Retail - summary

  • RDE drives volumes in August, with a -1.6% YoY decline to 92,573, but this represents a +21.1% increase when compared to August 2017. Year-to-date performance down -3.5% and the second consecutive year legislation alters standard seasonality
  • UK Consumer Confidence decreases three points to -14 for August 2019, highlighting that consumers remain nervous about the wider economy. Whilst 59% of dealers believe that economic conditions will stay the same or improve in the coming months, according to the latest Modix survey
  • 65% of dealers surveyed reported that consumer demand was the same or better than August 2018, and while 20% reported that physical footfall had improved, an impressive 39% observed an increase in online activity YoY
  • 41% of dealers in the August Monthly Market Survey reported a decrease in overage used cars, with 32% citing a decrease in stock. This supports a generally stable trading month. The publicised supply and lead times for new cars resulted in 64% reporting a decrease or level overage and 66% reduction in consignment stock for new cars
  • 41% of dealers cited uncertainty over the economic condition over the coming months whilst one in four are optimistic that sourcing stock will improve, as indicated in the August Monthly Market Survey
  • The introduction of WLTP, RDE and the CAFE legislation due in 2020 are all having an impact on the new car market. In recent months we’ve seen more clarification around company car taxation, but long lead times for the most popular new car models mean that fleet registrations are still fairly low
  • Long new-car lead times for the most desirable models supported used-car market stability
  • The used vehicle market held steady in the traditionally quiet month of August, with stable demand in both the wholesale and retail market
  • The automotive retail market continued to face several challenges in August, but dealer sentiment from the latest Modix survey suggests a stable market across the month
  • In an unpredictable market with a lot of forces at play, retailers feel that they can’t let uncertainty stop them from getting on with the job at hand

Wholesale - summary

  • August saw a slight change in the stock mix with a higher proportion of part-exchange vehicles, and an increase in average age and mileage MoM. As a result, the average part-exchange vehicle price was down -8.1% on July’s figure at £3,388
  • Wholesale stock profiles in August show an increase in age and mileage, following the seasonal uplift experienced from July into August
  • Data shows that diesel values have taken the biggest dip YoY, down -17.8% when compared to last August. In contrast, the average AFV value has been up YoY every month for the last six months, a sign of dealer and consumer interest in the vehicles
  • Ford and Vauxhall continue to dominate the top 4 positions for the most vehicles sold in wholesale for August, whilst the VW Golf replaces the Fiat 500 in the fifth position and the Audi A3 replaces the BMW 1 series in tenth place
  • Average values were stable in August, and the realignment of pricing guides that we’ve seen over the past two months stimulated demand in the wholesale market, generating strong conversion rates across the month
  • The proportion of 1 – 3-year old diesel vehicles at auction is falling, and this will naturally affect the average price. That said, a used diesel is still the best choice for many consumers, and good condition diesel vehicles continue to sell well at auction
  • The MoM drop in average price at Manheim reflects a change in stock mix, rather than a downward pricing trend
  • The continued success of Dealer Auction demonstrates a real appetite for digital wholesale, and in August the business reported that vendor numbers were up 9% YoY
  • Dealer Auction, Cox Automotive’s digital wholesale marketplace, saw the average selling price hold steady at £4,459, up just £57 on the July figure

Funding - summary

  • The average vehicle value remained in line both MoM and YoY at £7,312 (down £288 MoM and £84 YoY). As with the wholesale values, these declines reflect the trade values depreciation the sector has experienced over recent months
  • The average number of days in stock eased to 60.8 (61.8 July 2019 and 60.2 August 2018), maintaining an average in excess 60 days during 2019
  • Over one in five dealers see auction fees and transport costs as the biggest impact on profitability, while just under one in ten cite costs associated with vehicle preparation and valeting as hitting profit margins the hardest
  • The average mileage marginally down marginally to 59,695 for vehicles bought using the NextGear stock funding plan. It also saw the average age of its funded units increase from 5.8 to 6.2 years

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