VACC CEO Geoff Gwilym said there were “extraordinary pressures” on dealers, including industry changes to finance and insurance (F&I) rules, the increasing demand for cyber (pre-registered) cars and leaner profit margins.
“You can get quite sad about the outlook,” he told GoAutoNews Premium.
“The situation with the dealers at the moment is that the environment is under huge pressure and it will change under that pressure.
“I don’t think the current situation can continue with these lean (profit) margins and the pressure on making cars cheaper.
It is not only sales and service. Mr Gwilym said body repair has pressure from insurers “and that’s not going away”.
“That aside, you have a position where there are less accidents and these will continue to decline as cars come with more equipment to prevent collisions and speed limits fall,” he said.
Mr Gwilym said that he believed there would still be a variety of body repairers servicing the industry because the major insurers would want competition between repairers to remain.
He said that the insurance industry would not want a completely consolidated repair market because they would “not want repairers telling them want to do”.
Meanwhile, Mr Gwilym remained confident that some sectors of the industry would ride out any pessimism.
“I think the humble mechanic has a huge future,” he said.
“Consumers want – and will always want – cheap repairs for their car. Once a car is out of its warranty period then consumers will go back to a smaller mechanical repair business.
“It won’t matter if this is for a conventional car or an electric vehicles – I have a hunch that the humble mechanic who can fix your car in a couple of hours and get you back on the road and is located just around the corner will be a winner.
“It parallels the small computer repairer. No-one takes their computer to IBM, for example, for repair.”
By Neil Dowling
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