London Daily

Focus on the big picture.
Friday, Mar 06, 2026

Why car dealers may face a bumpy road ahead

Why car dealers may face a bumpy road ahead

Why do so many of us think we can successfully haggle over the price of a new car with a professional salesman?

After all, it's not like they do it for a living, or are trained, or have decades of experience, is it?

But things are changing on the forecourt. UK car dealerships, currently still mostly independently owned franchises, are facing a number of threats.

The coronavirus pandemic was the driving force behind an already existing trend that is now rapidly changing the car industry.

Instead of visiting one of the 4,500 car showrooms across the UK, or even several, test driving the vehicle, then picking a car and haggling with the sales team, customers are increasingly trying something new.

These days people are far more likely to search online for the car they want, picking two or three to look at. They then only visit the showroom to make their final choice and, perhaps, try to get some discount on the price advertised online.


The car industry has embraced the internet, but most of us still currently also visit a physical showroom

"If anything the pandemic accelerated this," says Christian Stadler, professor of strategy at Warwick Business School. "It is a light, easy way into the online world for customers.

"You find your vehicle on the website of the big car company, you trust its brand, but you still get it delivered through some local sales point, you can meet someone when you get the car."

However, Sue Robinson, chief executive of the National Franchised Dealers Association, begs to differ. She points out that "people still like to go to the showroom, and on average make 3.1 trips there before buying a new car".

But the number of visits to showrooms before purchasing a car is falling. People shop around online far more and are, therefore, far less influenced by the sales staff.

This new hybrid model of buying, where you first look online and then go to a showroom, is increasingly popular. It was exactly how I bought my new car last year.

My wife and I researched what type of car we wanted, picked out the perfect model, and then searched for the second-hand example that we could afford that was on sale near us, and we did all that online. Only then did we visit a showroom, check out the car, go for a test drive and make a decision to take the vehicle home with us.
Car dealerships in the UK are currently mostly independently owned franchises


We could have gone further, because 10% of UK sales are now said to be completed totally online, with the buyer not seeing the car until it is delivered to his or her doorstep.

These sales are lost to the car showroom owners, and this new buying method is here to stay.

So too is the move towards electric vehicles. Purely electric and plug-in hybrids now make up 20% of all new cars, and that proportion can only increase in the coming years.

Not only has the massive hike in fuel prices encouraged this trend, but new petrol and diesel car sales will be banned in the UK by 2030. That means dealerships will have to spend money retraining their staff to repair and maintain electric and hybrid vehicles.

And since electric vehicles have far fewer moving parts it should mean they need less servicing.

This too may pose a threat to the traditional car dealership, says Professor Stadler. "If servicing is less of an issue then the relationship with the dealership may become less important.

"There could be more of a separation between dealer and servicing. Now we buy a car and get it serviced and repaired at the same place. That might separate in future."

But Robert Forrester is not that convinced by that argument. He is chief executive of Vertu Motors, which has 160 dealerships selling cars for BMW, Audi, Nissan, Ford and several others. It has 4% of the new car market in the UK and employs 6,500 people.

Robert Forrester is confident that dealerships are here to stay


As he points out, the cars of today might need less servicing but they can no longer be serviced at home. "The only people who will be able to repair and fix cars going forward will be the franchise dealer, who has the expertise to do it," he says.

Whoever is right, the move towards servicing electric vehicles will be a game changer for the industry. The need to retrain staff will accelerate and dealers who don't invest in the latest technology will lose out.

The independent dealerships are also coming under pressure from some of the car manufacturers deciding to do away with such franchises, and instead open their own company-owned and runshowrooms.

Tesla, which has the advantage of being a new entrant into the market, has adopted this direct-selling model from the very start.

Tesla has always directly owned its showrooms


Two other carmakers are now also opening directly owned showrooms - Audi and DS. And others, including VW, Audi and Mercedes, are rumoured to be thinking about following suit.

Franchise owners have in the past made about 7% profit on every car they sold, but the car firms are said to now think that is too generous, and want some of that money back.

"There are some carmakers who are a long way along [the journey to owning their own dealerships], and others are waiting to see whether it works," says Ms Robinson.

Although taking over the dealerships means taking on the costs of property, staff and promotion, the carmakers get to sell their product at a set price of their choosing.They won't have to offer discounts to dealers to shift stock, and it gives them other advantages as well.

"It gives you more data, and if you have your hands directly on the sales you get a better sense of what the customers are doing," says Prof Stadler.

In coming years that data will become increasingly important as the way people own cars is likely to change.

In the future cars may be regarded more as "mobility solutions", something to hire for limited periods, rather than something to buy. This would give you, for example, the chance to swap your city runaround for a bigger car during the holidays, or take out a convertible for the weekend.

There could be car clubs, or paying by the hour or mile. All of that becomes far easier if the car companies have your data and can use it to fashion a deal that works for you, and them of course.

At Vertu Motors Robert Forrester is not worried, however. He says the car manufacturers will still need salesrooms and sales people, but they will be paid a flat rate by the carmaker rather than trying to make a profit on every car sale.

He adds the only difference customers will notice is that "the invoice will come from the manufacturer not the retailer".

But it could well mean less room to haggle, and less competition between showrooms selling the same brand and model. Haggle while you can, it may not be an option for much longer.

Newsletter

Related Articles

0:00
0:00
Close
Starmer Defends UK Role in Iran Conflict After Renewed Criticism from President Trump
Blue Owl Reveals £36 Million Exposure After Collapse of UK Lender Serving Wealthy Clients
UK Asylum Reform Plan Triggers Fierce Debate Over Border Control and Humanitarian Impact
US Stealth Bombers Head to UK Base as Trump Issues Stark Warning to Iran
UK Deputy Prime Minister Says Legal Case Could Exist for British Strikes on Iranian Missile Sites
Investigators Link Mysterious Parcel Fires Across Europe to Russian Intelligence Operation
Debate Intensifies Over Britain’s Legal Justification for US Military Operations Launched From UK Bases
Britain Faces Heightened Energy Price Risks as Iran-Linked Tensions Threaten Global Oil and Gas Supplies
British Counter-Terror Police Arrest Four Suspected of Spying on Jewish Community for Iran
Axel Springer Agrees $770 Million Deal to Acquire Britain’s Daily Telegraph
Iceland Supermarket Drops Trademark Challenge Against Icelandic Government in Long-Running Naming Dispute
UK Defence Secretary Visits Cyprus Following Scrutiny of Britain’s Response to Drone Attacks
Questions Grow Over Britain’s Military Readiness as Response to Iran Conflict Draws Scrutiny
UK Offers Failed Asylum Seeker Families Up to Forty Thousand Pounds to Leave Voluntarily
Saharan Dust Could Bring ‘Blood Rain’ to Parts of the UK as Weather Systems Shift
UK Deploys Additional Typhoon Fighter Jets to Qatar and Helicopters to Cyprus Amid Rising Middle East Tensions
Experts Urge Britain to Accelerate Renewable Energy Push as Global Conflicts Drive Up Costs
British Public Shows Strong Reluctance to Join Wider War in Iran
First UK Evacuation Flight Departs Middle East After Lengthy Delay
United Kingdom Imposes New Visa Requirements on Travelers from St. Lucia and Nicaragua
Iran Conflict Strains U.S.–U.K. Alliance as Trump and Starmer Clash Over Military Strategy
UK Interest Rates Could Rise Above Four Percent Again if Energy Shock Continues, Think Tank Warns
Starmer Defends Britain’s Iran Strategy as Badenoch Urges Stronger Military Support
Labour MP Says She Saw No Sign Husband Broke Law After Arrest in China Espionage Investigation
UK Jobless Rate Overtakes Italy’s for First Time in Years as Labour Market Weakens
United Kingdom Suspends Student Visas for Four Countries in Unprecedented Immigration Move
Campaigners Warn UK Student Visa Ban Could Push Migrants Toward Dangerous Channel Crossings
First U.K. Charter Flight for Stranded Nationals Set to Depart Oman Amid Middle East Crisis
France and United Kingdom Deploy Warships to Eastern Mediterranean as Middle East Conflict Escalates
U.K. Arrests Three Men Including Lawmaker’s Partner in Suspected China Espionage Investigation
Trump Says UK–US ‘Special Relationship’ Is Diminished Amid Middle East Dispute
UK Economic Forecasts Face Fresh Strain from Middle East Conflict and Rising Energy Costs
UK Reaffirms Close US Ties After Trump’s Public Criticism
Reeves Stresses Stability and Fiscal Discipline in UK Budget Update as Growth Outlook Shifts
UK Deploys Royal Navy Destroyer HMS Dragon to Cyprus After Drone Strike on RAF Base
Green Party Surges Past Labour in New UK Poll as Traditional Party Support Crumbles
Majority of Britons Oppose U.S. Use of UK Military Bases in Iran Conflict
UK Intensifies Evacuation Efforts from Oman, Working with Airlines to Boost Flight Capacity
Trump Condemns UK and Spain in Unusually Sharp Rift Over Iran Military Action
Trump Repeats UK Claims That Diverge from Verified Facts Amid Diplomatic Strain
UK Arrests Prominent Figures Linked to Epstein Network as Questions Mount Over US Action
Trump Says UK ‘Took Far Too Long’ to Approve Use of Airbases for Iran Strikes
Scope of Britain’s Role in the Expanding Middle East Conflict Comes Under Scrutiny
Trump Says He Is ‘Very Disappointed’ in Starmer Over Iran Comments
U.S. Embassy in Riyadh Struck by Drones Amid Escalating Iran Conflict
Starmer Confronts Strategic Test After Drone Strike Near British Base in Cyprus
Rolls-Royce Chief Signals Openness to Germany Joining UK-Led Fighter Jet Programme
UK Stocks Slip as Escalating Iran Conflict Triggers Global Market Selloff
UK Overhauls Asylum System to Make Refugee Status Temporary
Starmer Warns of ‘Reckless’ Iranian Strikes Amid Escalating Regional Tensions
×