Inside the Industry April 2024
2023/24 Charity Challenge – 2973 Thank Yous!
Last month I expressed my disappointment that donations had only reached just over £400 against my target of £2177 being £1 for every mile walked. Fair enough £2177 was always a very big target which I honestly didn’t realistically expect to reach but £400 was a long way down. So my appeal last month was maybe a bit blunt, but your response was just staggering. Including Gift Aid Tax Reclaims the total raised is now a fantastic £2973! So target smashed. Some very generous individual donations included, it wouldn’t be right to name names but every £ is very meaningful and gratefully received. Your generosity has been quite amazing.
As those readers who’ve worked with me in the past know very well I’ve always likes round figures when setting targets, so if by any chance you didn’t get round to it in the rush of daily life you can still donate by following the link below. £27 would see us break £3000! Whether we do or we don’t a fantastic result so enormous thanks to you all.
https://www.justgiving.com/page/paul-gilligan-1708960436839?utm_medium=fundraising&utm_content=page%2Fpaul-gilligan-1708960436839&utm_source=email&utm_campaign=pfp-email
March UK Sales (Registrations)
I said last month that we would only get a true picture of what’s happening in the UK new vehicle marker when the March numbers were finalised. March brings the first registration plate change and is in non Covid years the biggest sales month of the year. Well this March pretty well confirmed what had happened in the first two months. Total registrations were just over 10% up and the same increase for the first three months combined. However within that for the quarter Fleet sales are almost 29% up with Business sales down almost 8% and Retail down over 9%. And all this in spite of some very attractive discount and subsidised finance offers to stimulate the market together with an intense level of pre registrations. Total registrations were almost 318,000 which may sound impressive but for the 6 years before Covid struck in 2020 March registrations were always between 450,000 and 540,000 so the market is still about a third down on what had become to be regarded as the norm. That’s a big drop! And is spite of what the offers pouring into my In Box are a vast number of pre registrations.
Pure electric cars represented 15.5% of sales, exactly the same as last year and well below the Government target of 22% with heavy fines for manufacturers who don’t achieve that figure. It seems already that either the target is reduced or the fines will have to be paid. Hybrids in total took over 21% of sales and it seems this is what customers, particularly retail customers want.
As I’ve said before the vast majority of pure electrics are sold into the fleet market. A survey of UK leasing companies shows that 75% of new Business Contract Hire cars supplied are now pure electric or plug in hybrid. For Personal Contract Hire deals 75% are petrol or diesel, exactly the reverse. And of course this is all down to tax incentives for businesses and company car drivers with no incentives for private buyers (see below).
Looking at the performance of individual manufacturers the top 10 reads like this:
Month / Year To Date
1.
VW 6.97% 1. VW 7.56%
2.
Nissan 6.47% 2. BMW 6.74%
3.
BMW 6.31% 3. Nissan 6.12%
4.
Mercedes 6.23% 4. Kia 6.06%
5.
Audi 5.82% 5. Ford 5.97%
6.
Kia 5.81% 6. Audi 5.9%
7.
Ford 5.35% 7. Vauxhall 5.25%
8.
Toyota 5.31% 8. Mercedes 5.22%
9.
Vauxhall 4.89% 9. Toyota 4.8%
10.
Hyundai 4.27% 10. Hyundai 4.3%
See below ref Ford.
Government Refuses Incentives To Stimulate Electric Car Sales
One of the key things to come out of the March sales figures is that sales of new electric cars in the UK have stalled at around 15% of the market against a Government target of 22% (for this year rising form 2025 onwards). The industry have been pressing for incentives for retail customers as there are for businesses and company car drivers. There used to be such incentives which between 2011 and 2022 cost £1.5 Billion and supported the sale of almost half a million new cars. These pleas have fallen on deaf ears. The only action agreed so far is that by the end of this year all the cars that members of the Cabinet are driven around in on official business will be pure electric. This fleet comprises less than 50 cars so perhaps you can forgive the manufacturers for being unimpressed? Proposals included a reduction in VAT on electric cars, a reduction in the VAT payable for using public charge points from 20% to the 5% for private chargers, incentives for the purchase of used electric cars to reduce the heavy depreciation they currently suffer, all rejected. There are now 36 million cars on UK roads. Less that 1.5 million of these are pure electric. The industry is very angry about being fined if they don’t achieve a level of electric car sales that as one CEO said “is about double the level that customers actually want to buy”.
Proof that incentives work is not just provided by looking at electric sales into the UK fleet market. In Germany a Government subsidy of 4500 Euros per car was withdrawn abruptly and sales of electric cars have dropped by 29% as a result.
Manufacturers are responding they have to. There is no point in building thousands of cars the customers don’t want to buy. Jaguar having said they would be 100% electric in 2025 have now announced they will continue to produce petrol and diesel F-Pace models well into that year. Bentley who were to be all electric by 2030 now say they will make hybrids until “At least” 2032. Aston Martin similarly have extended hybrids until “Sometime in the mid 2030s”.
Have Ford Lost Their Way In Europe?
That was the question an old friend asked me over a glass of wine recently. He’s a man at least as steeped in Ford as I am. And the second big thing to come out of the March sales figures is the continued drop in Ford market share from the 33% of the 1980s to a little over 5% now. Last year the figure was about 7.5% so the drop has been over 30% in a year. All the last bit of course due to the fact that sales of Fiestas have ceased. Late last year another friend asked me where I saw the Ford market share once stocks of unsold Fiestas had been sold. I take no satisfaction from having replied “About 5%”. And next year Focus sales cease, what will the market share be then? Other manufacturers are slowing the move to a pure electric line up because of the lack of customer enthusiasm but not Ford. A recent interview I read with the boss of Ford in Europe was hardly reassuring.
Amongst other things he said “There are values which have made us successful over the last couple of years like solid quality and value for money that we’re not walking away from. The Ford brand is so rich and powerful, we have to do a better job of building that strength of brand into our products in Europe”.
So we have a boss who thinks they have had a successful couple of years when sales in their biggest market (UK) have been dropping by 30% a year? And who thinks the brand IS “Rich & Powerful”? If he replaces IS with WAS I for one would be in agreement. Time was when Ford supplied industry leading mass market cars, and when the product wasn’t up to scratch (e.g. 1982 Sierra) the strength and power of the Ford marketing machine and dealer network could still snatch victory from the jaws of defeat.
I have to agree with my friend that Ford as a car business in Europe has indeed lost its way. As a van business the story is entirely different thankfully. Ford in Europe is now a van business that also sells cars. And if it wasn’t a van business I’d be pretty sure that like GM if would have departed from the European market by now.
If Carlsberg Did Depreciation………..
A couple of weeks ago I was driving past our local Mercedes dealership. Caught in a queue at the roundabout it’s situated on I gave it a look and my attention was grabbed by a big luxury SUV parked in a prominent position with striking graphics applied inviting you to “Save £30,000 On This Car”. Well that certainly made me want to learn more so the internet was fired up as soon as I got back to the office.
Research showed the car as a Mercedes GLE AMG Coupe with a 5.3 litre engine and loads of options. It was less than 6 months old and had covered under 4000 miles. Retail price when new 6 months ago was £118,000, and yes it was now on sale for £78,000. No messing, no small print. Two things occurred to me:
First who can afford to lose almost £200 A DAY in depreciation? Second were I to be considering buying a similar car brand new and visited the dealership to progress the deal then being presented with a very clear message that if I did I would lose £30,000 in less than 6 months would surely make me reconsider the deal if not my own sanity?
Agency Plans Also In Reverse
As well as the move to electric cars having stalled so has the widespread change from the traditional dealer Franchise model to an Agency agreement where the manufacturer sets the selling price and the dealer simply receives a commission for handling the sale and delivery. Mercedes were first to switch at the beginning of last year and are sticking with it, for the moment at least. Heir sales dropped significantly but have now stabilised at that lower level. Dealers however complain that they are making a lot less money than before. Whilst some others have made the change for certain models only(often just the electric ones), others have “postponed the decision”. So the can gets kicked down the road.
Lots Of Tesla News Most (All?) Bad
Things move fast in Teslaworld. And not just the cars with throttles stuck wide open. I’d only finished reading in a monthly mag that the new $25000 electric car would revolutionise the company than I saw in my daily read that this project had been cancelled. And that deliveries of new Teslas were dropping rapidly, as were profits. That 10% of the Worldwide work force were to be made redundant (that’s 14,000 people). That big price reductions were being made in certain markets. Not in the UK – yet.
More Bad News – BYD Want To Bring Their £8000 Brand New Electric Car To The UK
The UK marketing boos of Chinese manufacturer BYD has stated publicly that they want to bring their Seagull model to the UK. This is a Fiesta sized pure electric car with a range of about 200 miles. In China it sells for the equivalent of around £8000. The cheapest electric car available in the UK was priced at over £20,000 but Dacia have recently introduced their “Spring” model with prices starting at £14,995. Still an awful lot more than £8,000? If they do sell at that price you would see finance payments of not much more than £100 a month. Reminds me of the £4999 Ford Ka (if you know you know).
Insurance Costs Continue To Rise, Thieves Continue To Get Way with It
The average car insurance cost in the UK is now very close to £1000 a year it was reported recently. That’s 43% more than at this time last year. Reasons given are the increased cost of spare parts and labour to carry out repairs and the rising cost of used car putting up write off claims. Another factor is the increase in car theft. The same rising cost of spare parts mean it is attractive to break stolen cars for those same components. And it seems pretty safe way to make a (dishonest) living.
Last year 336,000 vehicle theft crimes were committed in the UK. That’s about 1% of the cars in the country being stolen in a single year, in a hundred years they’ll have taken them all! About 85% of the cases were closed without a suspect being identified. There were 100 neighbourhoods in England & Wales where not one criminal was caught and charged, and a further 556 areas where there was at least one car theft a week and less than 2% resulted in an arrest and a charge. Worst place to park your car is Blyth in Nottinghamshire. There were 126 car thefts there last year, not one resulted in a charge. The West End of London no doubt because of the number of high value cars is one of the riskiest areas. 1171 thefts last year, 98% of them got away with it.
2024/25 Charity Challenge
As reported last month the first half of this year’s challenge is to retrace the route of the 1955 Mille Miglia. This means a target of 5.5 miles a day. This is easy it’s the EVERY day that is hard! Started March 1 went well after the first 5 weeks we were about 20 miles ahead of schedule so looking comfortable. Then on April 11 a severe attack of Sciatica hit me. I’ve had this before but not this badly. I’m saying Sciatica, actually seeing a Doctor 29th for the first time to get confirmation. It’s incredibly painful so much so I can only move around the house for very short distances with the aid of a walking stick. So for almost 3 weeks daily miles have averaged between 1 and 1.5 miles a day! Requirement now is up to about 6 miles a day and of course increasing every day. There are other serious consequences, in 264 hours from now I’m due to leave for John Lennon International airport to begin the journey to the Monte Carlo Historique GP.
Paul Gilligan
07785 29322