Cox Automotive has published the latest Automotive Market Landscape for 2020.
Highlights:
New car market
Registrations currently down -39.7% YTD and the SMMT forecast -30% down by the end of 2020
- Lost 600k registrations during COVID-19 lockdown and YTD
- Production constraints for OEMs due to lost efficiencies and supply chain issues
- SMMT reduce the 2020 full-year outlook to -30%, representing more than £20 billion of lost sales
- Order take healthy across the network, but concerns remain regarding supply
- OEMs focus on maximising 2020 recovery
Wholesale activity
Caution increases on Q4, whilst values remain healthy with supply constraints
- Supply returns to mid-July volumes, an increase of 18.2 indexed points following a post-lockdown low
- Used car prices remain healthy following a rise of 3.9 indexed points, as supply aligns with demand
- Online auctions continue to offer customers buying efficiencies and multi-sale opportunities
- Pent-up demand drive sales return to pre-lockdown volumes
- Mid-September performance illustrates the demand for quality retail stock
A period of volatility ahead for values
COVID-19 causes an unseasonably strong used car market
- Values highest YTD since the 2009 financial recovery (2009 - +10.7% YTD)
- The unseasonal market continues – market proceeding with caution into Q4 and Q1 2021
- Pressure on low graded (4/5/U) vehicles as buyers become more selective and impact of lockdown public nervousness eases
New and Used – E.U./International
European market facing -25% decline in sales in 2020
- Majority of the global automotive sector in the red
- Concerns increase for the U.K. new car market as we approach the Brexit deadline and lack of clarity
- The E.U. will potentially experience a decline of 3 million units in 2020, down from 12.8 million in 2019 to 9.6 million - -25%
Outlook
UK 2020
New car volumes scenarios
- We initially forecast 2.27m new car registrations
- In the “W-shape” recovery we expect, down -23.8%/1,716,999 m
- Concurs with SMMT forecast (-30.6%/1,603 m) issued July 2020 actuals released, showing -39.7% YoY decline
- Actual recovery will be determined by:
- When and how can dealers trade again?
- Will there be sufficient consumer demand?
- How many vehicles will be supplied?
Used car volume scenarios
- We initially forecast 7.99m used car transactions
- In the “W-shape” recovery we expect, down 17%
- No 3rd party views published and no actuals yet
published for 2020 Q3, showing post-lockdown recovery - Less impact on used than new as not relying on
a production that was already constrained - Actual recovery will be determined by:
- How can dealers trade in quarter 4?
- Will there be sufficient consumer demand post furlough?
- The challenges facing supply
Retailers anticipating the emergence of new trends
Dealers are expecting a change in consumer buying behaviours
- The expectation of consumer caution towards finance
- Accelerating consumer trends already in place pre-pandemic
- Move towards subscription vs ownership
- Attitude towards fuel type
- A move towards used cars in the short term; potential supply constraints and
- affordability causing negativity towards new
- Avoidance of public transport in short to medium but returning in the long term
- Concerns towards cash flow, as access to capital lowest worry
