Saturday 18 November 2017

Credit squeeze putting brakes on sales

The Irish Independent's 'Garage Watch', published every Wednesday, is one of the most popular features of the Motoring section.

Our team visits garages all over the country, sampling what is on offer and assessing the service to customers. Here, Motoring Editor Eddie Cunningham analyses the key trends in the course of an extraordinary year.

Anyone who has had anything to do with the motoring business -- either as a seller or a buyer -- knows there is always, at some juncture, a big 'but'.

This year began with a 'but'. The new scrappage scheme was up and running, there was a sense that interest in new cars was generally quite significantly up on last year.

Yet, even as far back as January, the 'but' butted in. Everything was set up for a decent start BUT the snow and frost effectively froze the anticipated surge. As soon as the snow cleared, business picked up markedly. And for a good while, as a sense of genuine surprise crept in with the exponential increase in buying, the dreaded 'but' was held in abeyance.

Yet, for the Irish Independent's 'Garage Watch' team, the signs of its impending re-emergence were starkly evident in many instances from an early stage.

Getting the money for a car was and remains (as Charlie Weston outlines on Page 6) the single biggest obstacle to buying, new or used, this year.

We published one or two cases where the buyer was thrilled with the car, the salesman, the garage, the obvious extensive back-up. But -- there's that word again -- the finance folk gave the thumbs down. We're not talking about people on the breadline here. We're talking about people in good jobs, decent salaries and decent prospects (yes, there are some despite the economic downturn).

Yet they were not considered suitable for finance by banks or whoever.

It is easy to knock those people with their calculators. But so many of them didn't bother with the sums back in the good old days -- and that makes them a zillion times more cautious now.

The financial difficulty with buying a car is, in microcosm, one faced by so many people across the economy every day: getting credit.

It is difficult to assess how many sales were thwarted by tightened purse strings; and it is impossible to gauge how many businesses, small and medium, have had to close or let people go because their overdrafts or credit facilities have been discontinued.

We are now entering a critical time for the motor industry. Suppliers of cars to the Irish market are testing the wind for 2011 and placing their orders on the best calculations they can possibly make at this stage.

If credit loosens up a little, they may have underestimated. If it tightens (is that possible?) or remains as it is, then maybe they will be left with awkward stock to shift.

From a buyer's perspective, to buy or not to buy is a decision that will, to a large extent, be taken out of their hands and depend utterly on the vagaries of the lending mood. It is no way to have to run a business, never mind a country.

What makes it all the more galling is the perceptible improvement in the service to potential buyers.

Most of the garages we visited were excellent, some were exceptional. Standards need to be high because people are used to them in other areas where they spend money. But the most impressive part of our mystery shopping tours has been the quality of sales staff.

There will always be off-days, and we have seen people under awful pressure where buyers greatly outnumbered staff. And, yes, a handful of sales people have left us unimpressed. But, in the main, the quality of services is now so much better.

Salespeople are much more upfront and frank, and 95pc of them call you back if they say they will. That is as it should be but in the good old days it was not always the case.

The other trend to emerge over the past few months is how scarce a good diesel hatch has become.

There is no doubt people are looking for the most efficient way of getting around and, for now at least, they have decided that a nice compact diesel in the small-family class is the best option.

So anyone out there who has one and is thinking of trading it in, hang in for a really good price. They are like motoring gems.

Next year? Impossible to say how it will start on the forecourts, never mind continue, but the higher standards must be maintained at all costs. Never was it so important to really care for, and about, the buyer and the product.

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