• More than half of dealers (52%) say the higher minimum wage is having the biggest effect on their profitability so far this year
• More expensive stock (45%), rising premises costs (41%) and increased marketing expenses (33%) are also factors
• Additionally, 38% report new higher employee national insurance contributions are an issue, shows May’s new Startline Used Car Tracker

Other factors hitting margins mentioned in May’s Startline Used Car Tracker include more expensive stock (45%), premises costs (41%) and increased employer national insurance contributions (38%).

Paul Burgess, CEO at Startline Motor Finance, said: “We’re going through yet another period when the costs faced by dealers are rising in a wide range of areas and our findings show the biggest surges are being felt.

“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.”

The Startline Used Car Tracker also shows dealers are concerned about rising costs in areas including marketing (33%), technology (33%), upward pressure on wages (32%), training (23%) and equipment needed for electrification such as (20%).

Paul said: “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.”

Compiled monthly by APD Global Research – well-known in the motor industry for their business intelligence reporting and customer experience programs – the Startline Used Car Tracker this month questioned 308 consumers and 66 dealers.