The automotive industry took a significant hit through both 2020 and 2021, as the number of cars rolling off UK production lines fell to their lowest level in approximately 70 years.

This was caused by widespread supply chain issues and global shortages of semiconductors, while new car sales have continued to decline throughout the UK into 2022 (despite the relative growth of online sellers and trading platforms like Auto Trader).  

Such economic issues are also compounding the legal challenges facing car dealerships on these shores. But what are the top legal challenges in this space and how can dealers overcome them?

#1. Quality Control

Used car dealerships have also struggled in recent times, with the cost of the average second-hand car having increased markedly against the backdrop of rising demand. 

Interestingly, this type of dealer also has to deal with issues of quality control, as they look to guarantee the roadworthiness of second-hand vehicles and ensure that they’re marketed accurately.

Similarly, dealers are required to inform buyers of even minor material or structural defects pertaining to specific cars, as nondisclosure can put dealers at the mercy of future lawsuits and incredibly damaging press. 

Of course, many dealers will refuse to accept damaged used cars onto their lots, which is an excellent way of maintaining quality control. However, the key is that you have a viable strategy for maintaining quality control at all times, whatever it may be.

#2. Vehicle Accidents and Compensation Suits

Of course, even the best strategies and quality control practices are fallible, and vehicles that display faults and experience accidents immediately after being sold may lead to the dealer facing lawsuits.

In this case, dealers have the option of settling out of court or pursuing the case, depending on the precise circumstances and their level of liability.

Regardless, it’s important to ensure that that the business is protected by a relevant and bespoke motor trade insurance policy.

This can cover the cost of legal representation or compensation payouts, while providing much needed protection for vehicles, staff and even the long-term integrity of the business as a whole.

#3. The Rising Demand for Used Cars

If you’re a new car dealership, you may also be struggling at present with the falling supply and demand for new cars.

As we’ve already touched on, this not only creates challenges in terms of revenue and profitability, but it also makes it hard for such dealerships to transition and incorporate used vehicles into their model.

Being able to diversify and sell high-quality used could be vital for new dealers, who’ll need to tailor their insurance and pricing to protect themselves from potential claims.

Similarly, they’ll need to ensure that they market and describe their vehicles accurately and in a way that’s compliant with UK law.


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