MHA Automotive Sector Forum: Shaping a Challenging Future for UK Dealers
Steve Freeman · Posted on: June 5th 2025 · read
On 8 May 2025, Steve Freeman and our specialist MHA Automotive sector team including Rob Dando, Andrew Feeke, Nathan Sutcliffe, Kamran Bagol, Glyn Edwards and Andrew Thurston hosted the MHA Automotive Sector Forum, a gathering of automotive retail leaders focused on tackling the sector’s most pressing challenges and identifying strategies for sustainable growth. Centred on the shifting dynamics of automotive retail and how businesses can respond effectively, the event combined expert analysis with practical guidance, delivering a roadmap for dealers to act decisively now for a brighter tomorrow.
"It was a privilege to open and host this year’s Automotive Forum, which brought together a powerful mix of insight, expertise, and forward-thinking discussion. Right now, the automotive retail market is facing intense pressure from shifting consumer behaviour, electric vehicle and fiscal policy uncertainty, and rising operational costs. Businesses need to be both informed and agile to make the right decisions. What stood out to me was the openness of industry leaders to tackle these issues head-on. The conversations sparked during the forum gave real direction — not just theory, but practical ideas that can drive progress and resilience in the sector."
The day began with Steve offering a clear overview of the market. He highlighted a 6% rise in vehicle registrations in Q1 2025, although the subsequent 10% reduction in April and forecast for the full-year means volumes are expected to only slightly increase to a level of around 2 million. Fleet sales have been accounting for up to 60% of the market, while private retail demand for electric vehicles remains weak. This has impacted the level of discounts in the market and pre-registration all of which put pressure on dealers new car margins. Battery electric vehicle (BEV) registrations rose by 43% in Q1 and 8% in April, but their current 20% market share still falls short of the government’s 28% target, mainly due to affordability challenges.
Freeman also noted the rise of new Chinese entrants like BYD, Omoda and Jaecoo, which have secured 3% of the market within 18 months of their launch by focusing on technology and warranty benefits and their relative pricing advantage over traditional brands. He added that the 2 million UK market volume is now represented by over 70 brands compared with the 45 brands operating in the pre-Covid market of 2.3 million cars. Supply of available product less than £30k is critical and this is impacting which brands are performing well.
He pointed to growth in used car sales, with a 6% increase in March indicating ongoing profit potential, despite a shrinking pool of less than 5 year old vehicles registered since 2019. Aftersales teams face continued pressure from technician shortages, but creative recruitment approaches are starting to offer solutions. Finance and insurance remain profitable, especially for businesses that stay compliant. However, rising overheads linked to inflation, Brexit and tax increases are forcing many businesses to look for cost savings in staffing, property and technology.
Matt Schofield from AutoTrader encouraged a more balanced approach to used car profitability. Drawing on over 2.5 million data points, he argued that dealers should focus on both volume and margin. He advised measuring profit per salesperson per unit and warned that high-volume sales can reduce overall profitability. Tools like Retail Rating and Deal Builder are helping dealers save time, respond to customer demand and generate higher returns.
Steve Young from ICDP added an international view, urging dealers to expand income through used cars, aftersales and subscription services. He also emphasised the importance of promoting EVs, even in the face of consumer hesitation. Young said digital tools can lead to better customer experience and more efficient decision-making, and that long-term partnerships with sustainable manufacturers will be key to future success.
M&A and property trends were addressed by Rob Dando and Andy Feeke from MHA Corporate Finance , along with Bill Bexson and Bobby Barfoot from Savills. They discussed how large dealer groups and overseas investors are reshaping the market. Falling profitability is affecting valuations but demand is still high for quality groups with attractive brands, so preparation with strong financials and efficient operations is essential. Dando emphasised the benefits of a dealership group, whether they are considering an exit/succession plan or not in the near to medium term, to be well prepared, particularly from a financial, tax, operational and legal perspective. This preparedness would pay dividends in the future, both in terms of value and process efficiency
Savills recent thought leadership has predicted up to 1,200 dealership closures by 2034, with many sites likely to be repurposed for EV charging or retail. Despite global uncertainty, dealership properties continue to perform well, much like industrial assets. Challenges around EV charging infrastructure remain, with 82% rating the UK’s network as poor, but freehold ownership and alternative site uses still offer strategic benefits.
Tax and tariff changes were covered by Nathan Sutcliffe, Andrew Thurston, Glyn Edwards and Kamran Bagol from MHA, and Harvey Perkins and David Chandler from HRUX. They highlighted:
- The inheritance tax changes coming in 2026 could ultimately result in significant extra tax costs for family-owned motor retail groups. Retailers were advised to plan ahead and review the options available to reduce the costs.
- The Government’s stated aim to outlaw contrived ECOS schemes presents a major challenge to OEM’s and Dealers and highlights the importance of solutions like EV Salary Sacrifice schemes to support vehicle volumes. HRUX presented its CarReward platform, a salary sacrifice scheme that offers a tax-efficient way for employers to support EV uptake while boosting employee benefits and sales.
- New VAT challenges are also being experienced by dealers as OEM’s introduce new discounts arrangements and potential VAT optimisation challenges.
- They also discussed how potential US tariffs and future trade deals could impact the flow of EVs and parts into the UK.
Richard Coates from Freeths closed the day by addressing the £40 billion in secret commission claims. He said many consumer claims could fail following the upcoming Supreme Court ruling, but advised dealers to be proactive by ensuring transparency around finance commissions to avoid legal risks.
Despite the current pressures around EV adoption, rising costs and regulatory change, the forum showed a sector full of dynamism and entrepreneurial spirit. With the right insights, partnerships and strategic thinking, UK automotive retailers can build stronger, more resilient businesses for the future.
Top Tips for Dealers
- Broaden income streams Expand used cars and aftersales to counter new car margin and profitability challenges. Consider which new and legacy brands to back and invest in.
- Harness technology to focus on profit Use AutoTrader’s Retail Rating for used car pricing and HRUX’s CarReward for EV salary sacrifice to boost efficiency and compliance. Prioritise profit per unit to maintain used car margins.
- M&A Consider strategic options early and be ready for changes in the market potentially impacting plans to expand or contract.
- Boost property portfolio Consider strategy for under-utilised or sub-scale sites, optimise property fundings options and consider dual franchising potential or retail repurposing for strategic gains.
- Act early on increased IHT exposures Transfer shares or set up trusts before April 2026 to reduce tax burdens.
- Track trade shifts Prepare for tariff-driven supply chain changes.
- ECOS Consider opportunity to switch ECOS arrangements to EV Salary Sacrifice ahead of the upcoming HMRC law changes.
- Optimise FCA compliance processes and resultant profit opportunity Disclose finance commissions fully to mitigate risks before the Supreme Court ruling.
