Do Car Dealers Still See Cash as King?

The motor industry is following the Brexit debate closely in the knowledge that the uncertainty over the UK’s exit from the EU is already impacting on car sales and profit.

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Already concerned by slowing sales, motor traders are bracing themselves for further falls in the market once the final severance deal is in place. Consequently, they are looking to cut costs, reduce debt and build up cash reserves before the stormy times ahead.


The uncertainty has prompted a response from the Society of Motor Manufacturers and Traders, with it’s Chief Executive labeling the lack of information about the future relationship with EU as “utterly unacceptable” and warning about the fall in investment in the sector.

A recent report from a leading firm of accountants has also warned that traders lack of cash-flow could be a major concern rather than a drop in short-term profits as Brexit looms. Reducing debt has created a breathing space for many companies, but reducing costs is also crucial to the survival of the sector as difficult times loom.

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It is not only the threat of a fall in sales which is concerning the sector but also the potential imposition of a 10% tariff on vehicles manufactured in the EU. Building cash reserves and reducing gearing will help to overcome these issues.

One significant cost for car dealers is motor trade insurance, and there are concerns about the impact of Brexit on the insurance industry. So what does motor trade insurance cost and how is it likely to change in the future?

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Unfortunately, there is no easy answer to the first part of this question, as the most cover is tailor-made to suit the client and the risks which their business represents to the insurer. A reliable broker specializing in motor trade insurance should be your first port of call.

So far as the outcome of Brexit’s impact on insurance quotes is concerned, it may depend upon your supplier. Large insurance companies will have access to significant reserves and be able to mitigate the economic storm which is widely predicted. Smaller providers may have to be more agile and adapt to the changing circumstances. In any event, it may be time to look at your renewal date and begin to plan ahead.

As the Brexit negotiations, the fallout is hard to predict.


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