This is an interesting time for the motor trade industry and there are many challenges ahead – the uncertainty of Brexit, falling household expenditure, inflation and the confusion surrounding diesel cars resulting in the decline of new car sales. The motor trade insurance experts will be here through it all – but what will the market look like for the rest of 2018?
This is a turbulent time for motor traders. Whether it’s the potential implications of Brexit on the UK economy or the changing government laws in relation to diesel vehicle ownership and usage, those in the trade must stay on their toes if they want to stay in the game.
Having said this, the opportunities for innovation and growth in emerging markets within the industry have never been greater. With the right motor trade insurance backing you for security and of course the right decisions in business, there is still much to be won.
Continued decline of new car sales
“The ongoing and substantial decline in new diesel car registrations is concerning, particularly since the evidence indicates consumers and businesses are not switching into alternative technologies.” – Mike Hawes, SMMT Chief Executive
New car registrations have continued to decline this year according to statistics published by the Society of Motor Manufacturers & Traders (SMMT). This has followed the decrease in purchases from both private buyers and fleet operators – a trend expected to continue until the end of 2018 at the very least. While dealers believe that consumer demand is still high, this has not been enough to overcome hesitancy when it comes to purchasing a new car.
This is largely due to the increased demonisation of diesel by the government and the public’s fear of being penalised for investing in diesel. While sales have not completely halted, the uncertainty surrounding this issue has been the cause of its predicted downward spiral for 2018 and beyond.
Although the sale of petrol and alternative fuel vehicles such as hybrid and battery electric cars are up, this has not been enough to offset the decline in diesel registrations.
Pressure on diesel
“Not only have they (diesel cars on sale today) drastically reduced or banished particulates, sulphur and carbon monoxide but they also emit vastly lower NOx than their older counterparts.” – Mike Hawes, SMMT Chief
The chancellor announced in last year’s Autumn Statement that people who purchase a diesel car that doesn’t meet the new standard for emissions from April 2018 will have to pay a higher road tax for the first year. Together with the threat of low emission zones restricting the movement of diesel drivers, this has been more than enough to put buyers off.
This stigma against diesel is not predicted to change anytime soon despite claims that the latest models are the “cleanest in history” and fall well below the carbon emissions limit. The industry has had to adapt to cover this fall in sales and some have already extended scrappage schemes.
The environmental march
“Sales will gradually move towards vehicles that pioneer alternative fuel technology; however, the move in this direction so far has been moderate.”
Ironically, the rising share of petrol car sales has led to a rise in new car CO2 exhaust emissions according to SMMT’s 2018 CO2 report. Although this speaks in favour of new diesel cars, it isn’t enough to turn the tide of public sentiment back towards diesel completely.
Our motor trade insurance teams have seen sales of alternative fuel cars rise moderately in recent years and many predict that all signs point towards a greener and increasingly electric UK. As climate change becomes a progressively topical global issue, the UK has made efforts to keep up with advances in technology and released certain targets for itself.
A long term prediction for the UK is that sales will gradually move towards vehicles that pioneer alternative fuel technology; however, the move in this direction so far has been moderate to say the least. While there has been investment in charging points for electric cars and buyer incentives for electric vehicles, there are still concerns about infrastructure and affordability amongst the public that will mean petrol and diesel sales will continue, if the government’s anti-diesel agenda abates.
“Most operators have strategically shifted towards used vehicle operations.”
Most operators have strategically shifted towards used vehicle operations according to sources such as Motor Trader, and are benefiting more from their aftersales departments. Dealers across the country are realising that they need to balance their sales focus and push for new, innovative ways to cater to consumer demands.
As competition increases and fewer people are visiting physical showrooms as their first port of call when buying a vehicle, dealers must also prioritise their online visibility and marketing if they are to retain market share. For those who can offer a reliable service with added aftercare components, the likelihood of success in 2018 is high. However, for those who are not willing to evolve from their new car business models, there are certainly choppy waters ahead.
For those who work in the service and repair of vehicles already, now is a chance to increase your exposure and service offerings and cater to used car owners who have postponed their purchase of a new car during this uncertain time.
Keep the motor trade insurance experts at ChoiceQuote on call. For more information, speak to one of our team on 01625 885 046.
“Over 80 per cent of new cars bought in the UK are imported according to the European Automobile Manufacturer’s Association.”
Motor manufacturing in today’s world is a highly globalised process. Players in the motor trade industry know all too well the impact that added restrictions and tariffs have when it comes to trading components internationally.
As a result of Brexit, we are surrounded with a mood of uncertainty when it comes to the future of the industry. What we do know is that over 80 per cent of new cars bought in the UK are imported according to the European Automobile Manufacturer’s Association and trade deals are vital for ensuring a sustainable supply to the market. Additionally, the declining household income and the fluctuating inflation rate is a factor in how willing consumers are to make major purchases over the next few years.
“Dealers must understand how to cater to the growing markets of used car and after sales purchases to sustain their revenue.”
Our motor trade insurance experts report that dealers remain optimistic throughout all of this and are reassured by the fact that consumer demand is still high. As clarity is gained when it comes to laws surrounding diesel car emissions and the country moves into a phase of new and lasting trade deals following Brexit negotiations, the motor trade industry could well be back on its feet. Both the National Franchised Dealers Association (NFDA) and the Retail Motor Industry Federation (RMI) have also stressed the importance of Brexit in shaping the future of the motor retail sector.
In the meantime, adapting to survive seems to be the key for dealers who must understand how to cater to the growing markets of used car and after sales purchases to sustain their revenue during this turbulent time.
We can’t predict the future. But a carefully tailored motor trade insurance policy will help you weather uncertain times. To find out more about your motor trade insurance options, call ChoiceQuote today on 01625 885 046 or fill in our quick online form to receive a quote.