Higher minimum wage key cost factor for dealers
New research has found that more than half of dealers say the higher minimum wage is having the single biggest impact on profitability.
According to analysis carried out by Startline Motor Finance, 52% say the higher minimum wage introduced in April is hitting margins more than any other factor.
Higher stock (45%), rising premium costs (41%), and increased marketing expenses (33%) were also identified as significant factors, as385 well as higher national insurance contributions (38%).
The Startline Used Car Tracker revealed that dealers are concerned about rising costs in areas including technology (33%), wages (32%), training (23%) and equipment needed for electrification such as (20%).
Minimum wage increase
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.”
