Article Type: Insight

What is in store for Europe’s car dealers?

The dealer sector in Europe has undergone the most substantial changes over the past 10 years, with the number of dealer outlets falling by 16% to 52,000 across Europe. Autovista Group chief economist Dr Christof Engelskirchen explores the challenges facing the sector.

Consolidation started well before 2009, driven mostly by margin pressures, and looks set to continue: digitisation and OEMs wanting to take more control in the sales process will serve as catalysts to this trend. Is this bad news for the sector? No, it is not.

In search of economies of scale, we see a trend of strong investment activities in the dealer sector. For example, in the UK Anders Hedin Invest has bought an 11.6% stake in Pendragon, the country’s biggest dealer group and Europe’s fourth-largest. US company Penske is now Europe’s second-largest dealer group, primarily because of its UK investment. The top 50 dealer groups in the country captured 42% of new-car sales in 2018, compared with only 27% in 2008. On average, UK dealers sell around 600 cars per year. Europe’s average is 331. More consolidation is highly likely. The Swiss dealer group Emil Frey, which is Europe’s biggest dealer group, has dominated consolidation.

New-car sales: agency model and margin pressure

New-car sales operations were already the least profitable activity for dealers, far behind aftermarket and used-car sales. Margin pressure will continue in this area. The dealer role in new-car sales will change, and as a result of more units selling online, OEMs seeking more direct customer interaction and the continuing trend to more leasing or personal contract purchase (PCP). New players will enter the market with new business models like car subscriptions. Car sharing, while economically challenged, will likely see a recovery as well.

An agency model for dealers adopting a consultative approach to selling is a likely future activity in the new-car sector. It will also be required, because a friction-less online and offline experience (some call it omnichannel) is an attractive future for car seekers. The process of vehicle purchase will move between the online and offline worlds, as customers seek information, personal contact,  and test drives. However, it should not matter where the final deal is done.

Megatrends bridge profitability gap

There are new opportunities for dealers linked to automotive megatrends, that can close a large portion of the profitability gap:

  • New business models, like maintaining and operating car-sharing fleets, or installing and running battery-charging stations;
  • Streamlining processes and services sales operations – consolidation and economies of scale play a role as well;
  • Strengthening the customer experience by employing big data analysis, addressing individual customer needs and offering new loyalty and incentive models;
  • OEMs understanding the importance of a strong and accessible network of car dealers. Staff at dealerships will become increasingly salaried, rather than on commission, to encourage consultative selling rather than hard-selling; and
  • The sale of a vehicle will happen in an ‘omnichannel’ environment, where dealers will help customers configure their vehicles, arrange test drives, deliver vehicles and provide services. For example, linking electric-vehicle (EV) ownership to car-sharing options, such as for holidays, will present revenue-generation opportunities.

Rising number of used-car transactions

Behind aftermarket, used-car operations are already the second biggest contributor to a dealer’s profitability. Used-car operations will continue to remain a most important pillar of dealer success. The good news is that while new-car sales might have peaked in Europe, the number of used-car transactions will rise. The main drivers are the growing trend of vehicle leasing and car subscriptions. These business models create more used cars than regular car buying, as holding periods are shorter. For alternative powertrains, leasing is particularly dominant as private buyers are less willing to take on the associated higher asset risks. Moreover, OEMs have started to encourage leasing as it keeps the customer close.

Autovista Group foresees that the number of young used cars will rise over the next decade, a much-needed boost for the dealer sector. These transactions will increase from 7.8 million transactions in Europe in 2019, to 12.1 million transactions in 2030, an increase of 55%.

Figure 1: Used-car transactions Europe + UK 2019-2030, by age group, incl. UK, in million units

Used-car transactions Europe

(Source: IHS, ACEA, Autovista Group simulation)

Consolidation professionalises dealers

Dealer groups are aware of the growing number of used cars and have adopted a strategy that reflects this. For example, Penske Automotive Group Inc. is bullish on its standalone used-vehicle store strategy and sold almost twice as many retail used cars than retail new cars in Europe. The company announced that Q3 2020 was the most profitable quarter in its history. It has 16 standalone used-vehicle ‘supercenters’ in the US and the UK, which saw a rise in revenues of 8%. Expense reduction also contributed to the success.

In Germany, the number of franchised dealerships reduced from roughly 17,500 in 2013 to some 15,000 in 2018. At the same time, the used-car revenue per dealer rose from approximately €1,800,000 to €3,750,000 (Figure 2). The value generated therefore rose from €31.5 billion to €56.3 billion.

Figure 2: Number of franchised dealers vs. used-car revenue per dealer in €, 2013-2019

Number of franchised dealers vs. used-car revenue per dealer in €, 2013-2019 graph

(Source: Association of German Car Dealers, Schwacke Analysis)

New opportunities

New business opportunities around the automotive megatrends, a different role in new-car sales and professionalised used-car operations represent great opportunities for dealers and dealer groups. Economies of scale will be more important than ever before. It will also be important to make the right investment decisions during these challenging times. The smallest change will likely be a new name for the old-fashioned term ‘dealer,’ which many associated with the outdated concept of haggling. There are plenty of options to choose from, e.g. retail specialists, sales agents, sales consultants or service factory. It will be exciting  to see how the sector will evolve over the coming years.

Video: Emissions anxiety for carmakers

Autovista Group Daily Brief editor Phil Curry explains why some carmakers are concerned about rising CO2 levels, and how the industry has got to this point with a strict European target in place…

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including autonomous vehicles, new-car registrations, safety systems, and electrification.

How is electromobility changing fleets?

The automotive industry has been dominated by a few specific topics in the last year; from coronavirus (COVID-19) to electromobility and the advance of new technologies. But how have these subjects impacted one of the industry’s most important sectors? In a new series, Autovista Group’s Daily Brief journalist, Tom Geggus, speaks with industry insiders to discover how these themes are changing fleets. In this second instalment: electromobility.

While COVID-19’s impact on the automotive industry has been sharp and sudden, the effect of environmental concerns can be considered tectonic. But now the two phenomena are driving change in tandem, with COVID-19 acting as a catalyst for a shift to greener mobility. Pandemic recovery plans and environmental regulations are leading automotive companies and consumers down the road of electrification. Leaders of the European Automobile Manufacturers’ Association (ACEA) recently called for pandemic recovery funds to be channelled into a green comeback.

Analysis conducted by Transport and Environment (T&E) revealed that electric cars will treble their market share in Europe in 2020, with most carmakers on track to meet their EU emissions targets. The environmental lobbying group also pointed to company cars as the ‘low-hanging fruit’ of electrification. T&E claim the segment could be utilised to achieve national climate goals, given that six out of 10 cars sold in Europe are company cars, and that last year 96% of new registrations belonging to the sector were petrol or diesel. So how are fleets adapting to electrification in the wake of COVID-19?

PHEVs meet policy

Management consulting company let it fleet sees the high life cycle cost of vehicles and increasing congestion in cities as cars are chosen over public transport, alongside the desire and need to be environmentally friendly, as leading people to alternative modes of transportation. This means a fundamental role change for fleet managers.

On top of looking after company vehicles, fleet managers will now oversee a wider variety of transport options, not to mention learning about new mobility technologies. As travel needs change with new working practices, combined with the influence of environmental consciousness, flexible approaches to mobility and policy will be essential. Plug-in hybrid electric vehicles (PHEVs) are one key example, as government incentives, OEM supply and emissions regulations drive adoption.

‘Maybe the leasing will be over five to six years into the future because you will be driving less,’ said Alain Duez, co-founder of let it fleet. ‘It could also be that you will have more hybrid cars because driving less means that it will be more in favour of the hybrids tomorrow.’

wim-buzzi headshot co-founder let it fleet
Wim Buzzi, co-founder, let it fleet

‘If we look at what the market is offering, you cannot do without the plug-in hybrid, because there is not enough offering yet,’ explained Wim Buzzi, co-founder of let it fleet. ‘It is a good technology. But if you’re going to allow your people to drive plug-in hybrids without recharging them, then you have a crucial error in your policy.’

This opens up the potential for the creation of specific strategies to deal with how these vehicles are used, in line with day-to-day operations. For example, over-reliance on the internal combustion engine (ICE) could render a PHEV’s electric capacities pointless if not properly utilised, making its green credentials effectively null and void. Companies could lay out comprehensive policies for when, where and how to recharge, all dictated by how the car is driven. Equally. the employee could simply submit their fuel bill, so long as it reflects responsible use.

This also lays the road for onboard technologies, like telematics and smartphone applications, all allowing fleet managers to determine employee travel patterns. Accompanied by open communication and transparency, this would help assess the potential options for reducing costs and emissions without affecting efficiency or productivity. However, while driver behaviour might change as well as powertrain technology, the basic need for mobility will not.

‘Maybe in 10 years’ time, people will not have a dedicated company car parked in their car park every day, and they will have a subscription model. But they will always need the car,’ said Buzzi. ‘So, in whatever form, that car will always be included.’

Online trends drive on-road vehicles

Fleet Electromobility quote 2

COVID-19 also resulted in a surge of online shopping, with 52% of consumers buying more online from domestic retailers and 49% stating they will do so more in the future. But as concerns over the environmental impact of these trends grow, logistics companies are having to double-down on green initiatives.

Deutsche Post DHL (DPDHL) recently announced it is further committing to reducing emissions, in line with its GoGreen programme. By 2050, DPDHL aims to reduce all logistics-related emissions to zero. EVs currently make up 15% of DPDHL’s fleets, an increase of 10% over the last three years. In its 2019 Sustainability Report, the logistics company revealed that it uses over 13,000 vehicles with alternative drive systems, including more than 11,600 EVs.

‘In terms of e-mobility, especially in terms of electrification of our delivery fleet, I believe that we are really one of the leaders in the global market, and we are very proud of that position,’ said Nancy Cui, vice president for global car and van procurement at DPDHL. ‘I think that the percentage of our electric van fleet is, in comparison to the rest of the market, very high, especially in the LCV segment.’ However, integrating EVs into a demanding delivery role did initially invoke some range anxiety.  

‘With the introduction of these electric vans in domestic parcel and letter services, we saw at the very beginning some kind of range anxiety of the couriers,’ explained Lars Pappe, Vice President of eMobility design and development at DPDHL. ‘But pretty soon the drivers found out they have an average route length of only 25 to 40 kilometres a day, while the battery capacity of these vehicles exceeds this by far. So even in wintertime, there is enough battery capacity left to return to the depot.’ This realisation, coupled with proper route planning and staff training packages, helped reduce driver range anxiety to a minimum.

Alongside its delivery vehicle subsidiary, StreetScooter, DPDHL also has a strong focus on infrastructure. ‘DPDHL Group has installed more than 15,000 charging points throughout Germany in our depots and electrified roughly 13,000 of our delivery routes here,’ said Pappe.

Presently, the logistics company is tasking a dedicated team with assessing DPDHL sites around the world, working out the electrification needs in terms of infrastructure and energy supply.

Going carbon negative

Microsoft began a PHEV project in Germany roughly three years ago, before the implementation of green incentive schemes. The team discovered the powertrain could be a useful tool when tackling fleet emission targets. However, the PHEVs had to make optimum use of their electric capacities, which meant charging them as often as possible, and not over-using the ICE.

This push to make the most of different environmentally-friendly technologies will be essential for Microsoft as it looks to meet its own green targets. At the start of this year, the computing giant announced it will become carbon negative by 2030, and, by 2050, will have removed all of the environmental carbon it has emitted, either directly or by electrical consumption, since it was founded in 1975.

To combat this, Microsoft is working on a number of measures. It is forming new strategic alliances with existing partners like Shell, to secure supplies of renewable energy. It is extending its internal carbon tax to tackle indirect emissions, as well as electrify its global campus operations vehicle fleet by 2030. How the company goes about acquiring vehicles like these for its fleets involves a rigorous procurement process.

‘We work with a selected number of OEMs,’ explained Michael Pohl, senior procurement engagement manager fleet at Microsoft. ‘We tender them every three to four years, which we just did last year, and now the result is a new setup. With those OEMs, we work closely on our strategy, on discounts, on bonuses, and on agreements.’

‘Some OEMs do offer discounts for electric vehicles, but this is not common, and they are not in the same league as the discounts on standard drivetrains. Of course, every OEM is keen for us to purchase as many electrified cars as possible, because it will help them with their CO2 emissions and potential penalties they have to pay to the EU, but they cannot necessarily deliver the number of cars we would need in a given or required timeframe.’

Essential infrastructure

Fleet Electromobility quote 1

As EV demand builds momentum, OEMs must boost manufacturing processes to keep pace while suppliers incentivise sales. These measures will have to go into overdrive as consumers and fleet managers alike begin to see the long-term benefit of electromobility. One of these benefits is the overall cost of owning an EV.

At the end of September, LeasePlan released its annual Car Cost Index, which reveals the true cost of owning a car, including fuel, depreciation, taxes, insurance and maintenance. EVs in the compact and mid-size segment are fully cost-competitive compared to ICE-powered vehicles in countries including France, Germany, and the UK. Autovista Group analysis also reveals that B-segment and C-segment BEVs are competitive compared to petrol models, albeit only because of government incentives.

‘The good news is that the costs of EVs are coming down and we are seeing the development of a strong second-hand market for quality used EVs,’ said Tex Gunning, CEO of LeasePlan. ‘The bad news is that governments are failing to provide the charging infrastructure necessary to satisfy market demand.’

In a recent blog post, Mathijs van der Goot, global lead on EVs for LeasePlan said, ‘it is essential to ensure that the charging infrastructure is aligned with the flourishing e-mobility market.’ There are currently more than 195,000 public charging in Europe, a rise of over 300% since 2014. But this falls a long way short of how many the industry needs. Last year, LeasePlan called for one million charging stations by 2025 and the European Commission estimates 2.8 million will be required by 2030.

A report filed by Technology intelligence company IDTechEX in September outlines the unique demands fleets could have on EV infrastructure. ‘Although electric fleet charging represents roughly 3% of the total charging infrastructure in volume, it constitutes over 20% of the total market value due to the added cost associated with the high-power requirements,’ the report states.

So, the need for improved charging infrastructure to support fleet electrification is vital, even as EVs become more affordably priced. If fleet managers are going to adopt these vehicles on a wide scale, charging anxiety will need to be tackled alongside shrinking price tags. Subsidies and governmental schemes will help tackle this challenge, but the advancement of charging technology will also play its part. But will this be the only big tech change coming to fleets within the next few years?

Want to know how COVID-19 has impacted fleets? Catch up with the series by reading the first instalment here.

Podcast: Tracking automotive markets, recalls and emissions

In its latest podcast, the Autovista Group Daily Brief team discusses the new Monthly Market Dashboard, plug-in hybrid (PHEV) recalls and manufacturer emissions targets…Autovista Group · Tracking automotive markets, recalls and emissions

https://soundcloud.com/autovistagroup/mmd-recalls-and-emissions

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Click here to access our Brexit survey, and tell us how the negotiation uncertainty and the UK leaving the EU is impacting your business and industry.

Monthly Market Dashboard: RVs rise across Europe, but for how long?

In the first of a new monthly initiative, Autovista Group has created a dashboard showcasing the latest data on residual values, average selling days, the fastest-selling used cars and the residual value outlook in France, Germany, Italy, Spain and the UK. Senior data journalist Neil King discusses the findings.

Autovista Group’s new monthly market dashboard (MMD) reveals that the average residual value (RV) of cars aged 36 months and with 60,000km grew year on year in all the Big 5 European markets in October. Even RV retention, represented as RV%, grew year on year in all markets except Germany. The highest growth in RV% terms was in the UK, where the average RV% was 48%, equating to a 1.9% improvement on September and a healthy 14.9% change compared to October 2019.

Monthly market dashboard October 2020

As reported in our coverage of the ‘three-speed’ development of RVs across Europe, the UK is enjoying the release of pent-up demand, both from the coronavirus (COVID-19) lockdown and the uncertainty running up to the country’s departure from the European Union on 31 January. The country also faces a starker vehicle-supply challenge than any other market, which is filtering through to higher RVs as used-car demand outstrips supply.

Quicker rehoming

In addition to the growth in RVs in most markets during October, three-year-old cars are also selling quicker than a year ago in all the major European markets, except Spain. Three-year-old cars are selling the quickest in the UK, moving on after an average of just 33 days. However, the greatest reduction in the average number of days for 36-month-old cars to sell, compared to October 2019, was in France. These vehicles now have to wait on average only 37 days to find a new buyer in France, sitting idle for a significant 23% fewer days than in October 2019.

The fastest-selling model in France in October 2020 was the Peugeot 208, which took just 17 days to find a new home. After the Peugeot 208 in France, the fastest-selling models across the major European markets were in the UK. The Range Rover Evoque and the Mercedes-Benz GLC also took less than 20 days to be rehomed in October.

The future’s not so bright

The new MMD also features the latest Autovista Group RV outlook for the major European markets. The current trend for rising RVs is unfortunately not forecast to continue in 2021. Autovista Group predicts that at year-end 2021, compared to year-end 2020, RVs of cars in the 36 month/60,000km scenario will be lower in France, Italy, and the UK and merely stable in Spain. The weakest outlook is for Italy, where RVs are currently forecast to be 3.9% lower by the end of 2021 than at the beginning of the year. RVs are only expected to be higher in Germany, albeit with year-on-year growth of only 0.4% forecast for both 2021 and 2022.

Click here or on the screenshot above to view the monthly market dashboard for October 2020.

Brexit survey: have your say

There are only 70 days until the UK’s Brexit transition period with the European Union (EU) comes to an end. Currently, there is still no certainty on future trading relationships, or how the UK setting its own regulations will affect businesses and technology developments in the coming years.

Autovista Group wants your views on Brexit, from the impact a ‘no-deal’ would have on the automotive industry in both Europe and the UK, to your opinions on how the two parties have managed the process.

Click here to access our Brexit survey, and tell us how the negotiation uncertainty and the UK leaving the EU is impacting your business and industry.

Modern classics soaring in desirability

Classic car ownership has never been so popular. Many collectors aspire to own popular models like Jaguar’s enigmatic E-Type Lightweight or Ford’s Capri. Whilst gaining ownership of the Capri might at least be possible for some, with price tags starting around £1,000,000, the very special E-Type is out of reach for those on a budget. Even standard E-Type’s have asking prices starting around £50,000, with some currently advertised at more than double that level. Due to COVID-19, there is the potential that an increased volume of classic cars will rotate back into the marketplace, as the economy bites and unemployment rises.

As we look ahead and consider the classic cars of the future, it is worth considering some of the elements that make them appealing in the first place. It helps if they are a good-looking car, and a sporting pedigree often enhances appeal and value. However, possibly more important is that people have an emotional connection with the model. Today, it is increasingly apparent that a special reminder of one’s youth is highly prized.

Finally, the scarcity of a model has a major effect on desirability and value. Strangely, it also helps that many of the cars considered classics today, were not built to a high standard. Due to this, many were destined for early graves at the scrapyard.

In the year 2000, there were 24.4 million cars on UK roads. In 2019, there were nearly 32 million. Interestingly, the proportion of older cars has increased, with just over 2.3 million cars over 13 years of age in 2000, increasing to over 6 million in 2019. Saving old cars of interest has become big business, fuelled by an ever-increasing nostalgia for modern classics. Ford Escorts and Fiestas, Volkswagen Golfs, and Peugeot 205 GTis from the eighties and nineties are highly desirable today.

Glass’s Leisure Vehicles Editor Paul McDonald said, “Following a significant boost in registrations over the last few months, a slow-down in September was not unexpected, as recent growth was partly a result of pent-up demand following lockdown. So, to see the increases continue is great news”.

With the major auction groups continuing to hold only online sales, some buyers continue to be wary about spending substantial amounts of money on vehicles they have seen in person. However, this trust continues to improve as buyers become more accepting of the descriptions provided by the auction houses.

Additional factors affecting the popularity of older cars

By the mid-nineties, car build quality and reliability had improved dramatically whilst the driveability of cars had also taken a step forward. New cars of today continue these improvements, but many people are choosing to look for older, more characterful cars to drive every day. This is not only down to the price, fueling the demand many enthusiasts strive to drive something unique and with historical interest.

There is no definitive age that identifies a classic car. Many hold the view that a modern classic will be at least 15 years of age, and a classic must be at least 25 years old. However, if you use car tax exemption as a guide, then the car needs to be at least 40 years old.   

Many people find driving a modern classic car is without status, which is a very desirable commodity in today’s world. Especially if a modern classic is relatively easy to afford. So, looking ahead, there are models that could already be considered modern classics. It is also worth remembering that with improved build quality more survivors of each vehicle could also affect the future asking prices.

The following examples are all over 15 years of age and remarkably can be bought today for under £1,000. As beauty is in the eye of the beholder, the decision on whether they are a modern classic is yours.

  • 2003       Jaguar S-Type V6 SE Plus                               £999
  • 2003       Mercedes-Benz SLK200 Kompressor              £995
  • 2001       Audi TT 1.8T Quattro 2dr                                 £999
  • 2000       Land Rover Discovery GS                               £995
  • 2004       MG TF 1.8                                                       £990

Motorcycle Market Update October 2020

Following a significant year on year registration increase in July and August (up 42% and 32% respectively), data published by the Motorcycle Industry Association (MCIA) shows that registrations grew by a more modest but still impressive 11.7% in September. Six out of the nine sales categories recorded growth with mopeds enjoying the strongest increase, followed by scooters.

Glass’s Leisure Vehicles Editor Paul McDonald said, “Following a significant boost in registrations over the last few months, a slow-down in September was not unexpected, as recent growth was partly a result of pent-up demand following lockdown. So, to see the increases continue is great news”.

With the major auction groups continuing to hold only online sales, some buyers continue to be wary about spending substantial amounts of money on vehicles they have seen in person. However, this trust continues to improve as buyers become more accepting of the descriptions provided by the auction houses.

Engine band highest registered models – September 2020

Power Band Model

0-50cc Lexmoto ECHO PLUS 50
51-125cc Honda CB 125F
126-650cc Royal Enfield INTERCEPTOR INT 650
651-1000cc Yamaha TENERE 700
Over 1000cc BMW R1250 GS ADVENTURE

Data courtesy of the MCIA

The used car retail market is showing similar recovery behaviour to the wholesale market. The key measures – Average Sale Price and Days-to-Sell are both positive. Just like the auction market, their rate of recovery is slowing, suggesting they are approaching their natural level.

Glass’s Live Retail pricing tool reports on the average time a car spends on the forecourt, with lower days to sell indicating higher retail demand. The average for July of 59.1 days is still 30% higher than expected, but in the circumstances is a distinct improvement over June’s average of 81.9 days. If the decreases continue over the coming weeks the value for August will be similar to August 2019.

New motorcycle market

Sales and demand remained buoyant throughout September, although some dealers reported a slow-down towards the end of the month. Concerns remain regarding the economy, especially how additional COVID-19 restrictions will affect the industry moving into 2021. Despite this, given the average riding age of 56, there is optimism that a significant proportion of motorcycle consumers are financially stable enough to support sales momentum moving forward.

What can the industry expect moving forward?

The industry has already demonstrated its resilience with sales and demand exceeding expectations. However, COVID-19 continues to be a major issue. Given this, the outlook for the final quarter of 2020 remains uncertain.  The Glass’s editorial team will continue to monitor all of the market dynamics during the next few months.

Used motorcycle market

With autumn now fully with us, dealers are experiencing a slow-down in enquiries. However, the used market remains remarkably resilient, potentially even more so than new.  With consumers having more time on their hands, saving money not taking holidays and unable to participate in certain hobbies, some dealers hold the view that increased numbers have taken up riding as an alternative, contributing towards recent sales growth.

Top-selling models

For dealers with major cities in their catchment areas, scooters and 125cc machines remain in strong demand, a result of commuters choosing to ride to work as an alternative to public transport. However, demand continues to be largely buoyant across the board, with the adventure and naked segments being particularly strong.  

Stock

Glass’s has received mixed feedback regarding stock availability from dealers. Although there have been improvements, some dealers continue to find locating quality used motorcycle stock a challenge, particularly 125cc machines. Compounding this issue, some riders are choosing to privately sell their old machines rather than part-exchange. However, despite these issues, many larger dealers are currently satisfied with their stock levels.

Sales activity

Sales remained positive into October with no dealers reporting a significant decline. However, with October’s weather becoming more autumnal and the heightened economic uncertainty, many values have been eased back for the November guide, except where trade feedback and evidence from the market place has suggested further adjustment is necessary. Exceptions to this are mopeds, scooters and commuter machines where values have been held.

UK to adopt EU emissions regulations following Brexit transition period

19 October 2020

The UK government has confirmed it will adopt European Union (EU) emissions targets for 2021 and beyond at the end of its Brexit transition period on 31 December 2020.

Following a consultation, the government said that the existing target of 95g/km CO2 emissions averaged across a vehicle fleet would remain, meaning carmakers may continue with their current strategies to ensure they meet the strict regulations. Many are looking to achieve this by selling a greater number of battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs). However, all must now be aware of their performance in two markets, rather than a single one.

Had the UK government decided to go its own way with regards emission targets, there were fears that the supply of BEVs and PHEVs in the country would become limited, as carmakers focused on supplying Europe to meet the needs of a bigger market.

The new UK rules will mirror those in the EU, including an £86 (€95) fine for each g/km above the carmakers’ respective targets multiplied by the number of vehicles registered in the year.

Changing figures

As the UK’s average fleet mass is heavier than that of the EU, the UK government has highlighted that the sum of individual manufacturer targets in the UK will be slightly higher than the sum of targets in the EU.

‘While this may therefore appear to be a slight relaxation of standards, by retaining the average EU mass value, it replicates the same level of effort required by manufacturers as under the current scheme in the EU,’ the government said. ‘This ensures that the regulation is as ambitious as existing arrangements.

‘If the UK average mass value was used to calculate manufacturer targets instead, it would make targets immediately more challenging.’

The UK average mass is updated every three years and will be used in calculations from the next due update onwards.

Future targets

The UK will also adopt EU targets set for 2025 and 2030 for a further reduction in vehicle CO2 emissions, meaning manufacturers will have to reduce output by 15% (based on 2021 levels) in 2025, with a 37.5% reduction in 2030.

European regulations (EU) 2017/1152 and (EU) 2017/1153 establish the correlation procedure to be used during the regulation’s conversion from New European Driving Cycle (NEDC)-derived targets and calculations to Worldwide Harmonised Light-Vehicle Test Procedure (WLTP)-derived targets and calculations.

While the corrections needed to ensure these regulations continue to function in the UK are minor, the EU dataset will be used as a basis for the correlation between NEDC and WLTP, providing further clarity for carmakers.

Super credits

One of the biggest changes in the government’s consultation announcement is the lowering of the CO2 g/km threshold for carmakers to apply for ‘super credits’. The credits can be used against emissions targets, and work as an incentive for manufacturers to sell more zero- and low-emission electric vehicles (ZLEVs) as they will multiply within a fleet. For 2020, one super credit counts as two vehicles, with this dropping to 1.67 in 2021, and 1.33 in 2022.

In the EU, the amount that manufacturers may benefit from the use of super credits is capped at 7.5g/km cumulatively over 2020-2022.

As the new regulations will only take effect from 2021, the UK government has decided to reduce the cap for two years to 3.75g/km. This received a mixed response in the consultation, some arguing that the figure was too high as carmakers may have already used their EU-mandated 7.5g cap, others suggesting it was too low, unfairly affecting those looking to bring more ZLEVs to the market in 2021 and 2022.

‘It is evident via the nature of the responses that this issue is complicated,’ the government said. ‘An increase in the super credits can act as an incentive for car manufacturers to put more ZLEVs on to the market, which is in line with the government’s net-zero and decarbonisation commitments.

‘Equally, the government recognises super credits can artificially lower manufacturer targets, thus providing the opportunity for higher emission vehicles to be sold. There is the possibility that manufacturers will use their EU-allocated 7.5g CO2/km cap in 2020 alone, meaning the 3.75g CO2/km cap available across 2021 and 2022 will be in addition to the super credits offered in the EU regime. Whilst this is possible, due to the timelines for enforcing the regulation, it will not be known until October 2021.’

Used Car Market Update October 2020

Auction Wholesale Market

A degree of stability seems to be returning to the UK used car auction market. Whilst the key measures of First Time Conversion Rate, Percentage of Original Cost New, and Sales Volume Index all dipped slightly in August, they all recovered in September and continue to exceed the figures achieved in the same month last year. Of course, with all the ongoing uncertainty in the world, it is too early to state that we are back to normal, but it is encouraging to see that despite all the challenges the auction market is still performing well.

First time conversion rate graph October 2020
Percentage original cost new graph October 2020

The rapid post-lockdown recovery was, at least in part, driven by a need to re-stock sites and feed pent up retail demand. Virtually every car offered received multiple bids and anything desirable was selling for very strong money. This slowed, and feedback from the market suggests that buyers are becoming a little more selective in what they buy. Desirable retail stock is still selling well at auction, moving quickly and for good money, but the less desirable stock is starting to become harder work. Cars with damage or less appealing specification can struggle to even get a bid, and those that do sell are not achieving the sort of money they would have two to three months ago.

In terms of what is popular, SUVs continue to sell well. Convertible hammer prices are weakening, no doubt due to the change in season, although they are still selling. Despite all the media hype and their apparent popularity in the new market, alternatively fuelled cars continue to challenge vendors in auction channels. This could be because the latest generation vehicles have much longer ranges and quicker charging times than those typically found in the used market, making them appear less desirable and thus perhaps worth less than the vendors may be hoping… Also, the restrictions around leisure activities have meant reduced demand for taxis and minicabs, which have become biased more towards low emission cars in recent years.

Used Retail Market

The used Retail market is also showing signs of stabilising, with the number of sales observations and the average sale price for September being very similar to those in August. The number of observations is still lower than for the same month last year, down just over 10%, but the average sale price is 5.8% higher, even though the average age of the cars sold was 47.5 months, almost 20% higher than the 39.8 months reported for September 2019.

Used car market retail observations graph October 2020
Used car market average sale price October 2020

Glass’s live retail pricing tool GlassNet Radar also shows that the average time a car spends on the forecourt continues to decrease. At 37.7 days it is 8.1% lower than the 41.0 days reported for the same month last year, and a notable 17% improvement over August’s 45.5 days. This is a good indication that there continues to be a healthy retail demand for used cars.

Used car market average days to sell October 2020

Outlook

Taken at face value, the metrics for both the wholesale and retail markets suggest that October will be another promising month. However, we continue to live in uncertain times and the recent lockdown announcements may likely slow down the recovery, especially in those regions that are seeing more stringent conditions. More transactions are now carried out remotely though, not just for the wholesale market but also for retail, and this may lessen that impact. We are also heading into the final few months of the year which traditionally means a slowing down of the market, especially if we have “proper” winter weather. So, as we head into the final quarter of what has been an extraordinary year the only thing we can be certain of is that the used car markets – both wholesale and retail – are as unpredictable as they have been for most of this year. Of course, Glass’s Editorial team will continue to monitor activity and share what they find.

Secret Diary of a Forecast Editor October 2020

Today, already the world is a very different place following the Covid-19 outbreak, and it looks like it will be some time before we get back to a degree of normality.

Over the past six months, since major lockdown restrictions first came into force, the automotive industry has become a very different place to work. Before March this year, a large part of the role of a Glass’s forecast editor involved meeting manufacturers to discuss new products and test-driving new models coming to market. Since the lockdown came into force, this has not been possible physically, so that all parties remain safe and healthy.

However, new models continue to come to market and the team to continue to have discussions with manufacturers virtually instead of physically. The following are two models that have launched recently.

Citroen C4

Over the past few years, PSA has found its design mojo again. Some of their models have been seriously good and the new Citroen C4 appears to be another excellent offering. It bears little resemblance to the previous version, which was a very ordinary hatchback.

Two Citroen C4 SUV's

The new C4 is a mix of a family hatchback and Crossover SUV. PSA have delivered excellent exterior styling and every time I see it, I find new things that I like about it. The interior is just as impressive with some features that will prove popular with consumers. For instance, PSA has taken the climate controls out of the touch screen and replaced it with simple controls on the lower dash. This shows that PSA continues to respond to customer feedback, which is great to see.

Citroen C4 interior

The C4 is available with petrol and diesel drivetrains and as the e-C4 full-electric version. The car uses the same platform as the Peugeot 208/2008 models and gets the same 50kWh battery that offers over 200 miles of range (WLTP). The C4 does not try to be sporty like many rivals; it just offers plenty of comfort and practicality, ideal for young families. It comes in four trim levels, Sense, Sense Plus, Shine and Shine Plus. The e-C4 starts at Sense plus trim.

Prices start at £20,990 for the Sense PureTech petrol 100 S&S 6-speed manual and top out at £34,330 (excluding the government grant) for the top of the range Shine Plus electric vehicle with 50kW battery.

Skoda Enyaq

The Enyaq is the first full-electric car from Skoda. It is an SUV, which Skoda claims, is as spacious as their bigger Kodiaq model.

The Enyaq is a great looking car, and even better, it has a range option of over 300 miles meaning that even I could live with it. Even better yet, the 300-mile range version comes in at a price tag of £38,950 making it even more attractive.

Skoda Enyaq front side view

There are two standard versions available, both of which are RWD; the first version named the 60, has a 62kWh battery, a range of 242 miles and around 180bhp. Then there is the 80 version which has an 82kWh battery and around 204bhp with the extended range of 316 miles. The starting price of the 60 is £33,450 and the 80 starts at £38,950. The 60 and the 80 standard vehicles come in three trim levels; Loft is the standard interior trim but you can select the Lounge trim for an additional £1,115 or Suite for £1,285.

The standard equipment is very good even on the cheapest model and the different trims are just design and material differences rather than additional equipment. Standard on the 60 are things such as 13-inch infotainment screen, ambient interior lighting, rear parking sensors, air-con and a multifunction leather steering wheel. The 80 adds navigation to the infotainment system, heated steering wheel, plus front parking sensors and a rear-view camera. There are then a set of packages to offer options such as heated front seats and keyless entry. All models come as standard with the capability to take 50kW charging and you can upgrade the charging system to take 100kW on the 60 and 125kW on the 80.

Designed for practicality and value rather than speed, it has a 0-62mph time of just over 8 seconds and a maximum speed of 99mph. However, the biggest issue will probably be trying to get one, as they will be extremely popular.

Skoda Enyaq rear view
Skoda Enyaq interior

New Car Market Update November 2020

New car registrations in September 2020 had a relatively low bar to clear to show growth over the last couple of years. In 2018, registrations were down by 20.5% on prior year due to regulatory changes surrounding WLTP emissions testing. This led to delayed vehicle certification and caused supply issues leading to registration delays. In September 2019 the market increased a paltry 1.3%, with the introduction of the RDE-2 emissions standard blamed for causing similar issues.

Despite the attraction of the new ‘70’ plate and many strong manufacturer retail and business offers, the data released by the Society of Motor Manufacturers and Traders (SMMT) for September show new car registrations falling by 4.4% compared to last year with a total of 328,041 cars registered. Although a lack of stock and logistics issues may have played a part, this is the lowest September registrations total since the introduction of twice-yearly plate changes in September 2001.

Illustrated in the chart below, the year-to-date total for the year is now down a third versus last year, equating to over 600,000 lost sales.

New car total registrations YTD graph October 2020

Data courtesy of SMMT

As in previous months, Private sales showed greater resilience than the sales in the Fleet and Business sale channels with a small drop of 1.1%. This shows that consumer confidence remains reasonably positive, despite the potential for job losses, whilst the reducing support for companies in the Government job retention scheme is just another impact for Fleets and Businesses as the market comes to terms with the pandemic.

Fleet sales reduced by 5.8% compared to last year to 159,081, while business dropped 31.9%, albeit on very small numbers to just 7,597, as both continue to underperform.

New car market Sales channel split YTD October 2020

Data courtesy of SMMT

This decline is understandable as companies continue to struggle with revenue and profit forecasts making large expenditure commitments such as vehicle fleet renewals a lower priority. This comes at a time when coronavirus cases are growing daily in the UK and Europe whilst the Government continues to increase lockdown measures. In the longer term, the increases in cases and lockdown measures will also affect private sales potentially stalling the economic recovery. Add to this the increasing headwind of Brexit and the outlook remains uncertain.

Battery electric and plug-in hybrid registration grew significantly in September accounting for over 10% of registrations, as new models became available increasing consumer choice. Demand for battery electric vehicles (BEVs) increased by 184.3% compared with September last year and have increased 165.4% year to date.

Sustained recovery across the automotive industry to will require a Brexit solution with minimal tariffs and as close to frictionless trade as possible. Additionally, to meet the Road to Zero aspirations the Government will need to consider increases to incentives and infrastructure support for alternative fuel vehicles to help meet the aggressive targets, whilst giving consumers and businesses the confidence to switch from old engine technologies.

Car Market Overview October 2020

There was optimism that the new car market would bounce back in September and give a much-needed boost in registrations. However, the reality was underwhelming, with the SMMT reporting that new car registration fell by 4.4%. On the face of it, a 4.4% reduction was not bad considering the continuing Coronavirus pandemic, and the ever-changing array of restrictions affecting consumers up and down the country. However, set against poor September results in 2018 and 2019, (down 20.5% and up 1.3% respectively) it was not a good result. That said, it was the largest volume month of the year so far and does indicate that consumers have enough confidence to make big ticket purchases. The year to date position is now 33.2% lower than last year.

The wholesale used car market continues to impress. Although we are beginning to see hammer prices easing slightly, as more stock enters auction halls, the average first time conversion rate increased in September by two percentage points to 85%. For the second consecutive month, younger cars have outperformed the average, with the first-time conversion rate of cars up to two and a half years of age being 88%.

Feedback from dealers indicates that the used retail market remains strong and Glass’s Live Retail Data backs that up, showing that observations have stayed on par with the other post-lockdown months, and other key metrics like average days to sell and average discounts have fallen. In fact, the average days to sell a retail unit in September was 38 days, which is the lowest it has been for the last three and a half years.   

Valuation accuracy remains a top priority for the Glass’s Editorial team. When Glass’s Trade values are compared retrospectively with auction hammer prices observed in September, they were within 0.7%. 

Motorcycle Market Round Up October 2020

Market Overview

Autumn is now fully with us and although several dealers have experienced a slow-down in recent weeks, typical for the time of year, the market remains remarkably resilient.  However, Covid-19 continues to be a major issue with further restrictions implemented across parts of the country. Given this, the outlook for the final quarter of 2020 remains uncertain, with the full impact of furlough schemes ending and redundancies yet to be felt. So, whilst recent feedback has been largely positive with the market exceeding expectations for many, caution is still advised.

Top Selling Models

Scooters and 125cc machines remain in strong demand, particularly for dealers in and around major cities where an uptick in sales has been partly a result of commuters choosing to ride to work as an alternative to public transport. However, demand continues to be largely buoyant across the board, with adventure and naked segments particularly strong. With the public having more time on their hands this year, saving money not taking holidays and unable to participate in certain hobbies, some dealers hold the view that increased numbers have taken up riding as an alternative, contributing towards sales growth in recent months.  

Stock

Feedback for stock availability was mixed, and although there have been improvements with an increase in offers from the public, some dealers continue to find locating quality used stock a challenge, particularly 125cc machines. Compounding this issue, some riders are choosing to privately sell their old machines rather than part-exchange. However, despite these issues, many larger dealers are currently satisfied with their stock levels.

Sales Activity

Sales remained positive into October with no dealers reporting a significant decline. However, the weather during the first half of the month was rather wet and on the chilly side. Taking this into account with heightened economic uncertainty and after some careful consideration, many values have been eased back for the November guide, except where trade feedback and evidence from the market place has suggested further adjustment where necessary. Exceptions to this are mopeds, scooters and commuter machines where values have been held.

LCV Marketplace Update October 2020

New Light Commercial Vehicle (LCV) Market

The light commercial vehicle (LCV) sector is proving resilient in these challenging times, however, there is still much to contend with as we move into the last quarter of 2020. From new social distancing measures, redundancies, the end of the furlough scheme and of course Brexit, all will have an effect on the LCV market and the wider economy. The new plate month of September is typically a strong month, this year returning an encouraging 26.4% growth in demand for LCVs. Overall, 52,096 new LCVs hit UK roads during the month, as all sectors bar-one returned increases in registrations. With the coronavirus lockdown easing and businesses back to work, it is encouraging to record a 7.1% growth in the new light commercial vehicle market. This follows four months of double-digit decline. Overall, 27,701 new LCVs were registered during the month, with growth in all but the Vans under 2.0-tonnes sector.

LCV new registrations graph October 2020

The first three quarters of 2020 have seen year-to-date registrations decline by 27.4%, with 208,080 units hitting UK roads (286,616 units – 2019). Breaking the month down by sectors reveals that registrations for pickups, vans between 2.0-2.5 tonnes and vans between 2.5-3.5 tonnes increased by 10.9%, 11.6% and 40.9% respectively. A 2.5% decline for vans under 2.0 tonnes was the only disappointment. It is important to note that these increases are set against a backdrop of a weak September 2019 driven by the introduction of WLTP for LCVs, with September 2020 registrations still 3.3% down on 2018.

Top five LCV registrations

Top 5 LCV registrations table October 2020

For quarter three 2020, the current SMMT LCV registration forecast is down 26.3% to 269,000 units. With the final forecast for 2020 due at the end of October, it is, unfortunately, unlikely to show any improvement over the current forecast.

As we move into October, UK registrations remain nearly 30% down on the same point last year. The pandemic continues to affect many businesses with the stop-start nature of localised lockdowns affecting many towns and cities around the UK. Although September was a positive step in the right direction, it will remain a tall order to meet the current SMMT forecast.

The interconnected nature of the UK economy means that the unknown nature of Brexit and the end of the furlough scheme will bring further uncertainty in the coming months. Moving forward, operators are starting to look more seriously at more environmentally friendly technologies to meet fleet requirements. This will be critical in the crucial role light commercial vehicles play in the UK economy.

September Used Light Commercial Vehicle (LCV) Overview

The used LCV market continued to deliver outstanding performance during September, with weakness seen only in the minibus sector due to passenger movement restrictions.

Stock shortages driven partly by fewer de-fleets, economic uncertainty and increased demand for used LCVs was the catalyst for the strong month, along with uncertainty over future vehicle supplies. Pent up demand and the volatile world that we currently live in, means that prices are likely to remain high for some time to come.

There seems to be no better time to sell an LCV, with dealers enjoying a buoyant retail market and healthy profits as a result. Rental demand is also high supporting increased home deliveries, with some vehicles earmarked for auction, actually being re-fleeted to meet demand. This trend is likely to increase in the run-up to Christmas.

September in detail

Glass’s auction data results show the overall number of LCV sales in September was up 15.9% versus August 2020 and up a staggering 57.4% versus September 2019. First-time conversions were down slightly at 87.4% compared to 88.0% in August, but up 9.0% versus September last year.

There is a continued appetite for good quality stock requiring the minimum of retail preparation across all ages. Supporting this enthusiasm is the continued high number of online buyers reported by the auction houses. Since March this year, average sales prices have risen over 30%, with September alone recording an 8.3% increase versus August and a 31.2% increase on the same point last year. September prices were at the highest level for the last twelve months.

The average age of sold stock dropped from 72.4 months in August to 69.7 months in September. This figure was 0.9 months higher than the same point last year.

Average mileage for sold vehicles dropped from 73,634 miles in August to 70,457 miles in September. This is the lowest average mileage recorded in the last twelve months and over 10,000 miles less than at the same point last year.

Glass’s continues to monitor the LCV market closely and has an open dialogue with auction houses and manufacturers, leasing and rental companies, independent traders and dealers as well as the main industry bodies. This information, combined with the wealth of knowledge in our CV team ensures Glass’s valuations remain relevant in the market place.

The Van’s Headlights: Mitsubishi Shogun Barbarian

The Van’s Headlights

Our research data for the summer months normally shows a lull in used vehicle activity followed by a flood of activity and increased sales in September. However, the pandemic has seen demand and prices soar through the summer. Closure of manufacturing plants and the effects on the wider economy resulting in delayed fleet replacement cycles used stock shortages and uncertainty over future supply. This has led to a surge in demand for used light commercial vehicles (LCVs) and correspondingly huge increases in conversion rates and average selling prices over the last few months.

In this month’s edition of The Van’s Headlights, the team consider the merits of the Mitsubishi Shogun Barbarian 3.2DI-DC 187bhp Auto Euro 6 SWB Commercial (2015 – 2019).

The Mitsubishi Shogun

The roots of the Mitsubishi Shogun (also known as Pajero and Montero in other markets) can be traced back to 1934, when Mitsubishi’s first 4WD vehicle, the PX33 prototype was built. However, it wasn’t until November 1979 that the Shogun prototype was revealed at the Tokyo Motor Show.

The Mitsubishi Shogun launched as a multi-purpose vehicle in 1982. A completely new genre of 4WD combining off-road toughness and capability with the comfort, handling and specification of a saloon.  Short wheelbase (SWB) and long-wheelbase (LWB) models were available with either 2.6-litre petrol or a 2.5-litre diesel turbo engine. 

Further generations of the Shogun passenger vehicles appeared in 1991 and 1999, but it wasn’t until 2004 that the first commercial variants of the Shogun were introduced in the UK.

Designed with the same reputation for reliability and build quality, the Shogun commercial was available as SWB and LWB vans with two trim levels, Equippe and Classic. With both manual and automatic transmissions available with both featuring the much revered Super Select four-wheel-drive system. The choice of four different driving modes; 2H (2WD high range), 4H (4WD high range), 4HLc (4WD high range with locked centre differential) and 4LLc (4WD low range with locked centre differential) made the Shogun Commercial an ideal choice for those needing to take to rougher terrain.

The 3.2DI-DC 158bhp double overhead camshaft (DOHC) engine was introduced in 2007 improving power, torque and driver comfort.

In 2010, Mitsubishi introduced a Euro 5 compliant 3.2DI-DC DOHC engine, again mated to either a manual or automatic transmission, but this time generating 197bhp with an increase in torque. It was at this time Mitsubishi introduced higher specification Warrior and Barbarian trim levels on the SWB 4×4 van.

A facelift in 2015 saw the introduction of an improved monocoque body with a revised grille for the Shogun Commercial, together with a Euro 6 3.2DI-DC automatic engine generating 187bhp with Mitsubishi discontinuing the manual gearbox in favour of an all-automatic line-up. At the same time, revised suspension improved ride and handling whilst LED lighting improved night time vision. A new spare wheel carrier on the tailgate also featured in this facelift.

The SG2 4Work replaced the Equippe as the entry model and was available as a SWB or LWB model, whilst the halo Warrior and Barbarian trims remained available in SWB formats only. SWB models could tow a maximum of 3.0 tonnes and the LWB SG2, 3.5 tonnes.

A capable all-rounder

Andy Picton, Glass’s Chief Commercial Vehicle Editor recommends the Mitsubishi Shogun Commercial as “an extremely capable and rugged off-road van with great towing capabilities. The Shogun is recognised as a credible alternative to the Land Rover Discovery and is a popular choice with the police and the Highways Agency, as well as in construction and agricultural markets”

Andy added, “Although no longer available new, the Shogun is supported by a strong Mitsubishi dealer network. It has a loyal following in the used market, with buyers attracted to its high specification levels, powerful and torquey 3.2DI-DC engine and its ability to tow up to 3.5 tonnes”.

Peugeot Bipper Professional 1.3HDi 80bhp Euro 6 van (2016 – 2017)

The Mitsubishi Shogun Commercial range

  • Two body styles
  • 5-speed automatic gearbox
  • Three trim levels
  • Euro 6 engine line up
  • Up to 3.5-tonnes towing capability

There were three models in the 2015-2018 Shogun Commercial van range – SG2 4Work, Warrior and Barbarian. All models were powered by the same 3.2DI-DC 187bhp Euro 6 engine, with automatic transmission. A high level of standard specification taken from the car featured in the commercial variant and included, Mitsubishi Active Stability and Traction Control (M-ASTC), ABS brakes with electronic brake-force distribution (EBD), driver and passenger airbags, 18” alloy wheels, heated seats, heated and electric wing mirrors, Bluetooth with music streaming, auto lights and wipers, cruise control and a leather-covered steering wheel.

Additionally, the recommended 2018 Shogun Barbarian SWB Auto added as standard; climate control, black leather heated seats, 20” alloy wheels, Touchscreen DAB radio with MP3 player and USB port, satellite navigation system, reversing camera, steering wheel controls, front fog lights, tyre pressure monitoring system, tailgate privacy glass, alarm and exterior chrome detailing.

Shogun SWB DimensionsShogun SWB Load SpaceShogun SWB Miscellaneous
Length4, 386mmLength840mmGross Vehicle Weight2,665kg
Width1,875mmMax Width1,395mmPayload480kg
Height1,870mmWidth between arches1,395mmWarranty5yrs/62,500m
Wheelbase2,545mmHeight1,105mmService Intervals12,500m
  Volume1.3m3 

2016 Pros2016 Cons
Powerful engine with plenty of torqueThirsty engine
Great off-road capabilitiesDisappointing payload
Good level of standard specificationBattery can fail due to insufficient charge
Responsive and smooth automatic gearboxHigh running costs
Superb Super Select 4WD systemThe single hinged rear door is heavy
 Good all-round visibilityOpening the rear door can be an issue in tight spaces
No AdBlue

Good level of standard safety features
 

Glass’s recommendation

Mitsubishi Shogun Barbarian 3.2DI-DC 187bhp Auto Euro 6 SWB Commercial

Registration Plate: 2018/18

Mileage: 30,000 miles

Glass’s Trade £20,500 Excl VAT

Glass’s Retail £22,800 Excl VAT

Holiday Home Market Update September 2020

Due to the ongoing effects of the COVID-19 pandemic, demand, pricing and stock scarcity in the holiday home market have intensified. Staycation demand continues to bring record levels of sales and bookings for holiday parks. Although very positive, stock availability is under strain from increased demand. Glass’s industry contacts are labelling the stock issues a ‘crisis’ for the following reasons.

Reduction in rental de-fleets

The volume of available used stock has reduced, as parks are reluctant to sell-off their rental fleets during such an intensely busy period. Many parks are holding the stock for an additional year, as the units were under-utilised during the lockdown and do not currently warrant replacement. There are also issues sourcing replacement units due to production delays at manufacturing sites.

Pricing

The price of used units has increased with the demand with dealers commenting that they are currently paying over Glass’s trade price to secure stock. In some cases, at unsustainable levels, where a limited profit margin remains.

Logistics

Tighter health and safety regulations continue to impact the logistics of moving units from location to location whilst also increasing the shipping costs.

Despite the summer holidays being over and children returning to school, demand for staycations shows little sign of slowing. This renewed interest in holidaying in the UK has increased demand for holiday home holidays and an increase in first-time buyers. Many have never owned or rented a holiday home before, and have come to the market in numbers due to the continued uncertainty surrounding many overseas destinations requiring a 14-day quarantine period when returning to the UK.

There is good news for holidaymakers who want to make up for the time lost during the lockdown as the Government have given special dispensation for the season to be extended, this has enabled many parks to be booked up until the end of November.

Delivery times

Thankfully, most manufacturers have restarted 2021 model range production. For the manufacturers, recommencing production has been difficult due to physical contact protocols due to the pandemic. Additionally, many manufacturers are encountering problems with their supply chains. Delayed importation of raw materials from Europe is slowing production and, in some cases, leading manufacturers to reduce their overall production aspirations for 2021.

Glass’s understands that the first batch of 2021 stock will leave factories in November. Dealers and traders will hope that parks upgrading to this new stock will dispose of some of their rental fleets, although the main volume of 2021 model year stock will not arrive until early next year.

Despite some very positive news for the industry resulting from the knock-on effects of COVID-19, some park owners are experiencing increased instances of customers being in arrears on their site fees. This may be exacerbated when the furlough scheme ends in October, with some holiday homeowners reluctantly having to sell. There will be no shortage of buyers waiting to take their units, however.  

There is the confidence that 2021 can deliver another strong year of sales. This would solidify the market’s buoyancy. Whilst this is dependent on the issues with stock not damaging the parks and dealers there is the underlying concern that the Brexit trade deal could add costs to the industry if the UK leaves the EU without a deal.

Glass’s believes that demand will remain strong into next summer, as it is unlikely that the pandemic is over, meaning that travel restrictions next summer are also very likely. Attracting so many new customers to the market this year has been very positive, however, to grow further, the industry needs to take this opportunity and focus on attracting more customers from younger age demographics. Future incentives from parks and competitive pricing will be key to growing ‘the staycation’ further, and ultimately a sustainable future for the holiday home market.

Touring Caravan Market Update September 2020

Since dealers began reopening at the beginning of June, the touring caravan market has enjoyed a surge in demand. With continued overseas travel restrictions, staycations remain high on the public’s agenda. Across the country first-time buyers, some with young families have been welcomed at dealerships, which is great news for the industry. An increase in towing tests further enhances this positivity. Since holiday parks reopened on 4th July, they have been extremely busy during the peak holiday period, many fully booked for the whole of August.

According to dealers, throughout the last quarter, market sentiment remained very positive with strong sales reported across the board. A high percentage of sales have been to first time buyers, which whilst excellent news for the industry, does pose challenges for dealers, as part exchange levels reduce further. Stock shortages are a concern for many dealers, with some experiencing record low levels.

Moving forward into Q4, industry challenges remain. There are expected ramifications as the UK economy enters recession and redundancies start affecting family budgets. A no-deal BREXIT is an additional concern with probable increases in retail and wholesale prices on new caravans resulting from increased trade tariffs.

Despite these concerns, there is optimism among dealers and manufacturers that 2021 will be a positive year. As staycations remain, with some travel restrictions likely to remain in place, and confidence in overseas travel at an all-time low.

Customers continue to upgrade to higher specified caravans with superior washrooms and more living space, as they are less inclined to use site facilities. Whilst wider 8-foot wide vans are enjoying a healthy increase in sales activity.

Touring Caravans – new market

In preparation for 2021 production allocations, many dealers are ordering higher levels of stock than last year to satisfy forecast demand. In contrast to the last few years, when high levels of stock were carried over into the new season, it appears this year that with such low stock levels, little will be carried over into 2021.

It has been confirmed that the October NEC show has been cancelled, and there is some doubt that the February NEC show will go ahead. As a result, there will be more local 2021 model year previews at dealerships around the country.

Used Market

There are increased numbers of new customers entering the market wanting to test out caravanning with a used van before upgrading to a new one. As a result, demand for used caravans has been strong from budget through to premium vans. A wide variety of layouts and berths are currently popular; however, transverse island beds remain the top choice. As with the new market, the biggest issue continues to be a lack of stock.

As has been the case this season, new customers purchasing without part exchanges has made the supply of used caravans difficult. To maintain stock levels, dealers have had to be more proactive, travelling further to locate suitable stock whilst paying higher prices to secure units. The majority of dealers reported their stock levels to be substantially lower than last year.

Summary

Following a catastrophic spring, the summer period has been exceptional and exceeded manufacturer and dealer expectations. While there is optimism for 2021, there are challenges, namely the state of the economy, the likelihood of a no-deal BREXIT. However, on balance, as illustrate earlier in this article, there are many positives to be taken.

October Edition

For this edition, taking into account stock shortages in the market with less 2020 stock carrying over into 2021, values have been held across the board, except where trade feedback or evidence from the market place has suggested further adjustments were necessary.

Motorcycle Market Update September 2020

Significant year on year increases in motorcycle registrations in July and August are boosting the motorcycle market following the national lockdown. Data published by the Motorcycle Industry Association (MCIA) shows that registrations grew 32% compared to August 2019, with all categories recording an increase. Once again it is the scooter category recording the strongest growth.

Glass’s Leisure Vehicles Editor Paul McDonald said, “After a huge boost in July registrations, further growth was hoped for in August, albeit not quite to the same level.  However, a 32% increase was incredible news. The question today is will this resurgence last in the face of recession and an uncertain UK job market?”

Engine band highest registered models – August 2020

Power Band Model

0-50cc Lexmoto ECHO PLUS 50
51-125cc Honda CB 125F
126-650cc Royal Enfield INTERCEPTOR INT 650
651-1000cc Yamaha TENERE 700
Over 1000cc BMW R1250 GS ADVENTURE

Data courtesy of the MCIA

New market

Sales and demand remained strong throughout August. The main focus continues to be the 125cc and commuter markets, although middle weights and larger machines also did well. However, the main issue is a shortage of new machines, with uncertain factory lead times, and some dealers quoting dates early next year for deliveries of certain models.

What can the industry expect moving forward?

Forecast demand is likely to create challenges for dealers into next year. The Glass’s editorial team will follow the market with interest over the final quarter, as summer turns to autumn and the furlough scheme closes with the inevitability of redundancies. Glass’s view is that while there is a reasonable chance commuter and 125cc sales will remain buoyant for the rest of the year, demand for the higher end of the market could decline more rapidly than typically expected during autumn.

Used Market

Since motorcycle dealers reopened following lockdown, the used market has remained busy with strong sales and enquiries throughout August. However, dealers are starting to experience quieter periods, typical in a ‘normal’ year, with August and September holidays. As increasing numbers of employees return to work they continue to seek alternatives to public transport raising expectations that for the remainder of the year, the commuter market will remain buoyant in the used market too. CBT training centres remain busy, good news for the industry’s future, with the potential of at least some new riders progressing to full licences. With the average rider age now approximately 55, this fresh interest is welcome news.  

Top Selling Models

Scooters and 125cc remain in high demand, driven by the increase in interest from commuters, however, a broad range of machines including higher priced examples continue to enjoy strong demand.

Used Stock

Supply continues to improve due to increased new sales generating more part exchanges. Larger dealers report having a good selection of stock and are satisfied with their stock levels, although it remains challenging sourcing quality scooters and 125cc machines. To supplement part exchanges, most dealers continue to proactively maintain stock levels to match demand.

Sales Activity

Today, the market continues to be buoyant, with autumn approaching and the furlough scheme drawing to a close, the next few months are looking increasingly uncertain. The weather in the first half of September provided excellent riding conditions, growing the chances of an extended sales season. Taking this into account and after some careful consideration, many values have been eased back for the October guide, except where trade feedback and evidence from the market place suggests further adjustments were necessary.  Exceptions to this are mopeds, scooters and commuter machines where values have been held, due to strong demand.

Car Market Overview September 2020

According to registration figures released by the SMMT, the UK’s new car market recorded its seventh monthly decline in August with a 5.8% reduction compared to last year. Fortunately, as August tends to be a low volume month, the reduction equates to only 5,347 units. Year to date, total registrations now sit 39.7% lower than 2019 at 915,615 cars.

There is little prospect of clawing back lost ground due to lockdown. However, September’s plate change could offer some good news if the new ’70-plate’ produces a bumper registration haul and exceeds last year’s total. There are suggestions from the industry that if new car stock allowed, September could record the highest number of registrations ever, due to resurgent demand. This positive market sentiment is incredible for a market so severely affected during the lockdown, however, in reality, COVID-19 related production and logistical related delays will likely rule out a record September.

The used car market continues to outperform last year with auction activity in August remaining strong. The average first-time conversion rate was 82.8% which is almost five percentage points better than in August 2019. Hammer prices remained high in August, exceeding Glass’s Trade values by 2.3%, leading to further increases in Guide values in September. This compares to a reduction in September last year of 2%, underlying how different this year is compared to last.

The buoyant retail market continues to underpin strong trade market conditions. Following the trend since the end of lockdown, average days to sell retail units continued to reduce in August. The average fell to 45 days down from 59 days in July and is now tracking pre-lockdown levels.

Whilst increased new car sales activity through September is expected to generate more part exchanges, it is unlikely that they will hit auction sales in volume until the back end of the month. We, therefore, expect wholesale trading conditions to remain strong throughout September.