Retail - Summary

  • While April’s new car figures may look disappointing, context is key, and when you take the prevailing economic and industry-specific headwinds into account, a fall of -2.7% year-to-date is actually a fairly solid performance
  • SMMT show new car registrations down -4.1% in April, while the consumer confidence index in the UK held steady at -13 in April 2019, slightly below market expectations of -12
  • 52% of dealers that responded to the Monthly Market Survey reported a YoY margin decline in April, while 3% said margins had stayed the same, and just 15% reported an improvement
  • Challenges continue to face the new car market, as 57% of dealers indicate an increase in consignment stock. Used car strength shows signs of softening in April’s Monthly Market Survey, as 57% of dealers cite an increase in overage days in stock
  • 52% of dealers remain positive over the economic condition over the coming months whilst 56% are optimistic that sourcing stock will improve, as cited in the April Monthly Market Survey
  • While new car registration in the fleet market was up 2.9% in April, we know that this was largely driven by daily rentals, while traditional fleet and business sales are down around 9% YTD. This is a trend we expect to see continue
  • Traditionally a quieter month than March, this April was also affected by the sunny weather over Easter, which undoubtedly affected consumer demand
  • Reports that following Q1, there is increased activity and demand for marketing campaigns based on pre-registrations volumes, particularly from the European brands
  • New car sales remain a key part of the story as an overall indicator of demand and a source of used inventory
  • Looking ahead, the used car market remains robust and stable, and while we expect a softer market than we saw in Q1, we know there’s still plenty of consumer demand for the right used cars
  • Continued penalties on diesel vehicles in the new car market has also led to purchase deferrals as consumers wait for a greater choice of hybrid and electric vehicles from 2020 onwards

Wholesale - Summary

  • Manheim saw vehicle volumes up slightly MoM, while the overall average price increased by 2.2%, although this is more likely to reflect a change in stock-mix than vehicle values
  • Average mileage for fleet vehicles sold through wholesale increased 22% YoY and 2.4% MoM whilst the overall mileages rose 15% YoY and 1.1% MoM
  • As with March’s data, April showed a YoY increase in the average price of alternative fuel vehicles, whilst both petrol and diesel eased further as the reduction in the fleet product continues to influence the profile of vehicles
  • WLTP uncertainty sees higher mileage cars hit the used market
  • There is likely to be an influx of ex Manufacturer and Rental vehicles into the market soon which should ease the sourcing situation for Franchised Dealers and Car Supermarkets, but Fleet vehicles will remain in short supply throughout Q2
  • Expectations that vehicle volumes will hold steady, and it’s likely that sensitivity around price will remain, as both vendors and buyers adjust their expectations based on current market values
  • report a 12% YoY increase in volume, a reflection of the increasing popularity of online wholesale channels
  • Older Grade 4 and 5 cars have struggled to find homes because of the reconditioning investment, but ultimately Dealers have had to try and fill empty forecourt spaces
  • Supply has improved in April and although the wholesale market has softened, there has been no material reduction in conversion rates that can occur in Q2, which suggests a current balance of supply and demand

Funding - Summary

  • The average vehicle value drops slightly to £7,759 (down £200 MoM) whilst the average value in 2019 remains ahead of both 2018 and 2017
  • The average number of days in stock dropped to 56.4 (down -3.4 MoM), returning to levels experienced in 2018 and 2017
  • Almost one in three dealers are planning to increase their Alternative Fuel Vehicle (AFV) stock as a result of the newly introduced Ultra Low Emission Zone (ULEZ) and anticipated rollout of Clear Air Zones (CAZ)
  • The average age of funded units reduced marginally from the 6.5 years in 2018 to 6.1 years, while the average mileage increased to just over 60,000

The Monthly Market Report includes our 2019 outlook for retail, wholesale and funding sectors as below:

Retail 2019 Outlook

  • Increasing appetite for Manufacturers and Dealers to embrace eCommerce
  • Demand grows for advanced vehicle imagery solutions to drive online buyer confidence
  • Dealers investing in PPC advertising to drive sales as consumers turn to online for their next vehicle

Wholesale 2019 Outlook

  • Demand for retail-ready stock will drive efficiencies in vehicle services, assisted by enhanced imagery
  • An increasingly agnostic approach to physical and digital sales streams will emerge to complement changing buyer behaviours
  • Buyers will expect increased transparency to drive stock confidence, leading to more detailed vehicle descriptions and assurance checks

Funding 2019 Outlook

  • A strong appetite for growth means cash flow remains a priority for dealers
  • An increased focus on digital integration is helping dealers to purchase stock hassle free from a variety of sources
  • Ease and flexibility remains key for dealers