Fuel Type: Electric Vehicle (BEV)

New Light Commercial Vehicle (LCV) Market February 2021

The new light commercial vehicle market grew by 22.0% in February. This positive high-level figure includes delayed pipeline orders and is set against the typically quiet month preceding the new March plate. Year-to-date, the light commercial vehicle market is 9.5% up overall versus 2020, with large increases in all sectors except those vans under 2.0 tonnes.

SMMT data indicates that the 17,205 February registration total is 3,102 units more than in February 2020 and is the strongest February on record since 1998 (18,044).

Breaking down the results reveals the only disappointment was a 25.3% registration decline for vans under 2.0 tonnes. Registrations for vans between 2.0-2.5 tonnes increased 9.0% whilst demand from construction and online deliveries saw the between 2.5-3.5 tonne sector improve by 30.0%. The Pickup sector also recorded a 26.8% increase.

The Ford Transit Custom failed to hold on to the number one position, deposed by its big brother, the Ford Transit. Nevertheless, Ford still managed to place four of its product ranges in the top ten.  The Ford Transit in top spot followed by the Ford Transit Custom in second, the Ford Ranger in seventh place and Ford Transit Connect in eighth.

Top five LCV registrations

Top Five LCV Registrations

Capitalising on this registration momentum will be vital as the UK emerges from lockdown with an economic plan that encourages LCV growth and gives businesses confidence to upgrade to cleaner and more sustainable fleets.

The March Budget froze fuel duty rates for an eleventh consecutive year. This is likely to be the last year fleets can expect a freeze, as the Treasury commits to a net-zero emissions target by 2050. The ambitious targets set to address climate change and meet air quality goals mean the fastest way to achieve these goals is to instil business confidence and encourage the take-up of the latest low emission vehicles.

February used Light Commercial Vehicle (LCV) overview

  • LCV used market buoyant in February
  • Easing lockdown likely to determine how quickly the economy recovers
  • New stock shortages forcing franchised dealers to source late-plate stock

February has seen the used market in buoyant form overall, with prices remaining strong for anything that can easily be turned around quickly. Even the minibus sector that has struggled over the last 12 months due to COVID restrictions is seeing values firm as buyers look to stock up in readiness for the easing of lockdown regulations. Forward Control vehicles and 4×4 Pick-ups have also seen a performance improvement.

First-time conversion rates remain high for ready-to-retail panel vans, driven mainly by the expanding home shopping market. There has been a noticeable increase in damaged vehicles on offer, with the number of provisional sales increasing as well. With many of these turned into sales after the event, it is only those with damage now avoided by the trade. Demand remained strong for the small numbers of clean, late-year retail stock, forcing those prices ever higher. With a lack of new de-fleet stock to ease supply and demand issues, prices look set to remain high for at least the first half of 2021.

The severe shortage of new stock at dealerships is not only forcing fleets to run their vehicles for longer but is forcing franchised dealers into the used market to source late-year stock. This extra layer of competition for the trade is pushing prices ever higher. On the plus side, the recent lifting of government restrictions on the sale of repossessed vehicles should benefit the used market with an increase in volume over the next few months.

With global vaccinations on the increase, the easing of lockdown measures will determine how quickly the new market recovers, in turn, increasing volume in the used market.

Although sales at auction in February increased by just under 13% compared to January 2021, sales over the same month last year decreased by over 17%. Only 8.5% of those sales were less than 2 years old, whilst nearly a third of all sales were in the 2-4yr old age bracket.

Medium-sized vans again proved the most versatile and popular in the used market, increasing market share in February by 3.5% to 38.5% of all sales, followed by Small vans with 28%.

February in detail

Glass’s auction data shows the overall number of LCV sales in February declined by 12.9% versus January 2021, whilst first-time conversion rates decreased 1.5% to 84.2%.

Average sales prices paid in February increased by a dramatic 5.5% versus January and are now a staggering 36% higher than the same point last year. The average age of sold stock increased slightly from 68.8 months in January to 69 months in February and was 6.8 months younger than the same point last year.

Average mileages also increased from 75,532 miles in January to 79,936 miles in February and was just 311 miles lower than at the same point last year.

Glass’s continues to monitor the LCV market closely and has an open dialogue with auction houses, 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.

Only battery and hydrogen cars to be sold in the UK from 2035

The UK government has published the results of a consultation on banning new fossil-fuel vehicles. The document confirms a phased approach to zero-carbon-only registrations beginning in 2030.

The first step will see new petrol and diesel models banned from sale. Vehicles that can travel a ‘significant’ distance on zero-emission technology, including some hybrids and plug-in hybrids (PHEVs), will be sold until 2035. After this point, only zero-carbon technologies, such as battery-electric (BEV) and hydrogen fuel-cell electric vehicles (FCEVs), will be available.

Another consultation later this year will determine what constitutes a ‘significant’ distance that hybrid vehicles need to travel emission-free.

The consultation around the advancement of dates reviewed four key areas of concern over the plans. These included the readiness of the chargepoint infrastructure, the preparedness of the vehicle-manufacturing industry, inadequate battery supply, and the impact on consumers.

Some vehicle manufacturers raised concerns that hydrogen-fuel infrastructure provision had not yet been rolled out to an extent that would stimulate the uptake of FCEVs. These respondents stated that this is particularly important for ensuring all car and van market segments can transition to zero-emission, especially those that may not be suitable for BEVs.

However, in response to these concerns, the government highlighted the various funding schemes in place to increase infrastructure and support manufacturing. It pointed towards a report by the Faraday Institution that suggested 1.6 million BEVs a year would be built in the UK by 2040, with an additional 40,000 jobs created in the sector by 2030.

UK manufacturing

There is a mixed response amongst manufacturers over the future of their UK plants. Nissan and Jaguar Land Rover are dedicated to building BEVs in the country, with the Japanese carmaker bringing battery production to the UK. However, Stellantis is concerned about the UK’s 2030 ban and is in talks with the government to secure funding for the future of Ellesmere Port.

‘As soon as you say that we are going to ban the sales of this kind of car, we will stop investing,’ Stellantis CEO Carlos Tavares commented at the launch of the merged automotive group. ‘If we are told that in 2030, internal combustion engines cannot be sold in the UK, which we respect as a decision from the country, then we are not going to invest in ICE anymore because that makes no sense.’

In response to concerns over hydrogen, the consultation response document states: ‘The FCEV and hydrogen refuelling market is in its infancy and government has taken steps to support its growth in the UK. The transport decarbonisation plan will discuss the potential role for hydrogen in decarbonising the transport sector, including road transport.

‘In addition, we have announced plans to publish a hydrogen strategy, which will set out a whole system view of developing the UK hydrogen economy, including how we will work with industry to create 5GW of low-carbon hydrogen production for use across the economy by 2030.’

There was also discussion around eFuels, which can significantly lower the emissions from internal combustion engines. However, the consultation response highlights the unknown nature of emissions from this technology. ‘By 2035, zero must mean zero,’ it states.

Funding round

The UK government is launching a research and development competition for electrically-chargeable vehicle (EV) innovations. Those entering could benefit from a share of £20 million (€23 million) in funding. This comes following the publication of consultation results surrounding a ban on fossil-fuel vehicles from 2030.

The investment fund is part of the government’s drive to ‘build back greener’ following the economic damage inflicted by COVID-19. Technologies that could benefit include zero-emission emergency vehicles, charging technology or battery-recycling schemes. It hopes that the EV design and manufacturing sector could create around 6,000 skilled jobs.

‘Investing in innovation is crucial in decarbonising transport, which is why I’m delighted to see creative zero-emission projects across the UK come to life,’ commented transport secretary Grant Shapps.

‘The funding announced today will help harness some of the brightest talents in the UK tech industry, encouraging businesses to become global leaders in EV innovation, creating jobs and accelerating us towards our net-zero ambitions.’

Innovative ideas

Previous winners of government research investment include a zero-emission ambulance prototype. Designed by ULEMCo, it can reach speeds of 90mph and travel an average of 200 miles a day with zero-emissions. Another successful entrant was Urban Foresight, which used its £3 million share to develop ‘pop-up’ street chargers. These are located in pavements and provide discreet access to charging infrastructure for those without off-street parking.

The uptake of EVs is increasing in the UK. As the technology also plays a crucial role in the government’s ‘Road to Zero’ plans, more needs to be done to support the sale of the technology with new innovations and ease-of-access to infrastructure.

By releasing this latest funding now, the government also hopes to have new ideas and technologies in place in time for its ban on new fossil-fuel vehicles coming into action in 2030.

Video: Europe’s registrations struggle in February but improvements to come

Autovista Group Daily Brief editor Phil Curry discusses the registration figures from Europe’s big five automotive markets. While numbers may be down, the outlook for the whole year is more positive…

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel.

Show notes

Lockdown drives German new-car registrations down by 19% in February

February UK new-car registrations plunge to level of 1959

Significant downturns in European registrations in February

Conditional reopening of German car showrooms

England’s car showrooms to remain closed until 12 April

Podcast: How is European automotive adapting to pandemic and climate-change fallout?

Daily Brief editor Phil Curry and journalist Tom Geggus discuss key activities and developments in the European automotive sector from the past fortnight. These include COVID-19’s effect on the uptake of mobility-as-a-service (MAAS), different fuel types, and autonomous technology.

https://soundcloud.com/autovistagroup/consumers-post-covid-automotive-outlook

Show notes

Cazoo buys Cluno as CaaS options increase

Significant downturns in European registrations in February

Lockdown drives German new-car registrations down by 19% in February

February UK new-car registrations plunge to level of 1959

VW accelerates towards electric and digital future

VW aims for commercialised autonomous systems in 2025

Is it too early to go ‘EV-only’?

Ford to be zero-emission capable in Europe by 2026

Jaguar makes BEV and hydrogen changes on path to net zero

Volvo to go all electric and online by 2030

E-fuels gain awareness as Mazda joins alliance

February UK new-car registrations plunge to level of 1959

The ongoing restrictions on dealership activity resulted in a 35.5% year-on-year decline in new-car registrations in the UK in February 2021. Autovista Group senior data journalist Neil King explores the latest figures and the market outlook.

A total of 51,312 new cars were registered in the UK in January, according to data released by the Society of Motor Manufacturers and Traders (SMMT). The association highlighted that ‘the industry recorded its lowest February uptake since 1959.’

The UK emerged from its second lockdown on 2 December, only to see new regional restrictions imposed from 16 December. Subsequently, national lockdowns in England and Scotland were announced on 5 January, with ongoing restrictions in effect across the rest of the UK too.

There was a modest improvement in the market contraction in February, compared to the 39.5% year-on-year downturn in January. However, there were two fewer working days in the month than in January 2020 and, on an adjusted basis, the decline was therefore greater.

The UK registration figures continue to align with the Autovista Group expectation of a return to year-on-year declines of about 30% in countries where dealers are closed for physical car sales. The downturn in the UK during February, however, is larger than the 19% fall in Germany, where car showrooms are also closed. The contraction is also greater than in France and Italy, although dealers were open in these markets.

The only major European market to suffer more than the UK in February was Spain. Although dealers are open, the country is in a perfect storm, enduring a third wave of the pandemic, a weak economy and a fall in consumer confidence, in addition to the end of the RENOVE scrappage scheme and an increase in car-registration taxes.

EVs challenge diesels

UK registrations of petrol and diesel cars fell by 44.5% and 61.0% respectively, but still held a combined 65.3% share of the market. Registrations of standard hybrids (HEVs) also declined, by 22.8%, but the upward trend for plug-in hybrids (PHEVs) continued, with a 52.1% rise. Moreover, demand for battery-electric vehicles (BEVs) grew by 40.2% and electrically-chargeable vehicles (EVs) accounted for 13.0% of registrations, challenging diesel cars, which gained a 13.2% share.

February 2021 new car registrations SMMT

Source: SMMT

‘However, increasing uptake of these new technologies to the levels required by 2030 remains a mammoth task, with yesterday’s budget proving a missed opportunity given the lack of measures to support the market overall and notably the transition away from pure petrol and diesel cars and vans,’ the SMMT emphasised.

Delayed recovery

On 22 February, UK prime minister Boris Johnson outlined the roadmap for easing restrictions in England, with non-essential retail, including car showrooms, able to reopen no earlier than 12 April. In Scotland, this is expected from the last week of April. The next review of restrictions in Wales is on 12 March, with non-essential retail possibly able to reopen as soon as 15 March. A timetable for easing restrictions in Northern Ireland has not been announced, although a review is planned for 16 March.

Accordingly, Autovista Group’s latest base-case forecast has been lowered to 1.86 million units, equating to 14% improvement in new-car registrations in 2021, with further growth of 11% predicted in 2022. This is predicated upon vaccination progress preventing any further lockdowns in 2021 and new-car deliveries being largely unimpaired by semiconductor shortages and/or post-Brexit border delays. Similarly, the SMMT has revised its market outlook to 1.83 million new-car registrations in 2021, down from the 1.89 million units predicted in January.

In a downside scenario, however, greater disruption to new-car registrations (and supply) is assumed for 2021, further reducing the opportunity to recover losses later in the year. The forecast for this worst-case scenario is for UK new-car registrations to recover by only 10% in 2021, to about 1.79 million units, with further growth of only 9% in 2022.

In a more positive upside scenario, the UK automotive sector will emerge more positively, with dealers quickly returning to full operational capacity to meet increased demand. A less-severe impact on the wider economy would also bolster new-car registrations in 2021 and beyond. In this scenario, the UK new-car market is forecast to grow by 18% in 2021, to over 1.9 million units, and expand by 13% in 2022.

Dealers stifled

Mike Hawes, chief executive of the SMMT, commented; ‘these closures have stifled dealers’ preparations for March with the expectation that this will now be a third, successive dismal ‘new plate month’. Although we have a pathway out of restrictions with rapid vaccine rollout, and proven experience in operating click-and-collect, it is essential that showrooms reopen as soon as possible so the industry can start to build back better, and recover the £23 billion (€26.7 billion) loss from the past year.’

With car showrooms closed in most (and likely all) of the UK until at least 12 April, order intake will continue to be suppressed, further delaying the automotive recovery. An improvement in orders is expected in April, especially with the release of pent-up demand, but is unlikely to translate into significantly healthier registration volumes until May. Autovista Group estimates that the extended lockdown in the UK will result in the loss of approximately 200,000 new-car registrations between January and April, most of which will not rematerialise later in the year.

The Van’s Headlights: The Life and Times of a British Conglomerate

Successive UK politicians continue a generational battle to keep Britain’s homegrown manufacturing alive, even while pure economics would have consigned them to history many times over.

One particular manufacturing company that had more problems than many over the years, with name changes, mergers and buyouts rarely improving its profit forecast was the British powerhouse of British Leyland Motor Corporation Ltd (BLMC). In this article, Glass’s Chief Commercial Vehicle Editor, Andy Picton, takes a potted look at BLMC’s struggles with light commercial vehicles (LCVs).

History

BLMC formed in 1968 with the merger of British Motor Holdings (BMH) and Leyland Motor Corporation (LMC) and encouraged by the Wilson Labour Government (1964–1970), created an automotive group with a 40% UK market share. At its peak, BLMC owned nearly 40 different manufacturing plants across the UK.

Even before the merger, the BMH stable of marques competed with “badge engineered” cars and LCVs. The merger added more internal competition from the LMC marques. What followed was a story of ineffectual management, poor product design and quality, serious industrial relations problems and the 1973 oil crisis. Combined, this resulted in an unmanageable, financially crippled behemoth heading towards bankruptcy. The company’s 1970’s legacy created an infamous monument to the industrial turmoil of the period.

Many vehicles including LCVs were badge-engineering exercises offered under different brand names including Austin and Morris. For LCVs, this policy remained until 1970 when the Morris J4 and Austin 250JU became Austin-Morris products.

By the early 1970s, the outdated vans were rapidly losing ground to the Ford Transit and Bedford CF. Plans were put in motion to build and launch a new van that would equal the competition. The all-new Sherpa launched in late 1974, with both Leyland and Austin Morris badging.

Despite containing profitable marques such as Jaguar, Rover and Land Rover, as well as the best-selling Mini, British Leyland had a troubled history, leading to its eventual bankruptcy in 1975 and subsequent part-nationalisation.

The Wilson/Callaghan Labour Government (1974–1979) took control, creating a new holding company named British Leyland Limited (BL) of which the government was the major shareholder. The company was now organised into the following three divisions:

  • Leyland Cars
    • The largest UK car manufacturer
    • 128,000 employees
    • 36 locations
    • Production capacity one million vehicles per year
  • Leyland Truck and Bus
    • The largest commercial and passenger vehicle manufacturer in the UK
    • 31,000 employees
    • 12 locations
    • Production 38,000 trucks, 8,000 buses and 19,000 tractors per year
  • Leyland Special Products
    • A miscellaneous collection of acquired businesses

By 1977, all vans were sold under the Morris brand. A further change saw the Sherpa move into the Land Rover division in 1981, under the newly created Freight Rover brand.

By this time the Sherpa van was unsurprisingly dating quickly against the competition. Sales of the Transit far outstripped the Sherpa, whilst imported vehicles from Volkswagen, Fiat, Citroen, Renault and Iveco were gaining a foothold in the market.

Freight Rover

With the Sherpa under its wing. Freight Rover commissioned the K2 facelift in 1982 renaming it the 200. In 1986 the company introduced the wider bodied 300 van and chassis derivatives opening previously untapped sales opportunities.

Success followed and Freight Rover was moved into the Leyland Trucks Division. With improving profitability, the Freight Rover business caught the eye of General Motors in 1986. At this point, they made a bid to buy both the truck division and Land Rover from BL. The deal was vetoed by the British Government because they did not want to sell the iconic Land Rover brand to the American company. Although the truck division was still available for sale, GM’s interest waned and Dutch company, DAF Trucks, secured the purchase the following year.

DAF Trucks/Leyland DAF

The trucks were manufactured in Eindhoven, Holland and Leyland, Lancashire whilst the 200 and renamed 400 Series continued production in Washwood Heath, Birmingham. Both the trucks and vans were sold under the Leyland DAF banner in the UK.

By early 1988 planning for a much-needed replacement for the ageing 200/400 Series was progressing. With limited product development capabilities in-house, the styling of the new standard width and the wide-bodied van was outsourced to the Bertone design house in Italy.

The management team were not convinced the Bertone styling worked, with Leyland DAF wanting more of a family look between the vehicles. The work was outsourced again, this time to MGA, the designers who had worked on the K2 facelift and high roof versions. By the summer of 1988, with sketches completed, MGA produced clay models and then full-size prototypes codenamed LDV201 and LDV202

An overall lack of finances at Leyland DAF at this time, combined with strong sales of the 200/400 series  – 13,234 sales and a 15.6% market share in 1992 – meant the company was under pressure to launch the new van range. Increasing costs meant the new project would be mothballed until Renault was brought in to partner the programme in 1989. Sadly, a lack of direction saw the whole project cancelled by Leyland DAF in 1993, deciding to develop the existing Sherpa models instead.

The proposed facelift did not see the light of day, as continued financial difficulties forced Leyland DAF to file for bankruptcy later that year.

Renault

With agreement sought from DAF, Renault took over the entire development. Recognising that their current Master van was ageing, the LDV201/202 programme was abandoned in favour of a single model that would be the basis for their new Master range of light commercials.

In 1995, Renault signed an agreement with Iveco to help develop a cab for the second generation Master, Mascott and third-generation Daily models. However, due to rising costs, General Motors Europe was brought in as another partner. The second-generation Master was launched in 1997, with rebadged GM versions of the Opel/Vauxhall Movano and alliance partner, the Nissan Interstar launching the following year. The third generation Iveco Daily also shared many panels and cab components, including the doors. Named International Van of the Year (IVOTY) in 1998, a facelift followed in 2003, with an all-new model debuting in 2010. It too was sold by Vauxhall and Nissan, with the latter promoted as the NV400.

GAZ Group

At the same time, the collapse of the project also allowed the International Automotive Design (IAD) Group, which had been engineering the vehicle for LDV, to join forces with Gorkovsky Avtomobilny Zavod (GAZ) Group of Russia. IAD used many of the existing features to develop the bodywork design and new independent front axle suspension of the old LDV201 for the all-new GAZ Gazelle van, pick-up and minibus range.

The GAZ Gazelle went into production on the 20th July 1994, with the first vehicles rolling off the production line on the 26th of August 1994. The Gazelle has gone on to be synonymous with light commercial vehicles in Russia and other Eastern European countries selling over one million units by August 2005.

Popularity has continued to grow, with GAZ now employing over 40,000 staff and operating 13 production sites in Russia as well as assembly facilities in Turkey and Kazakhstan. The Gazelle is now sold in 40 countries across Europe, Scandinavia, Latin America, Africa, Asia and the Middle East. By 2015, annual production had increased to nearly 69,000 units.

LDV Limited

Back in the UK, the Leyland DAF van business was sold off in 1996 and LDV Limited was formed. Both the 200 and the 400 were given facelifts and renamed the Pilot and the Convoy respectively. The Pilot was available in 1.9t, 2.2t and 2.6t gross vehicle weights, while the Convoy was available in 2.8t, 3.1t and 3.5t low roof (City), high roof (Hi-Loader) and Chassis variants.

The easy to maintain vehicles made them popular with operators such as Royal Mail, the Police and local authorities, with the Convoy achieving a market share of 10.5% by the end of 1998.

Although selling well, it was clear that the Pilot and Convoy origins which harked back to 1974 were completely out of date and out of tune with the current marketplace. A joint development programme was signed with Daewoo in 1998 with a plan to quadruple output to 80,000 units by 2005.

The Asian financial crisis of 1997-1998 hit Daewoo hard and the partnership with LDV ended in November 2000, when the Korean car manufacturer went into receivership. The replacements for Convoy, codenamed LD100 and the Pilot BD100 replacement, were dead in the water before they had started.

Not to be deterred, LDV dropped the BD100 and purchased the rights to the LD100 from Daewoo moving 6,000 tons of tooling by road and rail from Daewoo’s factory in Lublin, Poland to the Washwood Heath and the LDV Maxus was born.

Available in two wheelbases and three roof heights at either 2.8t, 3.2t or 3.5t GVW, the VM Motori powered 2.5TD engine with outputs of 95bhp, 120bhp and 135bhp, launched in February 2005.

The front-wheel-drive LDV Maxus received good reviews and was a regular sight in National grid, Royal Mail, AA and British police force liveries, being awarded Professional Van and Light Truck Magazine “Van of the Year 2005”.

However, the additional costs of ‘going it alone’ put LDV under further financial pressure, eventually going into administration later in 2005. US investors Sun Capital bought the company, only to sell them on to the Russian van maker, GAZ Group in July 2006.

Plans to expand production in Birmingham, add new product lines and enter new markets were announced. GAZ also planned to produce vehicles in Russia and sell an additional 50,000 units annually worldwide. However, due to the global financial crisis in 2008 and a lack of investment, these plans never materialised.

Production ceased at the Birmingham factory in December 2008 when a last-ditch attempt to save LDV by the British Government and WestStar Corporation failed.

Shanghai Automotive Industry Corporation (SAIC)

LDV continued to sell its existing stock and the entity was sold in 2010 to the Shanghai Automotive Industry Corporation (SAIC).

The van continued in production and was manufactured under the MAXUS name for the Chinese market and selected left-hand drive markets in Europe, whilst with help of distributors The Harris Group, the same range was launched in late 2015 as the LDV V80 and EV80 for the UK, Ireland and right hand drive Europe.

As the MAXUS brand has grown globally and as its products became more established, the decision was made to realign the companies. As a result, LDV rebranded as MAXUS in 2020, coinciding with the launch of two new models; the all-new Deliver 9 diesel range replacing the V80/EV80 and the all-new small electric van, the e-Deliver 3. The e-Deliver 9 electric van launched at the end of 2020.

The remarketing risk of EVs

The remarketing of electrically-chargeable vehicles (EVs) is examined by Autovista Group experts in our latest webinar. The mixed approach across Europe to provide stimuli for EV sales is paying off, with forecasters predicting a 40% market share for the technology by 2030. Does the increase in registrations trigger new remarketing risks? The panel considers whether the increasing sales of EVs will impact RV performance over the next three years. It also looks at potential differences in risk between BEV and plug-in hybrids (PHEVs).

You can view the entire webinar below, or download the slide deck here.

Autovista Group will be running a number of webinars looking at automotive trends this year. To be notified of upcoming events, subscribe to the Autovista Group Daily Brief.

Podcast: How does electric impact residual values and used-car strategies?

The Autovista Group Daily Brief team takes a look at some of the biggest automotive trends of the past fortnight. Phil Curry, Neil King and Tom Geggus discuss electrically-chargeable vehicle residual values, electromobility strategies and modular electric platforms.

https://soundcloud.com/autovistagroup/electrified-rvs-strategies-and-platforms

Show notes

Surging demand for new BEVs mounts pressure on residual values

France invests €100 million in EV-charging infrastructure

Call for one million public EV chargers in the EU by 2024

Ford to be zero-emission capable in Europe by 2026

Jaguar makes BEV and hydrogen changes on path to net zero

REE maps out UK engineering centre

Shell to transform into net-zero energy provider by 2050

Video: How can carmakers attract investment?

Autovista Group chief economist Dr Christof Engelskirchen and director of automotive agency Car Design Research, Sam Livingstone, discuss how investors value car-producing technology companies above traditional OEMs. As more new entrants come into the automotive industry, what options do traditional players have to engage and attract investment?

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel.

European battery supply chain boosted by two new projects

As battery-electric vehicles (BEV) move from the realms of alternative fuel to mainstream automotive technology, the supply chain for the critical component, the battery, needs to be shortened.

Currently, the industry relies on shipments from Asia. To maintain efficiency and reliability of supply as the production of BEVs increases within Europe, a closer network of gigafactories is required. In recent days, announcements suggest efforts are being made to establish a European supply network, saving the industry from potential issues, as seen with the recent semiconductor shortage.

A new company, Italvolt, will establish a gigafactory in Italy, with the first phase of the project scheduled for completion by 2024. Lars Carlstrom, former founder and shareholder of the Britishvolt project created the new company.

Italvolt states that its factory will employ around 4,000 people and be the largest in Europe, with an initial capacity of 45GWh, increasing to 70GWh. The 300,000m2 facility will be built in a yet-to-be-determined location in the country, with investment projected at €4 billion.

‘With the gigafactory project, Italvolt wants to give an important answer to the historic opportunity of green industrialisation, which is affecting all production sectors in a transversal way, representing a turning point for the global economy,’ commented Carlstrom.

The company states that demand for batteries in Europe, primarily driven by the automotive market, will hit 565GWh by 2030, behind only China, with an expected demand of 1,548GWh. Locating its factory in Italy gives it access to another market area, with carmakers such as Stellantis manufacturing in the country.

UK ambition

Following Brexit uncertainty, the UK has seen a swathe of announcements in recent months that have boosted the country’s automotive industry. Vehicle electrification is driving these investments, with the aforementioned Britishvolt project and news that Nissan will bring battery manufacturing to the country.

There could now be a third project that would see a gigafactory developed in Coventry, with the city’s council entering a partnership with the owners of Coventry Airport.

The joint venture partners will develop proposals and submit an outline planning application for a gigafactory in 2021. This will take place alongside regional discussions with battery suppliers and automotive manufacturers to secure the long-term investment.

The UK’s West Midlands area is home to several carmakers, including Jaguar Land Rover (JLR), BMW, and LEVC and Aston Martin Lagonda. The UK government has made up to £500 million (€577 million) available for investment in a battery-manufacturing facility, and the area will be tendering a bid for funding from this pool.

‘Coventry has emerged as a world leader in battery technology,’ said George Duggins, Coventry City Council leader. ‘The city is home to the UK Battery Industrialisation Centre, world-leading research institutions, and the UK’s largest carmaker, JLR, and it is clear to me that Coventry is the right location.

‘Coventry Airport sits at the heart of this powerful automotive research cluster and is the obvious location for a UK gigafactory. It will immediately plug in to a mature automotive supply chain and skills eco-system.’

The plans will have been boosted by news that JLR is to transition its Jaguar brand to a BEV-only marque by 2025, while Land Rover will launch six new battery models, with manufacturing centred in the UK. A supply of batteries on their doorstep would make sense, cutting delivery times and improving the carbon footprint of their BEVs with reduced shipping.

Jaguar makes BEV and hydrogen changes on path to net zero

Jaguar is to become an electric-only brand by 2025, as part of parent company Jaguar Land Rover’s (JLR) plans to be a zero-carbon business by 2039.

As part of a new strategy, presented by CEO Thierry Bolloré, JLR has set a path for a sustainable future. The Reimagine plan will see Land Rover produce six battery-electric vehicles (BEVs) in the next five years, with the first variant arriving in 2024. Jaguar will transition all models to BEVs by the middle of the decade.

The carmaker is looking to achieve net-zero carbon emissions across its supply-chain, products and operations by 2039. As part of this, JLR is preparing for the expected adoption of fuel-cell technology, in line with a maturing of the hydrogen economy.  Fuel-cell prototypes are set to be seen on UK roads in the next 12 months as part of a long-term investment programme.

‘Jaguar Land Rover is unique in the global automotive industry,’ commented Bolloré. ‘Designers of peerless models, an unrivalled understanding of the future luxury needs of its customers, emotionally rich brand equity, a spirit of Britishness and unrivalled access to leading global players in technology and sustainability within the wider Tata Group.

‘We are harnessing those ingredients today to reimagine the business, the two brands and the customer experience of tomorrow. The Reimagine strategy allows us to enhance and celebrate that uniqueness like never before. Together, we can design an even more sustainable and positive impact on the world around us.’

JLR will make an annual commitment of around £2.5 billion (€2.9 billion) to the plan, including investments in electrification technologies and the development of connected services to enhance the customer experience.

Underpinnings

Land Rover will use its forthcoming modular longitudinal architecture (MLA) platform for upcoming hybrid and BEV models, while also using the company’s electric modular architecture (EMA). Jaguar will build future models on a platform designed exclusively for pure-electric models.

This is part of a plan to consolidate platforms across the business, allowing JLR to focus on efficiency in production and quality of the finished product. It will also help to rationalise sourcing and accelerate investments in the supply chain.

The announcement also included confirmation that JLR will continue to build vehicles in the UK. Its plant in Solihull will become home to Jaguar’s BEV models, while also manufacturing the MLA. The replacement of the current Jaguar XJ model will also not be pursued. With its West Midlands plant geared up for BEV production, it is likely JLR’s site at Castle Bromwich will be repurposed.

The company will substantially reduce and rationalise its non-manufacturing infrastructure. Its executive team and other management functions will move to its Gaydon site to aid cooperation.

Show of faith

The move is good news for the UK automotive industry, which is finding its feet again after years of Brexit uncertainty. JLR’s commitment to the country follows Nissan’s announcement that it will invest in its Sunderland plant and bring battery manufacturing to the country.

‘The news that the UK’s largest automotive business has confirmed its long-term commitment to the UK is very welcome and is an injection of confidence into the wider sector,’ commented Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT). ‘Its roadmap to a future that is built around sustainability, with electrified and hydrogen models as well as investment in connected and digital technologies, aligns with government ambition and increasing consumer expectations.

‘Delivering this ambition, however, will require the UK to improve its competitiveness. The UK automotive industry is essentially strong, innovative and agile, but the global competition is fierce. The UK government must ensure advanced manufacturing has its full support, with a policy framework and plan for growth that reduces costs, accelerates domestic battery production and electrified supply chains, and incentivises R&D and skills development. Every effort must be made to create conditions that will enable the entire sector to flourish.’

Electric future

JLR’s decision to turn its Jaguar brand into an electric-only marque is in line with an industry that is starting to fully embrace the zero-emission technology after years of development. The timescale, stopping the sale of internal combustion engines in around four years, may sound ambitious. However, Jaguar already has a BEV model on the market, the I-Pace, while it has also shortened the number of non-electric models it offers in recent years as part of financial cutbacks.

Therefore, the company is ideally placed to make this announcement with such a short timeline. It will hope that it can achieve these targets before its main rivals, including Audi, BMW and Mercedes-Benz, and therefore take advantage of shifting consumer attitudes towards luxury BEVs.

The move to bring hydrogen fuel-cell vehicles to test this year also shows the company’s proactive thinking. With electric drivetrains moving from development to production, carmakers now have space to consider the alternative fuel. Hydrogen can produce the range and refuelling times of internal combustion engines, while also producing zero emissions. The technology is already used by Toyota and Hyundai.  JLR partner BMW is planning to bring a hydrogen model to market next year.

Used Car Market Update January 2021

Used Car Auction Wholesale Market

Whilst online shopping has become increasingly popular in the UK over the last few years, 2020 substantially accelerated this to the point that some households have been making most, or even all of their purchases via the internet. This has extended to the buying of cars, both new and used, with several companies launching operations offering this service. Because the sale of used cars has changed from being a largely “physical” process to a “virtual” one, the used car market has not suffered as drastically as may have been feared when lockdown was first introduced in March 2020.

As a result of this, the used car auction market had a relatively positive start to 2021 despite Lockdown-3, with improvements in both the first time conversion rate and sales volume. A first time conversion rate of 77.8% was 7.5% higher than in December, whilst sales volume was significantly higher – not that unusual given December is traditionally quiet, but a good result given it was not clear how long the current lockdown would continue.

First time conversion rate graph Jan 2021

The Glass’s Editorial team reported that buyer trends were similar to those observed in December, with lower graded cars continuing to struggle to achieve decent prices, or to even receive any bids at all. One interesting development was that the hammer prices of convertibles improved as the month progressed, even though much of the country was under snow!

Used Car Retail Market

With the country being in lockdown, and with no clear indication how long it would last, it was reasonable to expect used car retail sales for January to be relatively steady, and the figures suggest they generally were. The number of sales and their average value were very close to December’s results, at 100.2% and 99.1% respectively, and whilst the number of observations was generally lower in 2020, the overall trend for the average sale price was upwards. Remarkably, the average age of the cars was also virtually the same as for December – 49.5 months for January versus 49.4 months for December.

Used Car Retail Market Observations Graph - January 2020 to January 2021
Used car market average sale price graph January 2021

Glass’s live retail pricing tool GlassNet Radar includes data on the length of time cars spend on the forecourt before selling, and it reported that the average duration for January 2021 was 51.7 days. This was six days longer than in December, but that degree of increase is not unusual given the delays caused by the festive season and is only a little higher than the 49.9 days reported for January 2020.

Used car market average days to sell graph January 2021

Outlook

It is likely that the current lockdown will continue through to the beginning of March at least, so it is reasonable to expect that February’s used car wholesale and retail markets will perform in a similar fashion to January. Should there be an announcement of an easing of restrictions towards the end of the month, it may promote a surge in activity, especially in the auction market, but it is unlikely to lift the retail sector much, if at all, until those changes come into effect.

January 2021: New car registrations

With Lockdown-3 in full force dampening the spread of COVID-19, inevitably January new car registrations suffered. Although retailers have created ‘click and collect’ processes to maintain a level of sales, customers still prefer to see vehicles before they buy. It came as no surprise to see registrations falling 39.5% versus January 2020 (already down 7.3% versus January 2019). According to the Society of Motor Manufacturers and Traders (SMMT), total registrations for January stood at 90,249 cars, the worst start to a new car market for 51 years.

Demand was subdued for both the private and fleet sectors, with registrations down 38.5% to 37,946 and 39.7% to 51,002 respectively, while the small business sector was down 56% to just 1,301.

January 2020-2021 sector split graph

Data courtesy of SMMT

Pure diesel registrations fell 62.1% compared to last year to just 11,083 units. This is a collapse of 86% from their peak January 2016 figure of 82,311, even when you add the mild-hybrid diesel registrations of 6,221, a total of 17,304 is a decline of 79% from the high point.                                                                                                                                             

Despite the gloomy picture, there are some bright points. The SMMT reports that new emissions figures show 2020 registrations are the cleanest vehicles in history, with average CO2 emissions falling by 11.8% on the previous year. January registration figures also show battery electric vehicles (BEVs) increasing by 54.4% to 6,260 with a market share of 6.9%. Plug-in hybrid (PHEV) registrations also rose in January by 28% to 6,124 units.

The chart below compares the alternative fuel vehicle (AFV) volume in January 2021 with the prior year.

AFV Registration Comparison Graph

Data courtesy of SMMT

Looking ahead, February is usually the quietest month of the year for registrations with consumers preferring to wait until the new plate in March. This February will be no different, with an expectation for another fall in registrations as the nationwide lockdown will not be lifted until the beginning of March at the earliest. If the vaccine roll-out success continues and COVID-19 cases continue their rapid decline, then showrooms will reopen improving consumer confidence, translating into an upswing in business in the second quarter and beyond.   

New Light Commercial Vehicle (LCV) Market January 2021

The results for January show an overall positive start for 2021. However, this positivity masks large declines in all sectors except large vans. This sector single-handedly drove demand during January.

SMMT registration data indicates the LCV market grew by 2.0% in January. The 24,029 registrations, was 472 units more than in January 2020 and was the highest January volume since 1990 (24,094).

Breaking down the results reveals the only highlight was a 25.4% registration increase for vans between 2.5-3.5 tonnes. Registrations for vans under 2.0 tonnes declined 50.1% whilst vans between 2.0-2.5 tonnes declined 16.2%. Whilst pickup registrations declined by 25.8%, 533 new plug-in battery-electric LCVs joining UK roads, increasing the BEV market fuel type share to 2.22%.

Top five LCV registrations

Top five LCV registrations table Jan 2021

Brexit

The pandemic continues to affect the whole UK economy. While the UK automotive industry avoided tariffs following Brexit, the Rules of Origin (RoO) requirements hidden within the new legislation are creating new barriers to trade.

Before 1 January 2021, automotive products legally made in the UK could be sold anywhere in the UK and the EU. From 1 January 2021, automotive manufacturers must provide proof that at least 40% of the value of the parts in a finished vehicle exported to the EU originated in the UK. This threshold climbs to 45% in 2023 and 55% in 2027.

With increasing battery-electric vehicle production, the need for domestic battery production is vitally important. Without this, OEMs are less likely to invest in the UK.

The future must involve measures that can deliver long-term changes in the industry. With ambitious targets set to address climate change and air quality goals, the fastest way to achieve these goals is to instil business confidence and encourage the take-up of the latest low emission vehicles.

January used Light Commercial Vehicle (LCV) overview

The first half of January saw the usual seasonal slowdown, with conversion rates and prices easing in line with some of the older and higher mileage stock on offer. Demand remained strong for the cleanest retail stock, with the shortage of later plate Euro 6 vehicles forcing prices ever higher. With a lack of new de-fleet stock to ease supply and demand issues, prices look set to remain high for at least the first half of 2021.

With new vehicle production still below pre-pandemic levels, there is a severe shortage of stock, which is forcing fleets to run their vehicles for longer. As we move through the year, the rollout of the global vaccination programme and the easing of lockdown measures will determine how quickly the new market recovers, in turn, increasing volume in the used market.

With the recent lifting of government restrictions on the sale of repossessed vehicles, the used market should benefit from an increase in volume over the next few months.

Although sales at auction in January decreased compared to January 2020, conversion rates over the period increased by 2.7%. To highlight the shortage of late-year stock in the marketplace at present, only 6.5% of all vehicles sold during the month were less than 2 years old, whilst Euro 5 stock made up just under 31%.

Medium-sized vans again proved the most versatile and popular in the used market, accounting for over 35% of all sales, followed by Small vans with 30%.

January in detail

Glass’s auction data shows the overall number of LCV sales in January declined by 30.5% versus December 2020, whilst first-time conversions remained steady at 85.7% (85.9% – December).

Average sales prices paid in January increased by 8.2% versus December and were over 33% higher than the same point last year. January’s prices were the highest in the last twelve months and 3.5% higher than the previous best recorded in October. The average age of sold stock decreased from 72 months in December to 68.8 months in January and was 6.6 months younger than the same point last year.

In line with sales of younger vehicles, average mileages also decreased from 78,005 miles in December to 75,532 miles in January and were nearly 6,200 miles lower than at the same point last year.

Glass’s continues to monitor the LCV market closely and has an open dialogue with auction houses, 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.

Podcast: Jumpstarting 2021 – registrations, electromobility and shows

The Autovista Group Daily Brief team takes a look into some of the biggest automotive news stories of the past fortnight. Phil Curry and Tom Geggus discuss January’s new-car registrations, how carmakers like Ford, Hyundai, and Daimler are tackling electromobility, and whether there should be automotive shows this year.

https://soundcloud.com/autovistagroup/kickstarting-2021-registrations-electromobility-and-motor-shows

You can listen and subscribe to receive podcasts direct to your mobile device, or browse through previous episodes, on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Show notes

EU new-car registrations to start recovery in second half of 2021

Deceptively shaky start to 2021 new-car registrations across Europe

Germany: new-car registrations down 31% in January

UK new-car market suffers ‘worst start to the year since 1970’

EVs make great strides across European markets in 2020

Ford trebles size of UK EV-charging network

Hyundai boosts zero-emission mobility

Daimler to become Mercedes-Benz as it spins off truck business

Will there be a physical motor show in 2021?

Glass’s predictions for 2021

The Automotive Industry might have thought they’d seen it all in 2020. But the market fluctuations were merely a preview of what’s to come in 2021.

Just to take a quick look back, the car and LCV markets gave everyone a scare in 2020 when they bottomed during the first lockdown. But then the market reopened and surged forward until the year-end. Glass’s Predictions video for 2021 discusses the car and LCV markets and what our expectations are for both the new and used vehicles. Anthony Machin, Glass’s Head of Content and Product, hosts the video and discusses the way forward for automotive over the course of this year.

This video includes:

  • New and used car Predictions for 2021
  • New and used LCV Predictions for 2021

No talks between Hyundai-Kia and Apple

Hyundai Motor Company is not in talks with Apple over autonomous electrically-chargeable vehicles (EVs). The companies ended wide-spread speculation over a potential collaboration on Monday (8 February) with a regulatory filing.

The announcement dealt a $3 billion (€2.49 billion) blow to the carmaker’s market value, with its stocks sliding by 6.2%. Kia, as the rumoured potential operational partner, saw a 15% drop on the stock market, equalling a $5.5 billion loss in value.

Cooperation requests

‘We are receiving requests for cooperation in joint development of autonomous electric vehicles from various companies, but they are at early stage and nothing has been decided,’ the carmakers said in an investor update, as reported by Reuters.

‘We are not having talks with Apple on developing autonomous vehicles,’ it confirmed. Autovista Group’s Daily Brief did contact Hyundai, Kia and Apple for further comment on this latest revelation, but no response was received prior to publication.

Rumours had been rife over the potential battery-electric vehicle (BEV) tie-up. ‘We are agonising over how to do it, whether it is good to do it or not,’ a Hyundai executive aware of the Apple discussion said last month. ‘We are not a company which manufactures cars for others. It is not like working with Apple would always produce great results.’

Collaborative company

Hyundai is well known for its collaborative efforts across the board. These include everything from sponsoring global EV challenges, to investing in autonomous vehicle start-ups and even getting involved in robotics. So, the supposed talks with Apple fell well within the possible activity of this cooperative corporate mindset.

Addressing the company at the start of this year, company chairman Euisun Chung outlined the importance of this approach alongside its effort to become a global EV powerhouse as it launched its Electric Global Modular Platform (E-GMP), which will power its new Ioniq line-up.

‘With the launch of new vehicles based on the recently-released, electric-vehicle platform, the E-GMP (Electric-Global Modular Platform), we plan to provide attractive eco-friendly mobility options that aptly reflect customers’ diverse tastes and needs at more reasonable prices,’ he said.

‘Furthermore, our hydrogen fuel-cell technology, recognised as the world’s most advanced, will be expanded to diverse mobility and industrial sectors to help achieve carbon neutrality under the ‘HTWO (Hydrogen + Humanity)’ brand.’

This focus on electrification and hydrogen falls into a wider automotive trend, which emphasises the need for zero-emission mobility alongside the digitisation of vehicles. The sector is developing greener, smarter cars not only to meet emissions targets but also rising customer expectations. Consumer are becoming increasingly enveloped by new technologies, with mobile phones capable of connecting to every aspect of their lives, so the automotive industry is left playing catch-up.

E-volution

The Quiet BEV-olution

The UK Government has an ambitious plan to stop the sale of new cars and Light Commercial Vehicles (LCV) with pure internal combustion engines. Originally due to come into force in 2040, the Government has brought forward the ban to 2030. Between 2030 and 2035, new cars and vans can be sold with internal combustion engines if they can drive a significant distance with zero emissions (for example, plug-in hybrids or full hybrids), and this will be defined through consultation.

Although other vehicles, such as motorcycles and Heavy Commercial Vehicles (HCV), will eventually switch to less polluting fuels, for the moment they are not subject to the current government plans. In itself, this is interesting as there are cleaner alternatives to diesel including natural gas, battery-electric and fuel-cell electric. For the two-wheel market, while there is a growing selection of electric machines on sale, the move to battery-electric is still in its infancy.  

With favourable company car taxation and an ever-growing selection of new models on offer with new technologies removing range anxiety, the battery-electric car revolution is gathering pace. In the used car market, work is ongoing to support the development of the used electric vehicle sales with further studies around the cost of ownership and usability of these vehicles.

The E-volving Used Market

Today, there are around 7,500 used battery-electric cars available to buy on the UK’s market-leading online advertising portal. Just fifteen months ago, when Glass’s conducted the same search, the number was just 1,500.

Used car buyers are starting to see EVs as an affordable option compared to traditional petrol, diesel and hybrid alternatives. According to dealers, the current sweet spot for many consumers buying used cars is around £5,995.

For consumers ready for the move to an EV at this price level, currently, there are just two models to choose from in any volume. These are the Renault Zoe and Nissan’s Leaf. Dealer forecourt prices start around £4,200 for a ten-year-old Leaf, but then there is often a battery lease cost on top of that starting at £80 a month. For some people, this is around what they might spend on fuel each month. Therefore, a low mileage user has to look very closely at other costs when switching to battery-electric, including the zero price road fund license, lower servicing costs and lower fuel costs. Some users will switch to enjoy the knowledge that they are reducing emissions in their neighbourhood, however many are unwilling to make such a gesture and still state range anxiety as a reason not to switch.

Residual value development

As one of the longest-running volume EVs in the UK, the Nissan Leaf is a good example to analyse used pricing trends. With a new model Leaf launched in 2018, there was a notable increase in first-generation used examples hitting the market through part-exchange. Despite a significant increase in volume, the average residual value of a five-year example increased. The following chart shows Glass’s trade value for the Nissan Leaf expressed as a percentage of original cost new price. This increase in value is due to a general increase in interest in EVs throughout 2019. This intensified further at the beginning of 2020 before levelling out as COVID-19 made its presence felt.

Average RV% of a 5yr old Nissan Leaf graph

Glass’s editors will continue to keep a close eye on the EV market, paying particular attention to the significant number of cars expected to enter used car channels over the next three years. New EV sales have risen sharply to company car users over the past 12 months, fuelled by the attractive benefit-in-kind tax rates. With few current incentives available for used EV buyers, there is concern that when these cars come to the end of their contracts, supply may outstrip demand, negatively impacting residual values.

Daimler to become Mercedes-Benz as it spins off truck business

Daimler is to undergo a fundamental change in its structure, spinning off its trucks business and renaming itself Mercedes-Benz. The move is intended to help the company unlock the full potential of its business in a zero-emission future.

Daimler Truck will become a listed company with a majority stake distributed to Daimler shareholders. Mercedes-Benz will continue to develop models for both the passenger car and van markets. Diverging the business will allow each unit to focus on new technologies that are impacting their respective sectors.

Signs of a shift in policy emerged last year when Daimler announced it was developing hydrogen systems for its trucks business while cancelling plans for fuel-cell-powered cars. As the commercial and car markets are likely to take different paths towards zero-emissions, each company will now be able to put funding and resources into its own development rather than share the pot and restrict development as a result. The split is expected to occur at the end of this year, with an extra-ordinary shareholder meeting in Q3 to discuss the final plans and obtain approval.

Corporate structure

‘This is a historic moment for Daimler. It represents the start of a profound reshaping of the company. Mercedes-Benz Cars & Vans and Daimler Trucks & Buses are different businesses with specific customer groups, technology paths and capital needs.’ said Ola Källenius, chairman of the board of management of Daimler and Mercedes-Benz.

‘Both companies operate in industries that are facing major technological and structural changes. Given this context, we believe they will be able to operate most effectively as independent entities, equipped with strong net liquidity and free from the constraints of a conglomerate structure,’ he added.

As part of a more focused corporate structure, both Mercedes-Benz and Daimler Truck will be supported by dedicated captive financial and mobility service entities. The company plans to assign resources and teams from its current Daimler Mobility business to both brands.

‘We have confidence in the financial and operational strength of our two vehicle divisions. And we are convinced that independent management and governance will allow them to operate even faster, invest more ambitiously, target growth and cooperation, and thus be significantly more agile and competitive,’ commented Källenius.

Sustainability needs

Daimler had been struggling in recent years, announcing a series of profit warnings and initially struggling with its CO2 targets following the introduction of the Worldwide Harmonised Light-Vehicle Test Procedure (WLTP). Last year, the company managed to turn things around, tripling sales of plug-in hybrid (PHEV) and battery-electric (BEV) vehicles, and forecasting that it met its emissions figures to avoid any EU-sanctioned penalties.

‘We will continue to push forward with our ’Electric first’ strategy and the further expansion of our electric model initiative. Based on our current knowledge, we expect to meet the CO2 targets in Europe again in 2021,’ said Källenius.

With separate CO2 targets for passenger cars and trucks, Daimler will be keen to keep up this momentum, especially with stricter EU regulations for 2025 and 2030. Therefore, separating its trucks business will give Mercedes-Benz more focus on ensuring it meets guidelines by focusing on its electrification plans.

Further strategy

In October, Daimler unveiled a raft of plans that would see Mercedes-Benz focus on the luxury market with a shift to electrically-chargeable vehicles (EVs). The company plans for the number of internal combustion engine (ICE) models it offers to drop 70% by 2030. Part of this plan could see its range of compact models decrease as it focuses its product portfolio on the most profitable parts of the market.

‘We intend to build the world’s most desirable cars,’ said Källenius at the time. ‘It is about leveraging our strengths as a luxury brand to grow economic value and enhancing the mix and positioning of our product portfolio. We will unlock the full potential of our unique sub-brands – AMG, Maybach, G and EQ. Our strategy is designed to avoid non-core activities to focus on winning where it matters: dedicated electric vehicles and proprietary car software. We will take action on structural costs, target strong and sustained profitability.’

By divesting itself of Daimler Trucks, the carmaker can now focus on expanding new technologies in the passenger car market, including expanding its EQ line-up of BEVs. It plans to increase its range in the shortest space of time, meaning product development resources and expertise will be shifted to electric-drive projects.

Germany: new-car registrations down 31% in January

New-car registrations fell by 31.1% in Germany during January compared with the same month in 2020. A total of 169,754 passenger cars were registered according to the latest figures from the country’s automotive authority, the Kraftfahrt-Bundesamt (KBA).

This aligns with the Autovista Group expectation of a return to year-on-year declines of about 30% in countries where dealers were closed for physical sales. Germany is the largest European market affected in January, with the restrictions currently in place until 14 February.

The German market was also hampered by the return to a 19% VAT rate since 1 January 2021, which had been reduced to 16% from 1 July to 31 December 2020. Autovista Group estimates that this change advanced about 40,000 new-car registrations into December 2020, when the market rose 9.9% compared to the previous reporting period. Furthermore, the shortage of semiconductors will have invariably disrupted some new cars’ deliveries in the country last month.

New-car registrations, Germany, y-o-y % change, January 2020 to January 2021

Germany registrations 2020-2021 so far

Source: KBA

There were two fewer working days in January 2021 than in January last year. On a comparable working-day basis, Autovista Group estimates that registrations fell by about 23% in the last month, and annualised new-car demand was at 2.94 million units. As in France, Spain and Italy, the start to 2021 of Germany’s new-car market has been deceptively shaky.

Given the mitigating factors in January, this bodes relatively well for the German market, which Autovista Group currently forecasts will recover to 3.15 million units in 2021, 8% up on 2020. This is at the same level as the German automotive industry association VDA forecasts. However, the VDA rightly highlighted that 2021 will still be ‘significantly lower than the approximately 3.5 million new registrations of the years 2017 to 2019.’

‘We assume that the second half of 2021 will bring an improvement, if the progress in vaccination is so great that the pandemic can be noticeably contained in everyday life,’ commented VDA president Hildegard Müller. This echoes the EU-wide sentiment expressed by the European Automobile Manufacturers’ Association (ACEA). ‘The year 2021 will decide the future of the industry in Germany and Europe. We are at a turning point that will set the direction for the following decades,’ Müller added.

Brands and segments

German brands reflected January’s negative performance. Audi (down 47.4%), Mini (down 41.5%), and Ford (down 41.1%) saw the most significant declines. Meanwhile, Porsche posted the smallest losses, with a drop of 3.9%. Volkswagen maintained the largest market share, of 20.1%.

Among the imported brands, Tesla and Volvo exceeded their registration results for the same reporting period in 2020, up 23.4% and 9.4% respectively. In contrast, declines of more than 70% were seen at Jaguar and Honda (down 77.9% and 70.1% respectively), while Fiat recorded the smallest decrease of 14.8%. Skoda was the strongest imported brand for market share, with 6.7% of registrations.

Motorhomes were the only segment to achieve growth, of 5%, to capture a market share of 1.9%. Meanwhile, small MPVs saw the most severe decline at 63.6%, and full-size MPVs fell 55.3%, sports cars slumped by 43.2% and utility vehicles dropped by 42%. SUVs were the strongest segment with 21.9% of the market, despite a decrease of 26.4%, followed by the compact segment with a 19.1% share, down 32.2%.

Fuel types

Registrations of petrol-powered cars fell by half (50.3%) in January 2021 compared to the previous reporting period, taking 37.1% of the market. Diesel also dropped by 44.8%, representing just over a quarter of new cars (26.1%). In contrast, electrically-chargeable vehicles (EVs) saw year-on-year growth of 117.8%, with a total of 16,315 new units registered, taking their share to 9.6%.

Some 45,449 hybrids were registered in January, up 47.5%, while securing 26.8% of the market. A total of 20,588 plug-in hybrid units were registered in January, up 138.3%, with a 12.1% share. Natural gas (259) and liquefied gas (340) only accounted for 0.2% of the market last month, recording a combined decrease of 35.5%. The average CO2 emissions of newly registered cars was 125.9 g/km, representing a decrease of 16.9%.

The tipping balance towards EVs, and away from internal combustion engines (ICE), follows on from a trend recorded last year. In 2020, alternative drives made up of hybrid, fuel-cell, gas, hydrogen, and battery-electric vehicles (BEVs), claimed approximately a quarter of all new-car registrations. The German government set out COVID-19 recovery plans as a springboard towards a greener economy, with a greater emphasis on electromobility. In November, it committed a €4 billion stimulus package to the automotive sector, with funds channelled into the adaptation of production lines and incentivising the purchase of EVs.