufacture some of the most searched vehicles on CarGurus, they’re not the only ones impacted. Volkswagen, Daimler, Stellantis, and more are all feeling the effects of the shortage.

According to industry analysts, the lost units globally are expected to reach into the millions through 2021, and reverberations from the shortage could take the rest of the year to resolve.

Rubber supply is dwindling

As if the chip shortages weren’t enough of a problem, rubber is now reported to be in increasingly short supply. It’s not a full-blown crisis yet, but the combination of a devastating leaf disease, stockpiling by China, and recent global shipping delays such as the blockage in the Suez Canal could impact car dealers worldwide. Tire manufacturers are keeping an eye on the situation, which could cause rubber prices to rise and send auto suppliers scrambling to secure shipments.

Brexit could create trade bottlenecks

The above issues could be further compounded by the fact that there is still much to be worked out, in terms of how new rules governing trade and other services will be applied. The industry was spared from costly tariffs in the Trade and Cooperation Agreement between the EU and the UK (good news!), but new Rules of Origin requirements could create significant barriers for carmakers in the future.

Focus on what you can control

Though supply issues might make stocking your forecourt a challenge for the time being, there’s a lot still within your control. Here are some tips to ensure buyers choose your dealership:

  • Be smart about the stock you are acquiring. Tools like the CarGurus Market Analysis Tool can help inform the cars you carry, ensuring that they sell quickly.
  • Make sure the stock you’re showing online matches what you have on your lot. Cars are in demand right now, and there’s nothing more frustrating for a buyer than visiting the dealership only to find the information online was out of date.
  • Be transparent about pricing at all points along the consumer’s shopping journey. For franchise dealers, that might mean communicating more with brands to make sure you have up-to-date offers on rebates and incentives or investing in technology that ties all pertinent pricing data together.
  • Shorten the transaction time for buyers. Whether that means letting buyers complete more of the process online, minimising time spent in-store, or a combination of both, people don’t want to spend all day at the dealership. In fact, total time spent at the dealership is one of buyers’ biggest pain points, so make sure you’re not contributing to that pain.

At a time when buyers might be frustrated by having fewer choices, following these tips could not only help you increase efficiency at your dealership, but also streamline the buying process and elevate customer satisfaction.

Topics: industry insights, stock, supply