At last, some positive news!

It was encouraging to hear that one of the dealerships we have reported on for closing their doors in this Spring '24 period, has been purchased out of administration by MacGregor Industrial Supplies. Especially pleasing was the news that fifteen of the original employees have been kept on at Balgownie to ensure some degree of continuity. Clearly thoughts remain with the twenty-four who were laid-off initially - but as this is news that we perhaps didn't expect to hear, we should chalk this up as a bright spot in recent weeks. Particularly for the staff who do remain and hopefully for the customers who can continue to be served with the brands they are familiar with in the local area.

It has brought us no pleasure whatsoever here at Service Dealer Towers, having to report on this spate of closures these past few weeks. We'd much rather be talking up all the positive aspects of the industry and the incredible work that dealers up and down the country are undertaking week in, week out. In fact, it's such a relief that today each story in our Weekly Update can be described as positive news for the sector.

But I must say, in my 20+ years of working on the magazine I can't recall a period where as many dealerships folded in such a short period of time - so the unusual nature of these past few weeks, did require some comment I'm afraid.

Dealer thoughts

And talking of comment, we had quite the response from you, our dealer readers, last week when we asked what was going on with these closures so far this year? As illustrated by this Weekly Update's superb engagement rates recently, we are so lucky, and indeed grateful, that when we ask our expert readership for their thoughts and opinions on a given industry subject, we receive such considered and insightful responses.

What came across most strongly from dealers who contributed to the discussion, is just how much of an Herculean effort it is for small businesses, in the current circumstances, to remain sufficiently profitable.

This struggle was summed up succinctly by one reader who answered the question 'what's going on?' with, "Simple - lack of margin!". Another expanded on the theme, saying, "Greedy big brands with low margins for dealers."

This low margin argument received an interesting spin from a reader who described themselves as a DIY store, saying they would hate to be reliant solely on garden machinery for their profitability. They explained, "Something is wrong when you can make more money on a £21.99 tin of paint than if you chose to price match an online lawnmower."

Another thread taken up by our dealer commentators, took aim at the bottom end of the sector for skewing the marketplace for traditional servicing dealers. One said, "China is sucking the blood from many businesses with wholesale prices which in a real world would be crazy. Dealers with quality products simply cannot compete."  A separate dealer agreed with the position on cheap Chinese imports, saying they have been " . . undercutting the quality manufacturers for years, while at the same time making a mockery of all the 'green' claptrap spouted by hypocritical politicians, and others who, when it comes down to it, just cannot resist saving a buck or two."

We also heard from our friend Nigel Barnes of Moggs Of Wells, whose insight we always appreciate, who told us he sympathised completely with the current situation. On the subject of cheap products, Nigel added, "When it comes to sales, there are always other outfits giving what I would call ridiculous discounts, and manufacturers offering promotional prices to stimulate demand, meaning that our margins are squeezed to the bone if not beyond."

Nigel also spoke on the service side of a dealership, remarking how difficult it was to attract quality people with "desperately low" industry wages, and how customers do not realise how difficult and time-consuming some jobs can be. He told us, "I frequently find that we cannot really charge for how many hours a job actually took because customers simply wouldn't pay the bill. You only need a stripped thread or a sheared off bolt in an awkward position and time just goes out of the window."

We also had another factor for dealership closures mentioned to us, that we haven't heard articulated specifically regarding the recent spate, but nonetheless is a subject we have discussed many times in the past - and that is a lack of succession. One dealer wrote to me saying, "I have been keeping my own record of local dealership closures in the last few years and I’m currently up to a count of fifteen. To the best of my knowledge, all bar one of those closures was not directly related to lack of finance. Most were the owners having got to retirement age with nobody to take over the business."

Another opinion shared, was that some blame must be placed on the manufacturers for dumping dealerships with stock. They need to shoulder some responsibility for what has been happening we were told. This dealer also posed the question are other independent retailers in separate industries to ours, struggling in a similar fashion this year? And if not, what is it that's unique about this sector and why aren't our trade associations pressing government to do something about it? Big questions that require some further investigation.

So whilst we have learnt some positive news this week with a dealership saved from the brink, we must be mindful that there are always potential pitfalls. We will continue to monitor the situation as we progress throughout the season and, as ever, we will be thankful to have such a fantastic readership that we can rely upon to share with us their thoughts and opinions.

So please do continue to keep us up-to-date with happenings at your place of business and in your communities, whilst letting us know what you think about wider industry topics. It is always much appreciated.