Aftermarket facing £600m deficit

New research suggests the slump in car sales could cost the aftermarket up to £600m in service and repair incomes.

The SMMT has reported that new car sales are down by 29.3% so far in 2021 compared to 2019, with disruptions to the supply chain and Covid-19 having a devastating impact on the sector.

However, the semi-conductor chip crisis is arguably the major factor now, forcing manufacturers to reduce production capacities and even temporarily pause production lines.

Gavin Ruddick, non-executive director at BookMyGarage.com, said: “Last year, demand for new cars plummeted due to the Covid-19 pandemic, which we estimated would cost the aftersales segment £300m in lost revenue.

“Demand for new cars has since recovered but now manufacturers are facing significant supply challenges and the SMMT’s data indicates sales in 2021 could be similar to last year. That means the cost to the aftersales sector could now be a combined total of £600m, calculated from the near two years of a 30% reduction in new cars supplied into dealership groups, and impacting the vital revenue from segment 1.

“This is why now more than ever our sector needs support in finding innovative ways of filling spare workshop capacity which is automated and supports the administration and personnel challenges all sectors are currently experiencing.”