Retail - summary

  • New car registrations fell for the fourth consecutive month, with a drop of -4.9% in June. While petrol registrations were up 3.0% (66.9% market share), diesel registrations fell another 20.5% (26.4% market share) YoY
  • Consumer confidence index in the UK declined to -13 in June 2019, erasing a 3-point rebound to -10 in the previous month and missing market consensus of -11. The increasing political and economic uncertainty continues to add caution to the sector
  • 39% of dealers that responded to the Monthly Market Survey reported a YoY margin decline in June, while 25% said margins had improved, the highest cited in the first six months of the year. Over half those responding indicated that consumer demand had declined YoY
  • As supply returns to the market in conjunction with an easing in consumer demand, dealers cite an increase in both overage (37%) and days in stock (39%) for used cars in June’s Monthly Market Survey. Whilst new car consignment stock decreases (39%)
  • 38% of dealers cite uncertainty over the economic condition over the coming months whilst 32% are optimistic that sourcing stock will improve, as cited in the June Monthly Market Survey
  • Following a challenging May, consumer demand picked up slightly in June, however more than half of dealers still felt that demand had fallen YoY
  • Certain manufacturers have enjoyed greater success than others in the first half of the year, but the introduction of RDE2 in September looks set to shake things up
  • The new car market presents a varied picture, with some manufacturers reducing or removing quarterly targets, while others forecast higher than expected registrations
  • One in three dealers reported increased overage stock and higher days in stock YoY
  • Dealers reporting concerns that some manufacturers are not fully prepared for the change, we could see a drop in new car availability and an unseasonable number of August registrations

Wholesale - summary

  • Manheim saw a double-digit increase in fleet volumes in June while the overall average price rose by 5.7% MoM, resulting in a YTD (H1) average of £5,814
  • The average mileage for vehicles sold through wholesale increased 5.5% YoY but down -4.6% MoM as fleet vehicle volumes increase. Average part-exchange prices eased -1.8% MoM and the average age of vehicles fell -6.4% MoM to 82 months. This was the lowest observed in the first six months of 2019
  • The average price for Alternative Fuel Vehicles continued to rise in June up 17.4% YoY, while values for both diesel (-9.7% YoY) and petrol (-16.5% YoY) vehicles were down year-on-year
  • Falling vehicle values mean that dealers need to focus on accurate part-exchange valuations
  • 18 months of a strong used car market with tough competition for vehicles, has resulted in some dealers been lulled into a false sense of security when valuing part-exchange vehicles
  • Manheim reports a double-digit increase in fleet volumes month-on-month
  • Fleet volumes at Manheim increased significantly MoM, and in turn, the average price for fleet and part-exchange vehicles fell by 4.5% and 1.8% respectively
  • Dealer Auction, the trade-to-trade online auction platform, also saw the overall average price fall MoM, down 3.3% to £4,476, although average performance against cap hpi value improved by 0.5%
  • With fleet volumes gradually increasing, and softer levels of demand, dealers can no longer rely on competition in the hall to off-set missed damage

Funding - summary

  • The average vehicle value increased slightly to £7,657 (up £194 MoM and up £453 YoY) whilst the average value in 2019 remains ahead of both 2018 and 2017 with an average H1 of £7,688
  • The average number of days in stock rose to 62 (up 2 days MoM and 4 days YoY ), maintaining an average in excess 60 days during the first half of 2019
  • One in ten dealers have reported investing in additional funding to enable business growth, while almost a quarter cited they had taken on new staff in the Monthly Market Survey. Whilst two-thirds of dealers are on track or are performing above their half-year forecasts
  • The average age of funded units remained level YoY at 6.0 years, while the average mileage eased slightly to just below the 60K market to 59,493

The Monthly Market Report includes COX’s 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