Retail
- UK new car registrations declined -6.7% in October, as consumer confidence remains weak. However, in context due to both WLTP in 2018 and RDE in 2019, when comparing the 3 months Aug/Sept/Oct, the YoY resulted in a -1.3% decline
- October UK Consumer Confidence declined two points to -14 for the third time this year, returning to the lack of confidence observed in August
- The Modix monthly dealer sentiment survey found that 55% of respondents believed demand was down YoY. 59% also reported that physical footfall was down, although 34% saw an increase in online activity
- Supply pressures resulted in dealers reporting a reduction in both overage and days in stock for used cars. 88% cited that overage stock was the same or lower than last year, while 89% reported that days in stock had reduced or stayed the same
- Half of the dealers in the October Monthly Market Survey cited negativity towards the economic condition over the coming months as the UK approaches further uncertainty. Additionally, 68% reported that the supply constraints will cause the sourcing of stock over the coming month to remain the same or become tougher
- The new car market has been fairly slow, and 45% of the dealers surveyed reported an increase overage new car stock
- Good quality used stock has been in short supply, and higher prices put pressure on margins. While larger dealer groups have been able to offset this with smart use of part-exchange stock within the network, smaller independent retailers will certainly have found margins a challenge in October
- Retailers reported that days in stock and the number of overage cars reduced in October
- The Corporate Average Fuel Economy (CAFÉ) legislation measures fleet emissions and OEMs will likely be keen to offer favourable deals on higher emission vehicles between now and the end of the year
- Reports indicate that OEMs are holding back lower emission vehicles until January, but hopefully, 2020 will see improved availability of these popular vehicles
Wholesale
- Manheim reported MoM increase in its average sold price, up 9.2%, strong buyer demand across the month meant that 88% of vehicles were sold first-time, up 1% MoM
- Wholesale stock profiles in October show a decrease in both age and mileage following two-months of increases. With the average age easing from 86.1 months to 83.2 and mileage dropping 2,591 miles
- Over half of dealers cited in Manheim’s October Monthly Market Survey that consumer interest in electric vehicles has increased in the previous 12-months whilst reminder indicated that demand has remained the same or decreased
- Data from Manheim reveals that average prices for diesel vehicles fell YoY in October, this reflects demand to some extent, but is also influenced by a lower number of 1-3-year-old diesel vehicles in the market
- The top 6 positions continue to remain static for the most vehicles sold in wholesale for October, whilst the Mercedes C Class switches with BMW 3 Series into 7th and Audi A3 is replaced by the Mercedes E Class in 9th place
- Younger stock (up to three years old) has been in short supply as long new-car lead-times and market uncertainty saw lower fleet volumes hit the wholesale market
- Dealer-Auction.com also saw demand push prices up, and vehicles sold on the trade-to-trade online auction platform achieved an average 99.4% of CAP clean across the month
- The wholesale market recorded increased volumes and good levels of demand as retailers competed for the most desirable stock
- Dealer groups retaining higher levels of part-exchange stock to compensate for the downturn in new car sales
- With no over-supply, auctions performance resulted in strong prices and high conversion rates with few replacement vehicles on the horizon
Funding
- NextGear Capital, the leading provider of wholesale stock funding, also saw average age and mileage hold relatively steady but reported an average price marginally ease by 0.8% MoM to £7,698
- The average number of days in stock reduced to 61.6 (63.3 September 2019 and 59.2 October 2018), continuing to reflect the increased age profile observed throughout 2019 compared to 2018 and 2017
- The average age and mileage decreased marginally YoY in contrast to the data observed through the wholesale sector. Mileage eased marginally to 69,889 for vehicles bought using the NextGear stock funding plan. It also saw the average age of its funded units increase from 5.8 in 2018 to 6.2 years
Outlook for retail, wholesale and funding sectors
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 remain key for dealers
