As the UK enters into its third national lockdown, we will once again be updating this page daily with the latest news coming out of the industry with regards to the impact of coronavirus (Covid-19):
MotoNovo provides ‘unprecedented’ level of support during pandemic
MotoNovo Finance provided an unprecedented level of customer support during the Covid-19 pandemic, with some support remaining in place as the business continues to work with dealers and customers.
A year on since the start of the first lockdown, MotoNovo has helped close to 55,000 customers with tailored payment deferrals. In addition, over 2,000 dealers have been supported with financial assistance with stock funding plans and no-fee Click and Reserve tools.
Mark Standish notes that these highlights were only part of the business’ Covid support programme. He said: “Financial support to our dealers and customers has been critical for many, but I am also proud of the way our entire team stepped up our proactive communication and innovation activities.
“Signposting dealers to the continually updated support options made across the UK, developing online tools and guidance to help many make a rapid transition to online retailing are just some of the steps we have made. At the same time, we helped over two thousand dealers transition to meet the new FCA rules successfully with our ground-breaking MotoRate risk-based pricing model.”
“Throughout the last year, our dealers and customers have seen the value of collaborating with a fully committed partner. It is something they will see more of as we start on the road to recovery when showroom doors open in a few short weeks.”
Shift towards hybrid working favours used car sales
The transition towards mixed working styles poses significant opportunity for the used car segment, MotoNovo Finance chief executive, Mark Standish, has speculated.
According to Standish, a reluctance to use public transport and the need for flexibility favours the accessibility of personal transport.
Standish said: “We can see from the increasing traffic on our used car marketplace findandfundmycar.com that more people are looking to used cars and we see much of this being driven by the need for affordable alternative to public transport.”
In September, data from YouGov revealed the varied preferences towards remote working, with 18% wanting to work entirely from home, and 39% angling for hybrid-style working. Only four in 10 want to work exclusively in the office.
Catering to these demands, several British employers have recently revealed their hybrid working strategies. BP informed staff that they could expect to work from home for two days a week whilst HSBC announced plans to cut office space by 40%.
Explaining the implications for public transport, Standish believes that the shift to hybrid working will “leave public transport operators struggling to break even” due to low footfall.
“People are choosing cars, motorcycles, and bikes. Within this, affordability is critical,” Standish added.
According to data from the Auto Trade Retail Price Index, average used car prices in January increased by 7.4% year-on-year to £14,155, representing the ninth consecutive month of price growth.
Based on a pricing analysis of around 900,000 vehicles, the price index has revealed the effects of ongoing supply constraints in the market, combined with solid levels of consumer demand despite persistent lockdown restrictions.
Concerning dual ownership, Standish argues this will become the norm, due to an increased need for flexibility. He concluded: “With people mindful of finances, the immediate outlook favours the appeal of two used cars on the drive and strong used car sales in recent weeks certainly point to this outcome.”
Finance Link secures £50k BBLS loan from GC Business Finance
Motor finance firm Finance Link has secured £50,000 form GC Business Finance through the Bounce Back Loan Scheme (BBLS).
Based in Trafford Park, Finance Link was founded by Jake Bulger in February 2020. After securing a £50,000 BBLS loan from GC Business Finance, Bulger invested in a digital marketing campaign to increase awareness of Finance Link and secure new leads.
GC Business Finance is an alternative finance provider for businesses unable to obtain finance through their regular bank. It offers loans ranging from £500 to £500,000, including CBILS, start-up loans, equity investment, export finance and micro finance.
In November, GC became the first local authority-backed delivery partner to offer BBLS loans when Greater Manchester Combined Authority pledged £10m emergency funding to support businesses in the region.
Jake Bulger, founder at Finance Link, said: “The BBLS loan from GC Business Finance has been a godsend. As a new business, it really took the pressure off and enabled us to focus on our growth plan. Since launching our digital marketing campaign, Finance Link has gone from strength to strength, and we are looking forward to further growth as employees return to the office in the near future.”
Andy Nichols, senior loan manager at GC Business Finance, adde: “The last 18 months have been really tough for businesses, so we’re proud to have helped Finance Link to get off the ground and achieve impressive growth with a five-figure BBLS loan. Jake deserves a lot of credit for navigating the business through the challenging circumstances presented by COVID-19, and we are excited to see where Finance Link goes next.”
AA Cars: one in 10 would consider car purchase without seeing it
Almost one in 10 drivers has bought, or considered buying, a used car without seeing it in person first during the pandemic, according to a survey of 19,000 drivers from AA Cars.
The findings come as an increasing number of dealerships have launched Click and Collect services throughout the pandemic, growing by 30% since the start of 2021 alone.
Of those drivers who have bought a car without viewing it during the pandemic, 84% said they would do so again in the future.
Some 51% of respondents said an inspection by a trusted company would increase the likelihood of them buying a used car without seeing it in person first.
Drivers rated having no charge for returning a car if they decide to cancel as the second highest incentive which would make them likely to buy a car unseen, and having clear information about their right to cancel was third.
Almost half (47%) of drivers said knowing the dealer was associated with a trusted body would make them more likely to buy a car without seeing it in person first, and 45% said they would want a Click and Collect option where they could choose to cancel if they don’t like the car when they go to pick it up.
James Fairclough, chief executive of AA Cars comments: “Dealerships were forced to innovate like never before during the pandemic, and many offered Click and Collect and home delivery services for the very first time.
“Our data shows this appears to have been a positive experience for an overwhelming majority of drivers, with more than 80% of them saying they would do the same again in the future, suggesting that dealerships would benefit from continuing to offer their new digital services once the pandemic ends.
“However, there remains a high number of drivers who say they would never buy a car without seeing it in person, indicating there is still enduring demand for forecourts that people can visit.”
Separate research from AA Cars revealed that demand for used cars was almost three times greater in the post-Christmas lockdown, when compared with the first national lockdown in April.
European new car registrations decline by 19.3% in February
New car registrations across the EU fell by 19.3% in February, according to the latest data from European Automobile Manufacturers Association (ACEA).
Attributed to the persistent Covid-19 restrictions and resulting uncertainty, only 771,486 units were registered across the region – the lowest February total on record since 2013.
Within the four major EU markets, Spain registered the most significant drop of 38.4% in new car registrations, followed by France with 20.9% and Germany with 19%. Italy posted the smallest drop of 12.3% of new car registrations.
Including additional data from January 2021, total registrations of new cars in the EU declined by 21.7% year-on-year. Within the four major markets, once again, Spain suffered the greatest loss with a decline of 44.6% compared to 2020. Germany followed with a loss of 25.1%, whilst France and Italy recorded smaller decreases of 14.2% and 13.1% respectively.
Having left the EU, the British car market also declined by 35.5% in February, falling only slightly behind Spain, according to the Society of Motor Manufacturers and Traders (SMMT).
With UK-based showrooms closed since 5 January – and in many parts of the country since December – both private and fleet sector demand fell, by 37.3% and 33.5% respectively.
Conversely, plug-in vehicles continued to enjoy growth, with BEVs and PHEVs taking a combined 13% market share for the month, up from just 5.7% in February 2020.
BEV uptake increased by 40.2% to 3,516 and PHEVs by 52.1% to 3,131, as the industry continues to promote a broad range of lower-emission technologies for consumers.
In response to the growing popularity of EVs, countries are racing to get the necessary infrastructure up to speed.
According to LeasePlan’s 2021 EV Readiness Index, across the EU almost all countries have demonstrated an improvement in EV readiness when compared with the previous year.
The index, which presents an analysis of the preparedness of all 22 European countries for the societal transition to EVs.
As EVs becomes increasingly accessible from a cost perspective, the issue of charging infrastructure has taken its place as the major hurdle for widespread EV adoption.
The Netherlands, Norway and the UK all retained their status as the top three most prepared countries for an EV revolution across Europe.
iVendi processes £1.3bn of used car sales in pandemic year
iVendi processed more than £1.3bn of online and showroom vehicle sales during the 12 months of the pandemic – representing an increase of £200m year-on-year.
The company said the figure represented actual sales of more than 120,000 cars, vans and motorcycles, rather than being an estimate.
James Tew, chief executive of iVendi, said: “The fact that more business went through the platform during the pandemic than the previous 12 months shows the extent to which technology has sustained dealers through the crisis.
“Car retailers have spent more than half of the last year being able to only sell online and there is widespread recognition that the market has markedly fallen but dealers using our technology have been able to buck that trend.”
iVendi made its Digital Deal feature of iVendi Transact free to dealers from its launch in April through to the end of the first lockdown, which was widely adopted by the firm’s retailer base.
Tew added that during the pandemic, dealers have needed complete mobility between their showrooms and online offering. “Too many retailers have been stuck with dated ‘online retail 1.0’ systems that locked them into doing business in a manner that no longer fitted with what was happening in the real world.”
The £1.3bn figure, according to Tew, shows how resilient the industry has been over the pandemic year. “What we’ve seen over the last 12 months is that when lockdowns have forced dealers into online sales, they’ve moved very quickly to embrace new and effective digitisation that has proven highly effective for them and for their customers.
“All of this shows, we believe, that the right technology can potentially protect dealers from uncertainty and that digital transformation isn’t only necessary but also profitable. We certainly have many dealers whose bottom line has remained solid and grown.”
Comparethemarket sees ‘substantial fall’ in car insurance claims
Car insurance claims fell by 26% year-on-year in 2020, as lockdowns and social distancing restrictions forced a reduction in the number of journeys being taken.
This is according to statistics from online comparison site comparethemarket, which revealed that April 2020, the first full month of the first lockdown, saw the steepest drop. Claims reported for incidents occurring in April 2020 fell 63% compared with the month before and decreased by 69% year-on-year.
Claims over the winter months, which historically see a spike due to increased Christmas traffic and tricky weather and road conditions, were also down. Claims reported as occurring during the second lockdown, in November 2020, dropped 30% compared to the same month in 2019. In December, claims also fell 28% year-on-year.
The decline in claims reported is likely to continue this year as motorists are set to make fewer journeys than they would outside of the pandemic. The latest mileage data from drivers on pay-by-mile policies with By Miles shows the average mileage driven daily fell by 51% in January 2021 during the latest lockdown, compared to January last year.
Enquiry data also revealed the proportion of drivers keeping their vehicle at home during the day, rather than at an office or factory car park, increased to 68% at the end of 2020 – up from 63% at the end of 2019.
The average premium for motorists who drive fewer than 6,000 miles per year dropped to £776 at the end of 2020 from £846 at the end of 2019. However, lower mileage drivers could make a further saving of up to £169 by switching to pay-by-mile insurance. Pay-by-mile policies are designed to be cheaper for lower mileage drivers because these motorists use their cars less often so are much less likely to have an accident and make a claim.
The total amount By Miles members paid for their insurance over the course of 2020 fell 25%, directly in line with the reduction in their mileage. That means each policyholder saved an average of £44 from the price they had been quoted at the start of the year.
Dan Hutson, head of motor at comparethemarket, said: “Last year saw a significant fall in claims, particularly in the months when social distancing restrictions were strictest. This trend is likely to continue in 2021 as restrictions remain in place for a significant part of the year. Even after the pandemic, we anticipate seeing fewer claims as people use their car less for commuting by regularly work from home.
“With falling premiums, insurers seem to be passing on some of the savings from the drop in claims. However, these savings will only be available to drivers who shop around for the best deal when their policy comes up for renewal. For lower mileage drivers, pay-by-mile policies could be the most cost-effective option. These flexible policies may also benefit motorists who are unsure about how often they will use their cars this year as payments will be based on the miles they actually drive.”
Year of instability drives up demand for sub-prime finance
Demand for mid to sub-prime car finance has grown by 112% across the last 12 months, according to motor finance broker Caerus Capital.
As households struggled with the economic crisis, demand for mid to sub-prime finance rocketed, with a 63% increase in applications between first and second lockdowns. This was followed by a 64% increase in the most recent lockdown.
Sub-prime borrowers taking out credit cards also grew by 143% between August and September last year, according to analysis from the credit reference agency Equifax.
Explaining the effect of the pandemic on the demand for sub-prime finance, Ben Maguire, commercial director at Caerus Capital, said: “The pandemic has caused financial hardship for many families and young professionals who have been furloughed or made redundant over the last 12 months.
“Recent figures from the Financial Conduct Authority estimate that nearly a third of adults have seen their incomes impacted by the coronavirus pandemic.”
Figures from HM Revenue & Customs for January 2021 showed that there were 726,000 fewer people on company payrolls when compared with February 2020.
Furthermore, it is estimated that 1m self-employed people are also understood to be without work, many of them not eligible for state support.
Subsequently, many consumers within the prime segment prior to the pandemic have shifted to the sub-prime credit scores.
Maguire continued: “We have experienced a steady increase in car finance applications for sub-prime and guarantor loans, with the average vehicle purchase price sitting at £7,246.
“Our data also shows that there is strong regional divide, with the highest number of sub-prime applications coming from the Birmingham and the East Midlands regions.”
According to Maguire, Caerus Capital is currently converting declined applications to accepts at 79% through collaboration with its extensive dealer network.
“We have a market-leading panel of lenders to support all dealers’ customer finance requirements,” he said. “We are committed to driving up finance conversion rates.”
Car sales continue to fall below expectations across third lockdown
New car sales fell in February by 35.5% year-on-year, according to new data from Cox Automotive, reinforcing the importance of showrooms reopening on 12 April 2021.
Representing a monthly decline of 28,282 vehicles, orders for the new 21 numberplates were down by 30% year-on-year, according to over half of dealers surveyed.
Across all national lockdowns, both new and used car sales have fallen below expectations.
Philip Nothard, insight and strategy director at Cox Automotive, said: “The data on car sales during the third lockdown makes for difficult reading, but it also provides some optimism. Some 70% of dealers report the third lockdown has caused a 10-30% reduction in new car orders, and 17% of dealers have been hit as badly as up to 50%.
The first lockdown from March to June 2020 accounted for 77% of the total deficit in new car registrations, and a decline of 1.1m units within the used segment.
New car sales in March 2020 decreased by 44%, April saw a decrease of 97.14% and May saw a decrease of 88.98%. For used car sales, the year-on-year fall in March 2020 was a decrease of 30.72%, 74.22% in April and 57.11% in May.
During restrictions across November and December car sales declined more gently, with new car registrations falling by 27.4% and 11% across the two respective months. Used cars fell by 18.33% and 4.23% respectively.
Northard continued: “This highlights why it’s imperative for the industry, that car showrooms reopen on 12 April. Thankfully, over half of the dealers believe that economic conditions will improve once the third lockdown ends.”
In response to restrictions, dealers have been accelerating their digital transformations through the introduction of virtual showrooms and Click and Collect tools.
Despite being branded a permanent and positive shift in the industry due to their convenience, Northard believes that the “less popular Click and Collect schemes” will be “supplemented hugely by the more standard showroom and test-drive experience that customers are used to”.
Northard concluded: “The opening of car showrooms on 12 April is a real opportunity for dealers to boost sales volumes after a hugely challenging 12 months. April and May could see a surge in new car sales, coinciding with the recent release of the new ‘21’ number plate.
“Furthermore, consumer spending in 2021 could well shift to the car market, since other large-scale purchases such as holidays abroad, continue to be surrounded by risk and uncertainty.”
MotoNovo collates Covid-19 impact feedback from dealers
MotoNovo Finance has published the results of its Dealer Pulse 2021 survey, highlighting the key points focused on the impact of Covid-19.
“The Covid-19 pandemic has thrown up a massive challenge to the motor retail community,” explained MotoNovo’s chief strategy and marketing officer Jon Slater.
“I am delighted that the overwhelming view was that business was a lot better than expected with dealers showing their classic agility across such a broad audience. From the research, we have distilled thirteen key points from dealer feedback that summarises their experiences and views on the implications moving forward.”
Changes in the customer journey
1) Dealers recognised that customer expectations of online service have accelerated ‘by a few years’
2) Click and collect/delivery and remote sales increased noticeably for some dealers. However, the perception was that, apart from lockdown periods, this had not taken off as much as dealers thought it would. The fear of more returns/ buyers’ remorse has generally not materialised either
3) Customers are doing more research beforehand: they ask fewer questions once in the dealership and are coming in to confirm things are as expected. Often, final decisions are being made without sight of the car. The amount of selling dealers need to do has been reduced significantly
4) Although not universally desired by dealers, self-service elements in the finance journey are seen as rising
5) Signs of finance competitors being very aggressive with the rates they advertise and with some success
6) Concerns that financially savvy customers will begin to circumvent dealer finance
Used car growth drivers
7) Customers concerned about spending too much on new cars with EV’s around the corner
8) Concerns about the future economic climate
9) Moves to avoid public transport
Structural challenges for dealers
10) There was an absence of clear digital strategies by dealers to address the trend to online car buying and financing
11) Noticeable staff losses since the first lockdown as the need for physical presence dwindles. Dealers feel even busier and more stretched, an area where digitisation might help
Hope or reality?
12) The traditional PoS model is viewed as fundamental to great service and expected to remain, with digital playing a more significant complementary role
13) Delivery not pervasively implemented or desired, dealers associated it with a lot of set up work and other complications. Dealers do not think it will take over as people generally want to see the vehicle or book a test drive before purchase
Slater concluded: “We cannot underestimate the lasting change the last year has had on the dealer model. I do not doubt many people will want to visit showrooms when the opportunity returns, something supported by a YouGov survey that suggested 62% of people were not in favour of an entirely online car buying model.
“Nevertheless, it still means that a third of people are happy to buy online and with dealers telling us showrooms visits were just to ‘confirm things’ and with less staff on hand to help, a shift to online, self-serve car buying and financing is set to become increasingly essential. Dealers need to adapt, leveraging the support and help of collaborators.”
Trading volumes increase to 75%, Auto Trader data shows
Most retailers are currently trading at 75% of normal volumes, a 10% increase from January, according to the latest data from Auto Trader.
Registering a 10% year-on-year increase in audience performance to 15.2m cross-platform visits, activity on the Auto Trader marketplace points to an encouraging recovery in the coming weeks.
The data also revealed an 8.5% increase in advert views, and an average of 1.4m visitors every day last week, driving a 31.3% year-on-year increase in the number of leads being sent to retailers.
In anticipation of forecourts reopening with the easing of restrictions, an increasing number of consumers have been browsing around online.
Nathan Coe, chief executive of Auto Trader, said: “We are seeing early signs of a strong consumer recovery from the latest lockdown. It’s clear that consumers are getting more comfortable with the current buying options available and are anticipating physical forecourts fully opening in the coming weeks. We have seen this in both a step up in our audience performance and our proxy sold data.”
According to on-site research conducted on 23 February 2021, amongst the 800 consumers intending to buy in the next 12 months, 73% said the announcement from the prime minister had no impact on their planned purchase timeline.
Of the consumers that made adjustments to their timelines, 11% said they were considering delaying the purchase further, while 6% said they would purchase sooner.
Additional research from Auto Trader also revealed positive trends within consumer confidence in being able to afford their next car, with 84.3% reporting “very high confidence”. For individuals looking to buy in the next two weeks, this figure increased to 86.7%.
Coe concluded: “It is critical that retailers are showcasing all of their stock online to maximise current online sales opportunities now and to ensure that buyers who prefer to wait a few weeks can begin to make their buying decisions.
“We know April sales come from consumers searching in February and March and with the additional impetus from the plate change we can expect this to be even more pronounced this year.”
AA Cars: used car demand has tripled since April
Demand for used cars was almost three times greater in the post-Christmas lockdown, when compared with the first national lockdown in April, according to data from AA Cars.
Since the initial easing of lockdown restrictions last summer, used car demand began to gain momentum. Despite the persistent presence of lockdown restrictions, figures last month surpassed those in January 2020, which was pre-pandemic, by 20%.
According to AA, this demand may be attributed to weather, as individuals are less likely to travel by foot or bike during the winter months.
However, the firm acknowledges that the rapid processes of digitalisation across the industry are also likely to have had a significant impact.
James Fairclough, chief executive of AA Cars, explained: “The winding down of the first nationwide lockdown last summer prompted a spike in interest in used cars, but demand has not tailed off, even as new restrictions came into force at the start of January.
“Forecourts may be closed, but dealers are still finding ways to get cars to buyers, either by offering a click and collect service or even home delivery.”
The widespread introduction of Click & Collect and home delivery services offered by dealerships have made it increasingly easy for consumers to purchase a new car without ever visiting the showroom.
The demand is expected to continue an upward trajectory once forecourts are reopened, which will help to secure purchases with consumers who might be reluctant to purchase with the absence of any touchpoints along the way.
Fairclough continued: “This sustained increase in searches is very encouraging for the industry, and we expect to see this grow further after lockdown when people can visit forecourts again.
“Throughout the pandemic, some people swapped from commuting to work by train or bus to using a car instead. It will be interesting to see whether those habits continue this year now that people have become more reliant on their car.”
Covid roadmap: what it means for UK automotive
Prime minister Boris Johnson has unveiled the government’s roadmap for easing Covid restrictions in England, which culminates in all restrictions being lifted by 21 June at the earliest.
In terms of what it means for automotive, motor dealers will have to wait until 12 April before showroom doors can open – a decision which has been met with disappointment across the industry.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), acknowledged that while the priority must be to get the virus under control, the roadmap is disappointing given showroom facilities are large Covid-secure premises with low footfall.
Hawes said: “Whilst Click & Collect can continue, this does not replace the showroom experience on which so many retail customers depend, especially in the all-important March plate change month that represents one in five of annual new car registrations.
“Unfortunately, the continuing decline in retail business will translate into reduced production volumes as well as giving rise to other operational issues. We look to Government to work with the sector to provide ongoing support and clarity so the industry can plan its re-opening and recovery.”
Expressing a similar sentiment, Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), highlighted that the motor industry was one of the first to work with the government to develop guidelines to enable a safe return to work.
“Dealerships can operate effectively by appointment and take all necessary steps such as measuring customers’ temperature when they enter the premises, wearing masks, working behind protective screens, as well as sanitising cars and keys.
“Franchised dealers have demonstrated their resilience and ability to adapt, providing online sales and Click & Collect services. However, these are not enough to sustain businesses this year nor to fully satisfy consumer demand, especially with the upcoming plate change in March. Dealerships could reopen safely and immediately.”
Used car dealers optimistic for 2021, survey finds
Some 43% of used car dealerships in the UK are optimistic that used vehicle profit margins will rise throughout the course of 2021, according to a survey from NextGear Capital.
The positivity outshines the sentiment in January 2020, when 54% of respondents were anticipating a reduction in their performance. This time round, fewer than one in four think their margins face further decline. A third said they expect no change.
Liam Quegan, managing director of Manheim Auction Services & NextGear Capital, is optimistic about the used vehicle sector in 2021: “We’re seeing real hope among used vehicle retailers about their prospects, despite market conditions remaining highly challenging. The sector has proved remarkably resilient throughout the pandemic and with an easing of restrictions becoming a tantalisingly close prospect, dealers are rightly preparing for a return to growth.
“But we mustn’t be complacent and would advise dealers against over stretching themselves as consumer demand begins to rise again. Cautious optimism should remain our collective maxim.
“As demand and optimism grows in the used vehicle market, NextGear Capital remains poised to work in partnership with dealers to help them buy the stock they need from the source they choose, with funding available. This helps used vehicle retailers free up the cash they need to fill their forecourts, as the used sector fuels dealership recoveries nationwide.”
Separate research from Cox Automotive found that two thirds of dealers are down 10-30% as a result of the third lockdown, while 15% cited that they had felt little or no impact.
Philip Nothard, Cox Automotive UK’s customer insight & strategy director, said: “The sentiment from across the network is that there are ’pockets’ of weakness in retail which could be caused by increasing financial pressure – two-thirds of dealers reported an increase in both days in stock and overage vehicles. The advice given is to hold firm where possible.
“Many dealers acquired stock in Q4 of 2020 to be well placed for a fast start in 2021, although unfortunately some of this stock is now ageing. What’s clear is stocking the right car in terms of price point, model and good specification is key for the current trading conditions in 2021”.
UK January decline in used car sales ‘worst in Europe’
Used car sales in the UK fell by 40.4% year-on-year in January 2021, marking the single largest decline of any of the 13 European countries analysed by INDICATA.
Used hybrid car sales fell 9% year-on-year and BEV sales only rose 15%, the lowest rate of growth since INDICATA records began.
There are distinct signs in the UK and across Europe of an oversupply of BEVs caused by overpricing which has also impacted stock turn.
Overall dealer used car stock levels fell by 10.2% during January as cautious remained about overstocking and many franchised dealers left car buyers furloughed.
Despite the market stalling sales were still trending in January ahead of the levels recorded in lockdown 2.0 in October/November, while prices have risen by around 3% during January which reinforces demand is gradually coming back.
“Looking at January in a positive way, 60% of used car volumes were achieved despite the market being locked down and relying on Click and Collect. The used market continues to trade digitally, and we have seen more buyers than ever sign up to our online Autofind portal to either buy or sell used car stock,” explained Jon Mitchell, INDICATA’s group sales director.
“Already February sales have started to rise as franchised dealers come back into the market putting it into a good position ready for when lockdown 3.0 ends,” he added.
MotoNovo secures £520m in latest securitisation round
MotoNovo Finance secured a £520m issuance from 16 investors as part of its latest securitisation fundraising round, surpassing the company’s expectations.
The round marks the largest issuance across MotoNovo’s securitisation programme and the largest order book with over £800m orders secured during the two day fundraising window.
Mark Standish, chief executive of MotoNovo, said: “Against such an unprecedented market backdrop, it was reassuring to have such strong demand and support from both long-term investors as well as new investors to the programme. I couldn’t be prouder of the way our team has stepped up to the challenge and embraced the opportunity to reinvent the future of car finance.”
During the first lockdown, MotoNovo moved its 700-strong workforce to home-working with the business up and running within 24 hours. Pressure points to support worried customers and their forbearance needs were addressed with the rapid redeployment of people and new technology.
The business also kept lending with no changes to its credit approach. As Standish noted: “We have a proud, successful history of innovation and change. When lockdown struck, our immediate reaction was to care for our people and then to press ‘Go’ on reimagining and reinventing the future.”
Audi A3 overtakes Mercedes-Benz as top leasing enquiry
The Audi A3 model has topped the list for most leasing enquiries in January, according to the latest data from Leasing.com.
The Volkswagen Golf and the Vauxhall Corsa took second and third place on the list, with data revealing a surprising downturn in enquiries on Mercedes Benz models.
The Mercedes Benz A-Class has been the most popular car to lease for the past two years, but its popularity has fallen across the pandemic, as consumers turn to more affordable hatchbacks.
Explaining the changing consumer trends, Paul Harrison, head of strategic partnerships at Leasing.com, saidd: “The coronavirus pandemic has changed so many things about the way we live our lives including the products and services we consume.
“Although many consumers still need access to their own transport, their choices are changing. They’re’ driving fewer miles, and often opting for less premium vehicles to help manage their finances.
Car showrooms continue to be closed to the public as part of national lockdown restrictions, forcing consumers to shop around and compare prices online.
Harrison continued: “Monthly prices for the Vauxhall Corsa start at around £120 per month on a 5,000 annual mileage deal. For many that’s less than the price of a monthly train ticket for keyworkers who still need to get to work.”
Similarly, Audi topped the manufacturer league table, with Mercedes-Benz slipping to fourth place behind Volkswagen, Land Rover and BMW.
Despite growing popularity of electric vehicles, none of the top personal leasing enquiries for January 2021 on Leasing.com were for electric models.
According to data from the Society of Motor Manufacturers and Traders (SMMT), sales of battery electric vehicles (BEVs) saw a year-on-year increase of 54.4%, taking a 6.9% share of the market. The number of available EV models almost doubled from 22 in January 2020 to 40 this year.
Meanwhile, both new petrol and diesel vehicles saw a decline in sales, falling by 62.1% and 50.6% respectively.
Startline forecasts major growth in near-prime PCP market
Near-prime personal contract purchase (PCP) is set to see major growth in 2021 due to a range of factors, predicts Startline Motor Finance.
The company saw an increase of around 20% for its PCP product in the final months of 2020, with the trend continuing into January.
Paul Burgess, chief executive of Startline, said: “One of the key developments we saw in 2020 was prime lenders tightening their underwriting rules in response to the pandemic and more potential car buyers being referred to near-prime lenders as a result.
“So far, this has largely affected hire purchase but is now starting to become apparent in the PCP sector. There has been a definite acceleration in our near-prime product in the last quarter and heading into 2021 as a result.
“This is something we are especially seeing at major dealer groups where PCP is a more prominent product. For them, it’s clear that near-prime PCP is becoming more important.”
The trend has also been attributed to the improvement in online handling of motor finance by dealers and other introducers, said Burgess. “The repeated lockdowns of the last year mean that everyone has had to get better at their digital customer journey, and one aspect is that car buyers are increasingly being presented more effectively with a choice of finance products and providers online.
“Consumers are able to see more clearly the advantages of PCP and the competitiveness of near-prime versions of the product, so there have simply been more online applications.”
Burgess believes that with the general trends that are likely to continue through 2021, PCP will continue to grow as an increasing number of introducers and car buyers consider the product.
Third lockdown drives significant decline in car sales
In January, new and used orders fell by 36% and 45% respectively, as consumer demand finally ran out of steam in the face of a third national lockdown, reports Dealerweb.
Recent data from the firm revealed that, alongside a decline in new and used orders, enquiries also fell year-on-year, with new enquiries down 29 and used by 34%.
Despite two previous lockdowns, consumer demand remained strong across 2020 facilitating exceptionally high rates of growth for used car prices in particular.
In December alone, demand for new cars grew by 9.5% year-on-year thanks to a marked increase in conversion as dealers focused on nurturing each lead.
James Hill, managing director at Dealerweb, praised the resilience exhibited by UK dealers so far: “The focus on delivering excellent service and maximising the value of every enquiry has helped to support some relatively robust numbers throughout 2020.”
Yet all good things must come to an end. Hill continued: “It seems that the combination of a third and strict lockdown in January, alongside some terrible weather, has hit consumer demand.”
Reinforcing the role of data in navigating the restrictions, Hill concluded: “In a challenging market, it is vital to follow up each enquiry in an efficient way and to ensure that the whole team can access sales data in real-time to inform commercial decisions.
“We find that data adds value to every business, but it has a multiplier effect when it is used across the business to drive growth.”
Conversely, the latest data from Auto Trader suggested that the UK automotive market had in fact surpassed expectations in January.
According to data from Auto Trader, strong performance across the industry was evident from the high volumes of traffic to the online marketplace, whilst Dealerweb reported that, positively, used car sale values have also increased by 14% to £20,839.
MotoNovo increases dealer support during lockdown
MotoNovo Finance has confirmed two initiatives designed to support its dealers through the latest lockdown period:
Vehicle Stocking – with immediate effect, all vehicles scheduled for full payment at the end of an agreed stocking period on a MotoNovo stocking plan will be automatically renewed for an additional 60 days. Delaying the need to make such payments, will help dealers to preserve much needed cashflow.
‘Click & Reserve’ – This online tool’s availability continues to prove ideal in supporting dealers’ Click & Collect/Click & Deliver services. Launched during the pandemic to help dealers, its availability free-of-charge is now being extended until the end of March.
Karl Werner, deputy chief executive of MotoNovo, said: “These two steps can, we hope, make a useful contribution to our dealers in these challenging times. For us, being a good partner is a long-term commitment. As our record of dealer centricity demonstrates, supporting the dealer community as a finance company is more than the current proposal.
“Empathy, collaboration and innovation are crucial components, never more so than through the unprecedented experience of the current pandemic.”
Mobility services set to take off in post-pandemic society
Growth in mobility services is anticipated to increase as the effects of the pandemic, which has hampered progression within the sector, begin to diminish.
The prediction, which comes from automotive technology provider Epyx, states that, despite widespread negative impact, Covid-19 has also facilitated increasingly imaginative future thinking.
Several mobility concepts rely on asset sharing, be it cars, public transport vehicles or forms of micro-mobility.
Heightened awareness of viral transmission has dampened user appetite for shared forms of transport. Subsequently, progress across mobility has stagnated.
Debbie Fox, commercial director of Epyx, believes that the pandemic has made businesses more open to the possibility of considering a wider range of transport solutions.
Explaining the pandemic-induced mindset shift, Fox said: “The ways in which car usage patterns have been affected, the growth in home working and the widespread adoption of video conferencing are all likely to make mobility solutions appear more viable to a wider range of potential users.
“The crisis has also created a pause where vehicle leasing companies, manufacturers and others who have been moving towards becoming mobility providers have been able to refine their ideas and their product offerings.”
According to Fox, a particular focus for vehicle leasing companies was integrating mobility offerings into two other current trends – electric vehicles and increased digitisation of services.
She noted: “We work with nearly all of the 50 largest vehicle leasing companies in the UK, and many of the conversations that we are having with them are about the ways in which these three elements will fit together in the future.
“Our involvement in these dialogues is very much around the digitisation aspect. As probably the fleet sector’s leading provider of online solutions of all kinds, there is a recognition that we have a track record of making processes work effectively.”
In boosting the accessibility and efficiency of mobility services, Fox believes the “right technological infrastructure is essential”.
Fox concluded: “Certainly, this is an area we have been looking at as a company for some time, and we have a range of ideas about how mobility providers should be approaching their service delivery in this sector from a technological point of view.”
Startline registers busiest single day for new proposals
Startline Motor Finance registers its busiest single day ever for new proposals, indicating consumer appetite for motor finance remains undeterred by new lockdown restrictions.
Despite indication that the used car market continued to suffer, the quantity of business written so far this year is greater than that of the same period in 2020.
Paul Burgess, chief executive of Startline, said: “We are starting to see reports that the overall used car market is about 50% down but our experience is that different dealers are having very different experiences. Some are doing much better than others.”
According to Burgess, there is a possibility that some deals being written are “being carried over from the pre-lockdown period”.
Anecdotally, however, Burgess believes a strong number of people are continuing to purchase used cars, capitalising on the click-and-collect processes put in place by many dealers since the start of the pandemic.
Emphasising the importance of digitalisation across the sector, Burgess continued: “It’s not a magic wand to have a strong online process but without one, it is next to impossible for most dealers to trade successfully at the moment.
“Importantly, we believe that the quality of the online journey being created is becoming more important. Once a customer has decided to buy a car, the entire purchasing process including motor finance has to be as painless as possible. No-one wants to spend hours filling in online forms. Everything needs to be fast and slick.”
Looking forward, Burgess speculates over whether consumer demand for motor finance will continue on its current trajectory: “The question is whether consumer appetites for buying used cars will diminish and obviously the lockdown doesn’t help but the effects of the pandemic on the finances of individuals have, so far, been extremely variable. Some have been hit hard, others not at all.
“It’s important to make it as easy as possible for those people who have disposable income and a desire to buy a car to complete their purchase.”
This year, a significant percentage of Startline’s efforts had centred on meeting the needs of customers whose finances had been impacted by the pandemic. Such an approach has paid off as the firm recorded a 20% increase in turnover this year when compared to 2019.
Dealership model transformed by recurring lockdown
Repeated national lockdowns have driven significant changes in the relationship between online and showroom motor retailer sales, according to iVendi.
An increasing number of dealers are embracing digital infrastructure, facilitating the development of a multi-pronged business strategy. Subsequently, dealers can jump between the two models as lockdown restrictions continue to fluctuate.
James Tew, iVendi chief executive, explained the importance of dealer flexibility in the face of unpredictability: “There is already talk that the new lockdown could last until March. That potentially means an entire quarter of the new year when digital click-and-collect will be the only option. Dealers have to maximise these opportunities to be viable.”
Whilst maximisation of online channels is key, there must be a “recognition that digital sales do not exist in a silo,” according to Tew. Dealers must remain directly connected to the showroom, ensuring both channels are equally productive upon a return to normality.
Referring to the refreshed sales model as connected retailing, Tew said: “This creates an obvious departure from the past. It means that increasingly, there is absolute flexibility between using online and showroom sales, supported by technology that makes such a relationship possible.”
In response to the pandemic, iVendi has witnessed a surge in popularity of online tools. During the first week of the November lockdown, the firm registered a 33% increase in use of its Digital Deals proposition when compared to the first week of October.
Tew continued: “However, what is perhaps the most interesting aspect of our previous lockdown statistics is not the 33% increase in deals being sent by dealers but the 24% rise in those being opened by customers. This shows how this proactive approach to digital is providing a valuable new sales channel during difficult trading conditions.”
Government confirms lockdown grants for businesses
Businesses affected by the latest lockdown measures will be eligible for a government grant of up to £9,000, the Chancellor of the Exchequer Rishi Sunak announced today.
This follows the announcement yesterday that these businesses will be closed until mid-February at the earliest in order to combat the rising cases of Covid-19.
The cash is provided on a per-property basis to support businesses through the latest restrictions, and is expected to benefit over 600,000 business properties, worth £4bn in total across all nations of the UK.
Sunak said: “The new strain of the virus presents us all with a huge challenge – and whilst the vaccine is being rolled out, we have needed to tighten restrictions further. Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the Spring.
“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”
The one-off top-ups will be granted to closed businesses as follows:
- £4,000 for businesses with a rateable value of £15,000 or under
- £6,000 for businesses with a rateable value between £15,000 and £51,000
- £9,000 for businesses with a rateable value of over £51,000
A further £594m is also being made available for Local Authorities and the Devolved Administrations to support other businesses not eligible for the grants, that might be affected by the restrictions. Businesses should apply to their Local Authorities.
As part of the new measures, car showrooms are once again required to close, but can “continue to operate click-and-collect and delivery services”.
Second lockdown hampers used car demand
Used car demand fell by 22.1% year-on-year in November, according to insights from the latest INDICATA UK report.
Attributable to the return of national lockdown restrictions, the fall in demand coincided with a 2.6% year-on-year increase in stock levels, causing dealers to reduce prices.
According to the report, dealers made this decision in order to avoid ending the year with significant leftover stock.
Other dealers made reductions on the ageing and unwanted stock but continued to purchase cars at reduced lockdown prices, in anticipation of a strong end to December and the beginning of 2021.
Jon Mitchell, group sales director at INDICATA, explained: “We saw our online wholesale portal stock levels rise during November but not dramatically as many dealers have been investing in new stock at the lower lockdown prices,”
The data highlighted a decrease in prices of 2.1% between the end of October and November, as dealers stimulated online demand whilst showrooms were closed for business.
This was the first time the market witnessed a price drop since the first lockdown, revealing the buoyancy of the used market throughout trading periods.
Mitchell continued: “While prices did fell during November our INDICATA insights have already seen a rise of 0.3% again in the first few days of December as dealers come out of lockdown.
“Our message is the same as last month – clear out your ageing and unwanted stock quickly by reducing prices and invest in the fast-selling stock as everybody is expecting a strong trading period over Xmas and into Q1.”
INDICATA also reported a fall in demand for electric and hybrid vehicles for the second successive month. Dealer stock turn of diesel was 6.2 in November, compared with 2.8 on EVs, as consumers sought better value.
If EVs are to remain competitive, dealer pricing will have to fall. Ensuring EV competitiveness will be critical in the coming years, as the sale of ICE vehicles will be prohibited from 2030 onwards.
Second lockdown had ‘little impact’ on used prices
The average price of a used car was £14,041 in November, representing an 8.5% year-on-year increase, according to the latest data from Auto Trader’s retail price index.
Whilst prices have increased consecutively for eight months, the rate of growth eased very slightly last month, slowing from 8.6% in October.
Auto Trader said the strong price performance reflects the high levels of consumer demand in the market. Despite the forecourt closures in England and tightening restrictions across the UK, there were 52.9m visits to the online marketplace last month, which represents a 14.4% increase on November 2019. Underpinning the level of demand in the market, advert views increased 8.9% year-on-year, while the number of leads grew 20% above the same period last year, indicating lockdown has done little to slow buyers’ desire to purchase their next car.
Circa 2,145 retailers made price changes last month, which was 12% fewer than in November 2019 (2,444), whilst the average daily reduction was -£293; 8% less than the same time last year (-£317). The average number of cars being changed each day was 13,818, which is significantly fewer than the 17,500 – 24,000 adjusted during normal trading conditions.
Auto Trader’s director of data and insight, Richard Walker, said: “Despite thousands of retailers across the UK either having to close their forecourts or facing tighter restrictions, used car prices remain exceptionally strong, which even under normal trading conditions would be impressive.
“It’s particularly reassuring to see retailers hold firm with their pricing, reflecting a strong degree of confidence in the health of the market. We share retailers’ confidence and believe the outlook for the months ahead is positive. We’re continuing to see significant levels of consumer demand, in part driven by the growing aversion to public transport.”
Sue Robinson, chief executive of the NFDA, added: “Despite the lockdown and additional restrictions facing dealers across the UK, it is encouraging that used car prices have remained buoyant in line with consumer demand. Positively, the number of retailers adjusting their stock as well as the volume of cars whose price is being adjusted are both significantly lower than pre-Covid levels, which shows dealers’ resilience and confidence. We look forward to a strong December.”
SMMT: new car registrations down 27.4% in November
UK new car registrations were down 27.4% year-on-year in November, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
In a month when showrooms across England had to close due to new lockdown restrictions, the industry recorded 113,781 new registrations, taking trade back to levels last seen during the 2008 recession.
The decline was less severe than that seen during the first lockdown – when registrations fell by a record 97.3% in April alone – largely because this time around, retailers and manufacturers were able to be better prepared to fulfil orders via delivery or click and collect. Despite these innovations, private demand still fell by 32.2% while registrations by large fleets saw a decline of 22.1%
More positively, market share for battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) continued to grow significantly, up 122.4% and 76.9% respectively. BEVs recorded their third highest ever monthly share of registrations at 9.1%, while PHEV share increased to 6.8% – a combined total of more than 18,000 new zero-emission capable cars joining Britain’s roads.
Given the huge contribution that Covid-secure showrooms make to the economy and a national recovery, reopening dealerships across most of the UK will help protect jobs in retail and manufacturing and should help stimulate spending, said the SMMT. The sector has lost 663,761 units to date in 2020, which means that around 31,000 cars would need to be registered every working day in December if the market was to achieve the level expected at the start of the year.
Mike Hawes, chief executive of the SMMT, said: “Compared with the spring lockdown, manufacturers, dealers and consumers were all better prepared to adjust to constrained trading conditions. But with £1.3 billion worth of new car revenue lost in November alone, the importance of showroom trading to the UK economy is evident and we must ensure they remain open in any future Covid restrictions. More positively, with a vaccine now approved, the business and consumer confidence on which this sector depends can only improve, giving the industry more optimism for the turn of the year.”
Dealerweb: new and used car sales fall in November
UK dealers saw a decline in new and used car sales in November for the first time since June, as the country re-entered national lockdown restrictions.
According to data from Dealerweb, new car orders fell 30% and used car orders declined by 39.5%, when compared to November 2019.
The study, which examined more than 800 dealers across the UK, also revealed a 32% and 28% reduction in enquiries for new and used cars respectively.
James Hill, managing director of Dealerweb, said: “Both new and used sales have performed strongly since the end of the first lockdown, but it was inevitable that a second national lockdown would have a negative impact on orders. Interestingly the conversion rate of orders to enquiries dropped on used cars, perhaps reflecting the inability of customers to see, touch and drive before they buy.”
According to the SMMT, during Q3 the used car market grew by 4.4%, however, sales for the fourth quarter were expected to be heavily affected by the second lockdown. The SMMT said the swift re-opening of used car outlets would go a long way to help prevent further subdued activity in the market.
As a showroom management systems provider, Dealerweb assisted dealers through lockdown, enabling firms to meet social distance requirements.
Electronic signatures have proven to be a popular tool, providing buyers with the flexibility to complete the purchase both in home or at a showroom.
Research from Close Brothers Motor Finance recently revealed the various survival strategies deployed by car dealers in attempts to limit the effects of Covid-19 over the last few months.
Half of all firms surveyed adapted their social media offering, and 43% committed to building the online presence of their dealership in order to attract more customers. Online platforms have enabled firms to ensure customer access from their own homes.
To accommodate a surge in online activity, Close Brothers also rolled out an online finance calculator to dealers, as part of its plan to enhance its digital offering.
SMMT warns of £55bn manufacturing hit in final Brexit plea
The automotive sector could face production losses of £55.4bn by 2025 under a no-deal Brexit, according to a statement from Society of Motor Manufacturers and Trade (SMMT).
Attributable to WTO tariffs, the major losses will only add fuel to fire, as the entire European and UK sector has already lost £89m due to coronavirus.
Subsequently, the SMMT have made a final plea for negotiators to leave no stone unturned in efforts to secure a deal by Christmas that avoids tariffs.
Speaking at an online event, SMMT president and executive chairman HORIBA MIRA George Gillespie, said: “We need a future trading relationship that works for automotive. We’ve already spent nigh on a billion pounds preparing for the unknown of Brexit and lost twenty-eight times that to Covid. Let us not also be left counting the cost of tariffs, especially not by accident.”
According to insights from the SMMT, the sector should also anticipate a drop in vehicle production by two million across the next five years, whilst annual production is expected to consistently fall below one million units.
Even with a bare-minimum trade deal, the cost to the industry could reach £14.1bn. With little time for businesses to prepare for new trading terms, hasty communication of a deal has been encouraged in order to limit damage to the sector and its workers.
Issues going green
Calling for a deal that sustains competitiveness and keeps the UK at the forefront of the global green transition, Gillespie continued: “Industry can deliver the jobs growth we need and help rebuild a devasted economy, but government must work with us to create the environment for this success.
“That starts with a favourable Brexit deal and a bold strategy to help transform automotive production in the UK, attract new investment, upskill our workforce and build world-leading battery capability to future-proof our manufacturing. When Covid lifts, we need to be ready; ready to support government to engineer an economic – and green – recovery.”
A no-deal Brexit would significantly hamper the UK’s ability to establish a strong ecosystem for EV production, the SMMT added; a consequence aggravated by the government’s recent decision to bring the ICE-vehicle ban forward to 2030.
Mike Hawes, chief executive of SMMT, believes the green transition represents an immense challenge, as the competitiveness and employment to achieve green growth “hangs in the balance”. Referring to the ICE ban, Hawes added: “To complete the job in under a decade is no easy task. And with showrooms closed, choking factories of orders, the ability of the sector to invest further is severely constrained.”
The stakes are high – automotive represents one of Europe’s most valuable manufacturing industries, supporting around 180,000 manufacturing jobs.
The sector, worth £78.9bn, exports more goods than any other UK industry and provides an annual £15.3bn in added value every year to the UK economy, while investing £3.73bn in R&D.
Close Brothers MF rolls out online finance calculator for dealers
Close Brother Motor Finance has launched an online finance calculator for dealers as part of its plan to enhance its digital offering.
The calculator will enable customers to compare finance products side by side, whilst also providing a representative example of potential monthly payments for vehicles of interest.
Customers can alter the duration, deposit and mileage, providing them extra flexibility. Upon deciding to apply for finance, customers will be redirected to the online proposal form. Submitted proposals will be filtered through to the dealer Showroom platform.
Close Brothers has opted for a phased roll out plan to ensure dealers are equipped to utilise the calculator, as services become increasingly digitalised.
Seán Kemple, managing director at Close Brothers Motor Finance, said: “We’re ready to start providing finance calculators to our partners, providing support for customers researching the cost of finance, while also giving dealers leads to start finance conversations with potential customers earlier in the buying process – all contact free.”
Due to coronavirus and the subsequent restrictions, customer-facing digital tools are now a pinnacle of the vehicle buying process. Consequently, numerous firms have revealed ambitious plans to advance their digital offering.
Kemple continued: “The car buying experience has come on leaps and bounds in recent years, but the past few months has accelerated the need for enhanced digital options. We have been supporting our dealer and broker partners and have listened to them about the digital tools they need to enhance their customers’ purchasing journey. And we have accelerated our digital plans as a result.”
Close Brothers has been driving forward its digital capability, including the advancement of its API offering. Dealers are able to directly submit proposals and monitor the status of agreements via the API service.
Kemple finished: “The latest developments further ensure our dealers are provided with the tools they need to meet the ever-changing demand. Even if life does go back to ‘normal’, enhanced digital engagement will be invaluable.”
In partnership with Codeweavers, the firm also strengthened its Showroom platform, with Remote Quote and Apply, removing the need for customers to visit dealerships in person.
The calculator is delivered in partnership with financial technology experts Codeweavers and is available to selected UK based dealers now.
ACEA: EU new car registrations down 26.8% year-to-date
New car registations across the European Union fell by 26.8% year-on-year from January to October, representing 2.9m less units than in the same period in 2019, according to the latest figures from the ACEA.
Looking at the major EU markets, Spain has the steepest drop (-36.8%) so far this year, followed by Italy (-30.9%), France (-26.9%) and Germany (-23.4%).
In October, the EU passenger car market slipped back into negative territory, after posting the first increase of the year in September. Registrations of new cars declined by 7.8% to 953,615 units last month, as several European governments reimposed restrictions to battle a second wave of the coronavirus.
With the exception of Ireland and Romania, losses were posted in all EU markets, including the four major ones. Demand fell markedly in Spain (-21%) while more moderate decreases were observed in France (-9.5%) and Germany (-3.6%). In Italy, on the other hand, demand remained almost unchanged (-0.2%) compared to October 2019 levels.
iVendi registers 33% increase in digital activity amongst dealers
Digital activity amongst dealers grew by a third during the first 10 days of the UK’s second lockdown, according to iVendi.
On 5 November, the number of proposed Digital Deals sent to customers by automotive retailers using the company’s TRANSACT product grew by 33%, coinciding with a 24% increase in the number of customers opening the deals.
James Tew, chief executive of iVendi, explained that as a result of the pandemic restrictions, dealers were utilising online tools much more proactively, as illustrated by the figures.
Tew commented: “Because of the imposition of lockdowns, they’ve become adept at changing the emphasis between showroom and digital activity, and the increase in Digital Deals being sent over the last week or so shows how quickly they are now capable of moving from one to the other.”
However, Tew believes that the 24% increase in deals being opened by customers is “the most interesting aspect” of the data. He continued: “The more deals that dealers send, the more that customers open, it appears. This shows how this proactive approach to digital is providing a valuable new sales channel during difficult trading conditions.”
Digital Deals were introduced by iVendi in TRANSACT, a feature the company has provided to its dealer customers free-of-charge since April.
According to Tew, the Digital Deals enable propositions created by sales people to be sent to potential buyers as the basis for an online negotiation. The product is “designed to replicate the subtleties of an in-person dialogue”.
The feature has seen great success, said Tew. “Vehicles totalling more than £65m on finance have been sold using Digital Deals during the last six months. We now have dealers who send them to every potential customer with whom they have contact because of the success they are seeing.
“The value of this strategy during the renewed lockdown, which is a more much proactive approach to digital than the traditional method of providing an online shopping journey for buyers, cannot be understated. It makes absolute sense alongside the adoption of home delivery or click and collect models.”
Heycar and VWFS roll out online finance application journey
Heycar has launched a new online finance application journey, developed in partnership with Volkswagen Financial Services (VWFS).
In expanding their range of transactions, heycar will for the first time see the entire finance application journey fully integrated into its digital platform.
This will enable customers to understand their finance options 24/7, eliminating the need to travel to a dealership whilst also providing a clear indication of individual budget and purchase intentions.
Brook Bishop, head of strategy at heycar, commented: “Partnering with Volkswagen Financial Services marks an important milestone for us – of being able to offer a fully integrated finance journey for the first time.
“Their products offer great financing options across the full range of manufacturers on heycar. The benefits are two-fold – for dealers it helps capture really high intent leads, while for consumers it offers a convenient and stress-free way to finance a new vehicle from our stable of iconic brands from the comfort of their home – obviously something which is even more important now due to the latest ‘Stay at Home’ advice from the UK government.”
Heycar and VWFS, amongst several others across the automotive sector, have an ongoing strategic partnership in order to provide consumers with a range of financial solutions when buying a car.
According to Bishop, car-buyers now expect to buy and browse 24 hours a day. “From finding their perfect car, checking their credit score, applying for finance deals and dispensing with most of the paperwork. By providing this functionality we can drive high quality finance leads to dealers even if forecourts are closed, offering this on up to 27% of our stock.”
Bishop continued: “At heycar we understand how car-buying habits are changing, with consumers increasingly looking for new routes to ownership, by searching more frequently for a new vehicle online and undertaking more of the buying journey before setting foot on a forecourt. Our partnership with VWFS helps us meet that demand and marks the first step in a program of partnering with a wide range of manufacturer-backed finance firms.”
Dan James, marketing director at VWFS, said: “At VWFS we know that during and after this pandemic the need for great choice and competitive finance are more pressing than ever. People want to buy cars that suit the way their lifestyles have changed and finance will be essential to achieving that.
“As the evolution of buying behaviour continues during these times of uncertainty, VWFS is dedicated to providing financial solutions, and the launch of a new online application journey not only strengthens our partnership with heycar, but helps us to aid a wider audience of customers.”
Used car prices ‘softening’ in November, Aston Barclay data shows
Late and low used cars, ex-fleet cars and younger part exchanges all saw an increase in price during October, but there are signs in November that prices are starting to soften, according to the latest data from Aston Barclay.
Average prices in the late and low 0-24-month and fleet sectors rose by £101 and £104 respectively during October to record levels of £16,484 and £11,757.
Meanwhile young part exchanges between and 55-78 months rose by £711 to £7,682 as dealers rushed to buy used cars that fell into the retail sweet spot of £10-12,000.
Looking at fuel types, a smaller number of hybrid and electric vehicles were sold in October as average prices reached a new record high of £14,660; a rise of £633 since Q3, but many failed to sell due to prices looking expensive compared with equivalent petrol and diesel models. Aston Barclay expects prices to gradually fall on AFVs over the coming months.
The underlying market trend at the beginning of November is one that is starting to soften with conversion rates and prices falling on the back of the Covid lockdown 2.0.
Q4 is already seeing the market return to some sort of normality but predicting demand and prices at each sale is becoming more difficult. Aston Barclay is recommending reserves are revisited sale by sale to stay in touch with the market and fleet vendors in particular will have to accept that assets are depreciating again.
“Many franchised dealers will be replacing sold stock during lockdown 2.0, something which didn’t happen during lockdown 1.0, as only independents were buying cars,” explained Martin Potter, Aston Barclay’s managing director – customer.
“Overall, we feel prices will remain healthy into 2021 as new car waiting times increase forcing ex-business and personal leasing contracts to be extended well into 2021. Repossessions are also now not likely to reach the market until Q2 which will help keep overall used stock volumes under control and prices steady during the first half of the year.”
MotoNovo launches digital reservation tool
MotoNovo Finance has launched a digital reservation tool that supports online car sales 24/7, ideal for companies dealing with lockdown restrictions across the UK.
The tool, free to use until the end of February, enabling customers to pay a reservation fee on a vehicle they are interested in on a dealer’s website. The customer can then choose their preferred finance product, amount and term, and select an option to collect or have their vehicle delivered.
Mark Standish, chief executive at MotoNovo Finance, said: “Making online sales that bit easier for dealers and their customers in the current operating conditions is another way in which we are helping dealers and customers to come together. It also gives dealers a smart new dimension to their proposition, the ability to offer 24×7 capability. They can now turn the significant levels of out of hours buyer interest that we know exists into a solid sale.”
The development will benefit more than a thousand dealers that use MotoNovo’s Quote and Propose technology and is ideally suited to supporting the move towards click and deliver and home-delivery sale.
Standish added: “A key learning this year has to be the importance of collaboration. Working together, businesses can be quicker, leaner and better aligned to meet the challenges ahead. This latest rapid innovation is a classic example and by making it free until the end of February we are reaching out to our dealers to demonstrate once again that a closer working relationship can create a Triple Win that works for dealers, their customers and MotoNovo.”
Consumers struggling to contact finance lenders during Covid, FICO finds
UK consumers struggled to contact motor finance lenders at the start of the Covid-19 pandemic, according to a survey from FICO.
According to the data, 33% of motor finance customers faced challenges getting in contact with their lenders, alongside 27% of credit card customers and 23% of mortgage customers.
Such insights from the analytics software provider will be especially pertinent for finance providers, as the UK commences a second national lockdown.
Bruce Curry, FICO vice president for collections and recovery consulting in EMEA, said: “This is a turning point for lenders — they must be able to respond faster across multiple channels, or risk losing a big piece of their customer base.
“Indeed borrowers across every segment said that they are likely to move accounts in the next six months, or when renewing the secured credit, because of their experience during Covid-19.”
Motor finance customers were the most likely to move at 53%, followed by 30% of borrowers from main current account and credit card providers.
Curry continued: “Our research shows that most customers still picked up the phone when attempting to contact credit providers — and this put a huge strain on providers’ systems,”
“Incredibly in this age of digital transformation 43% of mortgage customers, 49% of credit card customers and 55% of motor finance customers used the phone as their primary communication channel. It was also interesting to see the demand for ‘confirmation of agreement’ from those customers that need something more tangible than just an SMS. Economic victims need additional assurance on implied commitments from lenders.
“People will be struggling to pay their bills for some time and looking to their bank or other financial provider for real, thoughtful help.
“The second national lockdown will increase the number of credit-stressed consumers, who won’t show up in collections right away as they will get support in the near-term. The post-Christmas peak may look flatter, as people use the payment holidays to cover holiday spending. If that does happen, the normal collections spike will come back with a vengeance later in the year, as Christmas borrowing on revolving credit becomes harder to service.”
New lockdown will ‘prompt shift to more proactive digital approach’
The current lockdown measures are accelerating a trend towards dealers using digital tools in a more productive manner, according to iVendi.
The company says that, over the period of the pandemic, its products have increasingly been used by sales teams in a targeted manner to offer deals to individual customers and use them as the basis for ongoing negotiation.
James Tew, chief executive of iVendi, said: “Many car, van and motorcycle dealers have historically tended to view their digital offering as essentially passive. However sophisticated their online vehicle buying journey, it is ultimately reliant on the buyer initiating and driving the process, rather than allowing dealers to take a proactive approach.
“What we have seen with this year’s lockdowns and have been able to track from use of our products, especially with the closure of showrooms for long periods, is a strategy that you could describe as much more of a sales push.
“At a time when dealers have a much-reduced opportunity to talk to customers in person and an increasing number of leads arrive through digital channels, this is becoming not just important but an essential means for driving sales.”
Tew added that iVendi believed that the coronavirus crisis had created a situation where the relationship between showroom and digital was being redefined.
“We’ve been saying for many years that when dealers think digitally, they need to conceptualise the showroom and their online presence as parts of the same domain. Few vehicle buyers stay exclusively in one of these spheres. They very much tend to move between the two several times as part of their purchasing journey.
“The last few months have made this even more apparent as dealers have become necessarily adept at switching between times when their showroom is allowed to open and times when they are making sales remotely. There is now much more flexibility built into their processes. Showroom and digital are much closer.
“We’re describing this new approach as ‘connected retailing’ and it is very much at the heart of how we are now looking at the vehicle retailing market in terms of the products we provide and the way in which we provide them.”
SMMT: used car market bounces back, up 4.4% in Q3
The UK’s used car market increased by 4.4% in the Q3 following two consecutive quarters of decline, with over 2m vehicles changing hands, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
September recorded the largest growth in the quarter, with year-on-year growth of 6.3%. Despite the growth, spurred by the re-opening of showrooms and easing of lockdown measures across the country, the UK’s used car market is still down with 1,070,941 fewer transactions over the first nine months representing a decline of -17.5% overall.
Sales in the fourth quarter are also expected to be heavily affected by new lockdown measures across the UK. The SMMT said the swift re-opening of used car outlets would go a long way to help prevent further subdued activity in the market.
Demand for pre-owned battery electric vehicles (BEVs) grew 34.4% year-on-year in Q3 and 4.4% year-to-date. At the same time, sales of plug-in hybrids increased by 35.7%, with 10,040 changing hands. Petrol and diesel cars both saw an increase in sales of 4.5% and 2.6% respectively, accounting for 97.42% of all used transactions during the quarter.
Mike Hawes, chief executive of the SMMT, said: “With England entering a fresh lockdown, and tighter Covid restrictions in place across the rest of the UK, the car is playing an even more important role in keeping society moving as public transport becomes less attractive for many. It is encouraging to see used car sales returned to growth but, as the pandemic continues and outlets in many areas are being made to close again, the short-term outlook is less positive.”
Car dealers remain optimistic about the future, says Close Brothers
Car dealers have shown optimism in the face of adversity, with 89% of dealers confident in their business outlook for the next six months, despite a series of sobering industry statistics.
The new research from Close Brothers Motor Finance has revealed the various survival strategies deployed by car dealers in attempts to limit the effects of Covid-19 over the last few months.
Seán Kemple, managing director at Close Brothers Motor Finance, commented: “Dealers have had to make big changes to survive during the pandemic and adjust to a new retail environment. This means furloughing staff, but also introducing new measures to ensure customers can still get their hands on their next car. Digital transformation has also been vital to maintain engagement with customers and be more resilient in an ever-changing retail world.”
In response to social distancing restrictions, two in three dealers introduced a delivery service or increased their publicity of an existing service. According to the findings, 50% also changed their stock sourcing strategy.
Half of all firms surveyed adapted their social media offering, and 43% committed to building the online presence of their dealership in order to attract more customers. Online platforms have enabled firms to ensure customer access from their own homes.
From a financial perspective, the pandemic has had a major impact on the industry. 43% of dealers were forced to amend their profit targets, while 22% had to take out finance or additional finance to stay afloat.
The research revealed that 68% of dealers had to furlough staff, and 15% let staff go in the face of a stagnant economy. Kemple continued: “Despite the introductions of local restrictions, and now a national lockdown, dealers are feeling confident that their business will survive further hurdles. Dealers are making positive changes to complete sales in a totally different car-buying landscape and continuing to attract customers.
“However, it is crucial that the Government continues to provide support for those that will “find themselves set back financially. Dealers need to keep adapting and improving their stock and sales strategy to meet customers’ needs and keep afloat during further restrictions.”
Auto Trader rolls out latest support measures for retailers
UK car marketplace Auto Trader has unveiled new support measures for its UK retailer partners following the introduction of new national lockdown restrictions.
It is understood that retailers in England will be allowed to operate both home delivery and some Click & Collect services. This, coupled with the consumer activity seen through October and into November, will help to sustain some sales. However, this announcement has increased uncertainty for retailers as there’s understandably more caution beyond the month of November, particularly as December typically sees a seasonally lower volume of sales.
As a result, Auto Trader is providing its advertising packages for free for the month of December and an extension to its payment terms by one month for its November services. Both of these measures will help to free up cash flow to allow retailers to finish the year in the strongest position possible.
Nathan Coe, chief executive of Auto Trader, said: “We remain committed to supporting our customers when it matters the most. What our customers really need at the moment is simplicity and clarity about the future. By going free in December and extending payment terms in November, we feel we have delivered this. We are also doing everything we can to sustain demand by driving consumer awareness that retailers are open and highlighting Click & Collect and home delivery stock available on Auto Trader. Our new marketing campaign focussed on this launches today.
“Today we have also announced our half year results. The unprecedented level of support we provided to retailers has had a material impact on our financial performance. However, as an organisation we feel both proud of the decisions we have made and the performance we have achieved. What has made me most proud has been the determination and passion I have seen from our people to support our retailer partners and to continue to improve the products on which they depend. We have and will continue to work tirelessly to support our partners and to deliver the things they and the wider industry need to continue to emerge even stronger.”
Revenues at Auto Trader during H1 were down 37% year-on-year to £118.2m, which resulted in a 48% decline in operating profit to £68.5m. Operating profit margin also reduced to 58% (H1 2020: 70%).
Audience performance significantly strengthened in the first half of the year despite an initial decline in visits and engagement through April and May, with over 75% of all minutes spent on automotive marketplaces spent on the platform (H1 2020: over 75%). Average monthly cross platform visits across the six-month period increased by 12% to 57.3m per month (H1 2020: 51.2m).
CD Auctions to continue operations during lockdown
CD Auctions will continue operations through the current lockdown period to support the needs of fleets and dealers.
The regular programme of online sales will continue as normal, and logistics services will be conducted safely and adhering to social distancing guidelines.
Andy Pearce, operations director at CD Auction Group, said: “Our advanced imaging systems and comprehensive digital documentation give buyers peace of mind to buy vehicles with confidence. It’s an approach that has continued to attract new customers in 2020. We will continue to conduct sales through the November lockdown with the care and consideration you would expect.”
CD Auctions reported record demand throughout the summer, with its buyers app proving popular with dealers thanks to the ‘buy it now’ function which allows the purchase of a vehicle as soon as it is added to the live database.
The company has seen the numbers of dealers accessing its digital online-only sales from mobile devices double in the last 12 months to now account for 50% of all bids.
New car registrations down 1.6% as England heads into lockdown
The UK new car market declined again in October, with registrations falling by -1.6% year on year, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
The industry recorded 140,945 new registrations last month, making it the weakest October since 2011 and 10.1% lower than the average recorded over the last decade.
The trade body said that the arrival of new models and ongoing financial incentives helped initially to sustain UK demand in the month, but the introduction of a ‘firebreak’ lockdown in Wales on 23 October contributed to the nation recording 25.5% fewer registrations by the end of the month, which accounted for more than half of the overall UK decline.
Subdued activity from businesses drove much of the month’s drop, with around 2,500 fewer vehicles joining larger fleets than in October last year, while private registrations saw a modest increase of 0.4%. However, this performance was flattered by a weak October 2019, when ongoing supply issues arising from regulatory challenges, as well as political and economic uncertainty ahead of the anticipated Halloween Brexit withdrawal date, saw overall registrations by private buyers recede by -13.1% in the month.
As of mid-October, the industry had been expecting to register about 1.66m new cars in 2020. However, with the announcement of a second lockdown for England, which will include the closure of vehicle showrooms, the market forecast has been downgraded by a further 100,000 units to 1.56m. This equates to a total year-on-year decline of around 750,000 registrations and a £22.5bn loss in turnover, with 2020 now likely to be the weakest year since 1982.
While the continuation of click & collect and delivery services is welcome, and should help prevent a return to the sales wipe-out experienced in the spring, the SMMT said it cannot offset the loss of custom from the closure of showrooms themselves, given the unique nature of the car purchase process.
Mike Hawes, SMMT chief executive, said, “When showrooms shut, demand drops, so there is a real danger that with England today entering a second lockdown, both dealers and manufacturers could face temporary closure. What is not in doubt, however, is that the entire industry now faces an even tougher end to the year as businesses desperately try to manage resources, stock, production and cashflow in the penultimate month before the inevitable upheaval of Brexit.
“Keeping showrooms open – some of the most Covid-secure retail environments around – would help cushion the blow but, more than ever, we need a tariff-free deal with the EU to provide some much-needed respite for an industry that is resilient but massively challenged.”
BCA “stands in good stead” for second lockdown
BCA has confirmed that all sales will remain online in the face of a second lockdown, promising the continuation of safe, efficient and profitable trade.
Stuart Pearson, BCA chief operating officer of UK remarketing, explained how the firm had evolved since the first lockdown.
Pearson said: “Having the experience of successfully managing the significant challenges placed on the industry during the first lockdown stands us in good stead. BCA will continue to utilise the wider resources of the group to provide our customers with choice, scale and efficiencies to support their businesses during the weeks ahead.”
In order to meet demand for stock from its buyer base, BCA’s programme of real time online events and multi-channel buying options will continue. “The wholesale marketplace is performing very efficiently and this is good news for all professional operators in the used vehicle sector.”
In efforts to keep on top of evolving government guidance, the firm has also extended opening hours for vehicle collections, said Pearson.
Vehicle collection periods will be extended to 8pm from Monday to Friday, in order to provide customers with additional opportunities to collect vehicles at a suitable time.
Pearson continued: “Our online Click and Collect service is currently handling over 10,000 requests weekly and we are developing new functionality within our Buyer app to allow customers to book BCA Click and Collect slots directly from their mobile device. BCA’s significant transport resource will continue to be fully available to support our customers bringing vehicles into, and away from our centres.”
BCA’s Decision Intelligence team is keeping close to the current evolving picture in the wholesale sector whilst also providing consumers with real-time data to inform marketing decisions.
Using actual auction prices, BCA Valuations is also delivering data on market performance in order to help customers in the valuation of their vehicles, in line with market sentiment.
Touching on the BCA Buyer app and website, Pearson finished: “We continue to develop functionality for the new digital buyer audience, enhancing the wider user experience for customers using both the BCA Buyer app and bca.co.uk. Our online sales programme will adapt to meet the changing needs of our buyers in the current market, utilising the connectivity and efficiency across the BCA Group to provide more of the right vehicles to the marketplace at the right time.”
Auto Trader urges retailers to hold firm with vehicle pricing
Online car marketplace Auto Trader has urged retailers to hold firm with pricing as consumer demand remains strong in the face of the second national lockdown.
Auto Trader’s retail price index recorded the largest ever monthly price increase on its marketplace for a third consecutive month in October. The average retail price of a used car was £14,014, which marks an 8.6% year-on-year increase on a like-for-like basis and seven months of consecutive growth.
That follows the previous year-on-year records of 7.6% in September, and 6.1% in August, prior to which the highest rate of growth was 5.8%, observed in July 2014.
The price growth reflects the high level of consumer demand in the market, despite the 17 day ‘firebreak’ in Wales and the newly announced national lockdown in England.
In October, Auto Trader saw 61m cross platform visits to its marketplace, which is a year-on-year increase of 24.6%. Crucially, for those English retailers facing four weeks of forecourt closure, the number of visits to Auto Trader during the last six days increased 20% year-on-year, driving advert views up 16.3%.
This weekend saw used car leads being sent to retailers increase by 17% compared to the same time last year, indicating that the impending lockdown has not slowed buyers’ desire to purchase their next car.
Richard Walker, director of data and insight at Auto Trader, said: “The introduction of the second national lockdown in England and the 17-day firebreak in Wales is disappointing for us all, but not surprising given news over the last few weeks.
“Fortunately, businesses are far better prepared than they were in March and despite the restrictions, our data suggests consumer demand remains strong. As we stressed during the original lockdown, retailers should avoid the temptation to slash their prices in order to entice car buyers, as it simply isn’t necessary and could have a lasting negative impact on the market.”
Sue Robinson, NFDA chief executive, added: “It is encouraging to see that average asking prices saw an increase in October demonstrating that consumer demand for used cars remains healthy, in particular, for petrol and diesel vehicles. Despite the introduction of new restrictions, dealers have been receiving high volumes of online enquiries and this is likely to continue over the coming weeks.”
Aston Barclay rolls out tiered buyer fee structure
Aston Barclay has launched a new tiered buyer fee structure in attempts to add further transparency to its dealer buyer fees.
Within the structure, the more cars purchased by dealers, the greater the benefit from reduced fees. When compared with its two largest competitors, Aston Barclay will offer savings of up to 7%.
The new structure aims to provide “total transparency and rewards those dealers that are buying more cars with lower fees,” said Martin Potter, managing director of Aston Barclay’s customer division.
Potter said: “We aim to provide the best value possible value for dealers when buying cars in the wholesale market, particularly during these uncertain times.”
The vehicle remarketing firm has also promised to never sell used cars to consumers in competition with its dealer customers.
“Dealers can rest assured we will never sell used cars to consumers in direct competition with our dealers. We will always be a trusted remarketing partner that provides dealers with access to the best cross section of wholesale car and van stock. Our recent buyer fees announcement has further reinforced our position in the market,” he continued.
This particular promise follows the recent launch of a major new brand by a competitor, which sees it competing with its dealer customers to sell used cars directly to the consumer.
Aston Barclay were quick to reassure the market that it has no such plans to launch a similar proposition, continuing to support its dealer customers through the provision of wholesale stock.
Concerning the timing of the changes, Potter continued: “This comes at a time when we have reverted back to our Covid-19 digital auction programme which means dealers are only allowed on site as part of our appointment collection service,”
In light of an oncoming second lockdown, the firm has announced the continuation of its full digital car and van sales programme from Thursday. All six physical auctions will also be closed for physical viewings from Wednesday evening.
Alongside closures, Aston Barclay will reintroduce its Covid-safe car collection appointment service from its six physical sites as well as continue with its own collection and delivery service.
FLA expresses concern over FCA deferral extension
The Finance and Leasing Association (FLA) has expressed concern over the extension of the payment deferral period for consumer credit customers.
In a statement outlining the policy, the Financial Conduct Authority (FCA) said: “Following the announcement of the latest government restrictions in response to the coronavirus outbreak, we will propose updates to our temporary guidance on motor finance credit to support consumer credit customers financially affected by coronavirus.
“To support those financially affected by coronavirus, we will propose that consumer credit customers who have not yet had a payment deferral under our July guidance can request one. This could last for up to 6 months unless it is obviously not in the customer’s interests. Under our proposals borrowers who are currently benefitting from a first payment deferral under our July guidance would be able to apply for a second deferral.”
In response to the FCA’s announcement, Stephen Haddrill, director general of the FCA, said that it is vital that support is provided in a way that best serves the interests of borrowers.
“This is best achieved best achieved under existing FCA rules that require lenders to assess their customer’s position carefully. Giving borrowers the impression that a six-month deferral is always the right answer is dangerous. It could leave people with unsustainable debts that they may struggle to repay.
“The FCA should limit its guidance on payment deferrals to three months at this stage as it did in March, so that there can be a full review of the policy by the FCA, and of individual circumstances by lenders before any extension. Without this, some people will continue deferring payments and accruing debt to their extreme detriment.
“If HM Treasury and FCA press ahead with a deferrals policy until the end of March 2021 in spite of these risks, then furlough should also be extended well beyond one month to give more people a realistic chance of being able to better manage their repayments in the interim.”
Used car market back to pre-Covid levels in June
The used car market in England has bounced back out of lockdown with sales up by 3.4% in the first 10 days of June, compared with the same period in 2019, according to INDICATA.
In the seven days between 4-10 June, used car sales saw growth of 13.3% year-on-year. That equates to around 12,000 used cars per day which is where the market was pre Covid-19 lockdown.
But INDICATA analysis shows dealers are being more cautious about replacing sold stock with sales exceeding supply by 71%. That equates to the UK dealer network being short of 100,000 used cars against pre-lockdown levels which could cause a scramble to source stock in the coming weeks to avoid forecourt spaces being left empty.
Used prices have risen by 0.5% in the first 10 days of June and there are some immediate winners and losers post lockdown. Hybrid sales were up 22% year-on-year, while diesel demand has fallen 8%. The 6-9-year-old and 9-12-year old sectors are both up by 10%, while the 0-3-year old sector has fallen by 6.5% reinforcing the market’s move to older and cheaper used car stock.
The sports and luxury car sectors remain the big winners, up 39.9% and 29.8% respectively. SUVs remain popular with a 11.2% growth while the biggest losers are the MPV and small car sector which were down by 12% and 5.5% over the same period in 2019.
“It is surprising how quickly the used market has bounced back from the Covid-19 lockdown. With reduced output from car makers and fewer dealer part exchanges and ex-fleet cars coming into the market then demand should exceed supply throughout the rest of 2020 with prices continually strong,” explained Neil Gilligan, INDICATA UK’s business development manager.
“INDICATA generates used car insights from 13 countries so looking at what has happened to the German used car market could be useful for the UK. German dealers opened on the 20 April and experienced a swift bounce back to pre-lockdown levels like the UK has, and used car sales have continued to grow. This could bode well for the UK market for the rest of the summer,” he added.
Aston Barclay introduces new measures for auctions
Aston Barclay has introduced new measures to help buyers select and view used stock prior to an online auction taking place.
A limited number of buyers will be allowed on-site prior to an auction to view vehicles, with each person having to sign an online form and confirm the sale they are interested in viewing. All buyers will report to auction reception and will only be allowed to enter once they have been through the check-in process.
Buyers will not be able to turn up and view stock without an appointment and for the time being the auction programme will continue in its online format, with no physical buyers present.
The current official Government guidance states that vehicle auctions can open today (15 June), but Aston Barclay believes it is too early to host physical sales.
“Monday will be the first time we have welcomed any customers onto our sites for 11 weeks. In our minds, 15 June is too soon to welcome buyers to a physical auction with social distancing measures still in force.” explained Neil Hodson, Aston Barclay’s group chief executive.
“However, we recognise that our loyal buyers may want to see vehicles prior to bidding in online sales. Our imagery, inspections and grading clearly show the condition of the vehicles online, but there are reassurances buyers take from physical viewing. We will be monitoring the success of our two-week trial before we decide on hosting physical sales in the future. In the meantime, we will continue with a 100% online auction policy.”
Retailers must plan for second coronavirus wave, says iVendi
Motor retailers should have preparations in place for a second wave of coronavirus later this year, says iVendi.
James Tew, chief executive at iVendi, said that the possibility of further peaks occurring was very real, and that businesses need to be prepared for the UK returning to another state of lockdown.
“At the moment, dealers are understandably working very hard to get their businesses moving again after the events of the last few months but we’ve all seen the warnings from experts of the likelihood of a second wave, something that is perhaps already happening in countries like South Korea and Iran.
“Of course, the hope is that this does not happen in the UK but many clearly believe that it will and, given that very real possibility, it seems sensible that businesses have some kind of idea about how they might handle a further lockdown.
“This is difficult, of course, because we don’t know what any second wave might look like but there are a variety of scenarios that could emerge and it makes sense for managers to run through what they might do in each. To us, preparation seems important – it may even be that we have a number of waves over the next few years.
“Clearly, there was little the industry could do in response to the first wave of coronavirus – it took us very much by surprise – but there are few excuses for not being more cognisant of any future occurrences.”
Online customer reassurance ‘key for returning dealers’
Motor dealers can benefit from building customer reassurance through their online channels, according to MotoNovo Finance.
A study from MotoNovo found that four in 10 dealer website homepages make no prominent reference to Covid-19 secure measures, and only 23% of homepages are displaying secure measures prominently.
“Showroom doors may be open across England , but dealers can benefit by investing additional time in promoting their social-distancing and sanitisation steps to build essential customer confidence and reassurance to create footfall online and in the showroom,” said MotoNovo Finance’s deputy chief executive Karl Werner.
With the vast majority of car sales starting online and recognising that many customers will be seeking reassurance before visiting a showroom, dealers can help themselves by building this reassurance prominently into their digital presence, said MotoNovo.
Since re-opening mandates that showrooms must be ‘Covid-19 secure’ having completed a full risk assessment and taken all necessary safety and sanitisation steps to minimise risks, promoting these measures is a natural value-building opportunity.
Looking at the range of website approaches to COVID-19, many dealers have taken some steps, but have not necessarily provided a full picture of their tactics. As well as the data above, MotoNovo found that:
- 19% of dealer sites were prominently displaying Click & Collect options
- 9% displayed the COVID-19 secure poster logo/image, but without explaining its meaning
- 8% were allowing showroom visits by appointment only
Werner concluded: “We are working hard to champion the need for a reinvention of the dealer model to reflect the ‘new normal’ trading environment. A full engaged, dynamic digital strategy that is; current, promotes transparency and customer care should be seen as a priority. In this respect, not promoting the steps taken to keep customers and staff safe prominently is a missed opportunity. That said, we saw some outstanding examples of good practice that recognise that customer safety is ‘top-trumping’ price.”
Bounce Back Loans help to kickstart used market, says Shoreham
The government’s coronavirus Bounce Back Loan is helping to kickstart the used vehicle market, according to Shoreham Vehicle Auctions.
The majority of independent dealers buying used vehicles from the past four Shoreham online auctions have admitted to using the funding to source replacement stock sold during the pandemic.
“The loan has given used car and van dealers a cashflow boost,” explained Alex Wright, managing director of Shoreham Vehicle Auctions. “With franchised dealers shut and no part exchanges coming into the used market many dealers had struggled to source replacement stock during the pandemic. Some were also cautious about investing cash in new stock when they weren’t sure how the used vehicle market was going to respond to the lockdown.”
“The government low interest loan has provided a lifeline for many dealers. 90% of those dealers we spoke to have all confirmed it has helped stimulate their businesses, which has in turn given the used market a leg up as it comes out of lockdown,” he added.
The five digital sales Shoreham has hosted since lockdown have seen strong bidding and prices way above CAP Clean. It has seen a big demand for cars over four-years old at under £10,000 which is likely to continue. And with no large dealer part exchange volumes due into the market over the coming weeks Shoreham expects prices to stay high.
The used van market has also been very buoyant with high conversion rates and prices up to 10% above CAP Average, said Shoreham. Many smaller independent van retailers have been selling online throughout lockdown, but with no part exchange or de-fleeted leasing vehicles coming into the market there has been a pent-up demand with little or no replacement stock for them to buy.
Parcel delivery companies have been busy over the past 12 weeks and many have bought used vans to extend their fleets to cater for this increased demand. The sub-£4k utility vans are up 10% on March prices and 3-year old rental vans have also been making March money. However, the 19-plate vans have struggled as franchised dealer buyers have yet to enter the market with many buyers still on furlough.
“Van dealers also confirmed they have taken the £50k loan and as soon as auctions opened for business, have invested that money in replacement stock. With many extended leasing contracts in the market, we predict that even when the franchised dealers come fully back online stock is likely to be thin on the ground and prices will remain strong,” said Wright.
Bentley confirms 1,000 job losses at UK locations
Volkswagen-owned Bentley has confirmed there will be 1,000 UK job cuts in the wake of the coronavirus crisis, which makes up around a quarter of its workforce.
The company, which makes cars in Crewe, was expected to offer workers the chance to take voluntary redundancy, the BBC said.
Chief Adrian Hallmark said last month a quarter of the company’s workers had been furloughed due to the lockdown while another quarter were working from home. As first reported by ITV, the carmaker has since restarted production at its Crewe factory, but with only around half the usual number of staff.
Bentley, founded in the UK in 1919, increased its worldwide sales by 5% to 11,000 cars in 2019 but has struggled to be profitable in recent years. It completed a turnaround plan last year but now appears to have been hit by the sharp fall in demand for new cars caused by coronavirus, the BBC said.
This has seen car manufacturers, suppliers and showrooms closed for weeks, with consumers holding off on big-ticket purchases.
Car dealership Lookers announced on Thursday it would cut up to 1,500 jobs with the closure of more showrooms in the UK.
And Aston Martin also announced 500 redundancies on Thursday, a week after naming a new chief executive.
Union Unite described the Bentley announcement the company was seeking to make 1,000 workers redundant as another “heavy blow”.
Unite’s national officer for the automotive sector Steve Bush said: “This is another heavy blow for our automotive industry and its dedicated workforce. Bentley is a name known around the world for the quality of its vehicles, thanks in large part to the expertise of this highly dedicated and superb workforce.
“To ask 1,000 of them to leave the company, albeit on voluntary terms, is heartbreaking for the workforce and their communities. We are determined to support our members during this process to do what we can to mitigate the jobs lost.
“Today’s news is another sorry reminder of the battering this sector is taking, caught by a downturn in global demand which has then been supercharged by the global COVID-19 pandemic.
“It is absolutely essential that the government works with the automotive industry and Unite to bring forward the sort of sector specific support we are seeing other governments deliver, in France and Germany, because for every automotive job that goes, four more will go in the wider supply chain.”
Mike Hawes, chief executive of the SMMT, said: “It has been a black week for UK Automotive with devastating job cuts across retail and manufacturing coming hard on the heels of earlier losses. Whilst the industry is fundamentally strong and agile, it is not invincible. Global industries are challenged and we need to ensure the UK has in place a comprehensive strategy to support the sector and the highly skilled workforce on whom it depends.
“As the sector strives to weather the worst storm in a generation, measures to drive cash flow, stimulate demand and, above all, maintain our competitiveness are essential. Governments must double down on efforts to reboot economies, protect jobs and, internationally, work urgently to secure ambitious free trade agreements which avoid tariffs that add onerous cost and stifle global growth.”
Online reserve-and-collect gains popularity among consumers
UK car-buyers are increasingly using an online reserve-and-collect tool when purchasing a vehicle, according to iVendi.
The product allows consumers to gain first refusal over a vehicle by making a small payment online. This removes the car from sale for a time period specified by the dealer, who also receives an alert.
James Tew, chief executive at iVendi, said: “We launched this feature in February with the intention that it would allow dealers to provide a new way of giving customers the means to progress a sale online, especially out-of-hours.
“Of course, as we emerge from lockdown, it has taken on a whole new significance as dealers look to adopt reserve-and-collect trading models. As a result, we are receiving many calls from dealers and sales are picking up.
“This is happening in England, as showroom doors are opening, and it seems safe to assume that similar patterns will be followed in Wales, Scotland and Northern Ireland, using a model of online sales accompanied by reserve-and-collect.”
SMMT: UK new car sales down 89% in May
New car registrations in the UK fell 89% year-on-year in May, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
Some 20,247 cars were registered in the month, with click-and-collect services enabling some movement in the market. However, with 163,477 fewer registrations than in the same month last year, the performance still marked the lowest May since 1952.
Private buyers accounted for the lion’s share of registrations at 63.7% of the market, equivalent to 12,900 units, while 6,638 cars went to fleets. There were severe declines across all segments and fuel types, apart from battery electric vehicles, with 429 more units registered year-on-year in this exceptional month as pre-orders of the latest premium models were delivered to customers.
The overall market is now down 51.4% in the first five months of 2020, at just over half a million registrations compared with more than one million at this point last year. The news comes in the week that car showrooms in England were given the green light to re-open following more than two months of lost trading. In Scotland, Wales and Northern Ireland (until next week), however, car showrooms remain closed.
Mike Hawes, chief executive of the SMMT, said: “After a second month of shutdown and the inevitable yet devastating impact on the market, this week’s re-opening of dealerships is a pivotal moment for the entire industry and the thousands of people whose jobs depend on it. Customers keen to trade up into the latest, cutting-edge new cars are now able to return to showrooms and early reports suggest there is good business given the circumstances, although it is far too early to tell how demand will pan out over the coming weeks and months.
“Restarting this market is a crucial first step in driving the recovery of Britain’s critical car manufacturers and supply chain, and to supporting the wider economy. Ensuring people have the confidence to invest in the latest vehicles will not only help them get on the move safely, but these new models will also help address some of the environmental challenges the UK faces in the long term.”
SMMT negotiating £1.5bn scrappage scheme with government
The Society of Motor Manufacturers and Traders (SMMT) has held talks with the government over a possible £1.5bn scrappage scheme, to reduce the price of vehicles and drive sales.
This is according to an article in The Guardian, which quotes a letter sent to chancellor Rishi Sunak from SMMT chief executive, Mike Hawes. In the letter, Hawes claimed the primary benefit of the scheme “would be in jump-starting the market, the sector and the economy without further drain on public purse”.
Despite calls from campaigners for industry bailouts to be linked to environmental targets, Hawes said the scheme “must support the entire market, not just disproportionately favouring specific segments or technologies, recognising the diverse nature of UK automotive manufacturing”.
However a scrappage scheme incentivising the purchase of petrol and diesel vehicles could be detrimental to the government’s current Road to Zero 2035 emissions target.
Richard George, head of oil at Greenpeace UK, told the Guardian: “If the government is going to bail out the car industry, then every penny should go to supporting the transition to clean electric vehicles. People have noticed and enjoyed the cleaner air we’ve seen during the lockdown.
“Ditching petrol and diesel for electric cars and vans would improve air quality for good, with huge benefits to our health and environment, as well as putting Britain’s car industry into the 21st century and securing a future for its workers.”
Elsewhere, other industry leaders, including the bosses of BP and Heathrow, wrote to the government to say that bailouts “can and should be aligned with the UK’s legislated target of net-zero emissions by 2050 at the latest”.
Hawes added: “The effect on underlying consumer confidence will be unclear and we may need to work with government to identify ways of boosting demand, especially given the contribution this sector makes to the economy and jobs. That time is not now but industry, and government, need to be prepared for all eventualities.”
Renault finalises €5bn credit facility from French government
French finance minister, Bruno Le Maire has signed a €5bn (£4.3bn) loan guarantee for Renault and is urging discussions start immediately concerning the future of the automaker’s Maubeuge plant.
Renault has launched a consultation process on the Douai and Maubeuge plants to study the creation of an electric and light commercial vehicles centre in northern France.
“The French Minister of Finance [signed] a loan guarantee for €5bn, which has been granted to Renault,” said a source in the Finance Ministry in Paris. “[He] has called for social and technical dialogue to start immediately to develop an industrial future for Maubeuge.
“This project should guarantee for the long term, beyond 2023, jobs and the level of industrial activity at Maubeuge. No decision will be taken on the transfer of acclivity until such a future product has the agreement of [all] parties.
“Discussions will start next week between unions and Renault management, as well as regional representatives. A new meeting, chaired by the Finance Minister with politicians, labour bodies and Renault management, will take place in September to take stock.”
Renault announced the finalisation of a credit facility agreement with a banking pool, for a maximum total amount of €5bn benefiting from a guarantee of the French State.
“This credit facility, which may be drawn in whole or in part, will help finance the group’s liquidity requirements within the context of an unprecedented crisis,” said a Renault statement.
The main terms and conditions of this credit facility are:
- A maximum total amount of €5bn which may be drawn in whole or in part and in one or several times, until 31 December, 2020
- An initial 12-month maturity, with an option for Renault to extend the maturity for an additional three-year period; a guarantee from the French State up to 90% of the total amount borrowed
- A banking pool made up of five banks: BNP Paribas, Crédit Agricole, HSBC France, Natixis and Société Générale
Renault is looking to reduce its fixed costs by more than €2bn across a three- year period, which will involve the loss of 4,600 jobs in France and 10,000 around the world.
FLA publishes Covid-19 guidance for re-opening businesses
The Finance and Leasing Association (FLA) has collaborated with other automotive trade bodies to publish an industry Covid-19 guidance for businesses operating in the vehicle collection, delivery, distribution, storage and technical services sectors.
The government published its own guidelines last month, to help employers, employees and the self-employed to understand how to work safely during the coronavirus pandemic and to ensure workplaces are as safe as possible.
Updates were then made to the guidance on 25 May after further consultation was undertaken with industry members on the preparations required for re-opening.
The aim of this new document “is therefore to consolidate into one place what the new Covid-19 guidelines mean for vehicle collections, delivery, distribution, storage and technical services. It also suggests some additional best practice options which should assist operators in ensuring a high level of safety and compliance”.
The FLA collaborated with the BVRLA, the National Association of Motor Auctions (NAMA), and the Vehicle Remarketing Association (VRA) for the guidance.
Dealers to hold firm on used car prices, says Cox Automotive
Nine in 10 dealers are not planning to cut their used car prices as showroom doors open for the first time in over two months, according to the latest dealer survey by Cox Automotive UK.
Some 54% of those surveyed said they plan to hold firm on prices, while a third said they are waiting for market data before making a decision. Less than 10% plan to implement reductions across the board.
This is despite the survey finding that cashflow ranked as the dealers’ second most pressing concern post-lockdown. Only the health and well-being of their employees and customers ranked higher.
Philip Nothard, customer insight and strategy director at Cox Automotive, said: “We’re encouraged by the sentiment shared in this latest survey. It’s reassuring to see the overwhelming majority of dealers taking a calm and sensible view of their pricing strategies, despite the pressure they inevitably feel to get cash flowing back into their business.
“It’s absolutely right dealers wait for market data that’s based on actual transactions now. We expect unusual things to happen with used prices over the coming weeks as supply and demand imbalances work out.
“It’s inevitable dealers will be more receptive to deals from genuine buyers in the short-term, but overall the feeling is used prices will settle reasonably quickly so panic-pricing to clear stock is not in the best interests of anyone.”
Reopening of dealerships signals a spike in enquiries
Levels of digital enquiries for new and used cars spiked in late May, as dealerships prepare to open their doors for the first time in over two months, according to Dealerweb.
Digital enquiries into dealers across the UK during May were only 16.5% behind 2019 levels. It marked a significant improvement from April, which saw a drop of 61.5% on 2019.
James Hill, managing director of Dealerweb, said: “It is clear that digital channels are leading the way as buyers start to think about their next vehicle purchase. There is no doubt that dealers will need to ramp up all aspects of the digital customer journey to maximise conversion rates and ensure a great customer experience is maintained.”
Levels of telephone enquiries have not recovered at the same pace despite many dealerships staffing customer service lines. April saw a 95.5% decline in enquiries against 2019 and May experienced an 80% drop.
Dealerweb research has previously indicated that 49% of buyers are more likely to complete a vehicle purchase if they receive a response to an online enquiry within one hour. 25% of buyers said they expected a dealer to respond in under 30 minutes.
Hill concluded: “Our latest analysis shows that real demand is building and dealers vitally need the right systems in place to maximise on conversion rates in the appointment only, social distancing environment.”
Renault to cut 14,600 jobs in bid to save €2bn
French carmaker Renault is planning to cut 14,600 jobs and scale back production at several factories, in an attempt to save €2bn (£1.8bn) following a decline in demand during the Covid-19 crisis.
As part of the restructuring plans, Renault is reducing its global production capacity from 4m vehicles to 3.3m by 2024.
Some 4,600 workers in France will lose their jobs, and an additional 10,000 from plants around the world. The carmaker also said it plans to halt production of combustion engine cars in China, with partner Dongfeng buying Renault’s stake in the firm last month.
Clotilde Delbos, interim chief executive at Renault, said: “In a context of uncertainty and complexity, this project is vital to guarantee a solid and sustainable performance, with customer satisfaction as a priority.
“By capitalising on our many assets such as the electric vehicle, by capitalising on the resources and technologies of Groupe Renault and the Alliance, and by reducing the complexity of development and production of our vehicles, we want to generate economies of scale to restore our overall profitability and ensure our development in France and internationally.”
FLA & NFDA welcome the reopening of dealerships
Commenting ahead of the 1 June reopening date for car dealerships in England, Adrian Dally, head of motor finance at the Finance & Leasing Association (FLA), said: “With increasing numbers of people returning to work, the reopening of car dealerships will be very welcome. Motor finance lenders are vitally important to the motor industry, and they’re ready to support customer purchases as they did before the Covid-19 crisis.”
Sue Robinson, director at the National Franchised Dealers Association (NFDA), added: “As lockdown measures start to ease, many of us will need cars to get back to work and it is crucial that automotive retailers are open to serve the workforce. They have been working hard to put all the necessary measures in place to ensure social distancing can be observed, and we look forward to welcoming customers back into showrooms.”
UK car manufacturing plummets 99.7% in April
UK car production fell to its lowest level since the Second World War in April, dropping 99.7%, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
In April, many manufacturers refocused efforts on producing personal protective equipment (PPE), including face shields, visors and medical gowns for use by healthcare professionals. During the pandemic car makers have now made some 711,495 pieces of PPE, said the SMMT, with others helping make medical equipment, including high-tech ventilators as part of the Ventilator Challenge UK Consortium.
Output for both the domestic and overseas markets was severely curtailed in the month, with 152 cars built for export and 45 for customers in the UK. The exceptional month follows a particularly weak April 2019, when volumes fell 44.5% year-on-year due to temporary shutdowns as manufacturers sought to mitigate the impact of an expected end-March Brexit.
The news comes as the latest independent analysis suggests annual UK car production could fall below 1m units in 2020, which would represent lower volumes than in 2009 and possibly a third lower than expected in January pre-crisis.
Although the UK’s 168,000 automotive manufacturing employees are now starting to return to work, with around half of the country’s car and engine plants set to be operating by the end of May, factories are scaling up production along different timescales and, with strict social distancing measures in place, output initially will be restricted with a predicted loss of up to some 400,000 units by year end, compared with the January outlook, and a cost to industry of up to £12.5 billion at factory gate prices.
Mike Hawes, chief executive of the SMMT, said: “With the UK’s car plants mothballed in April, these figures aren’t surprising but they do highlight the tremendous challenge the industry faces, with revenues effectively slashed to zero last month. Manufacturers are starting to emerge from prolonged shutdown into a very uncertain world and ramping up production will be a gradual process, so we need government to work with us to accelerate this fundamentally strong sector’s recovery, stimulate investment and safeguard jobs.
“Support to get all businesses through this short-term turmoil will ensure the UK’s many globally-renowned brands can continue to make the products that remain so desirable to consumers the world over and, in turn, help deliver long-term prosperity for Britain.”
AA Cars extends 50% discount for dealerships
AA Cars has extended its 50% discount for car dealers into a third month as dealerships prepare to reopen on Monday 1 June.
AA Cars introduced its 50% discount in April as the coronavirus crisis forced forecourts to close for the lockdown, and it has now confirmed the offer will continue throughout June for dealerships across the UK.
The government has announced that forecourts and showrooms in England can reopen from 1 June, as long as they meet social distancing and hygiene guidelines.
Interest in used cars has increased since the UK Government encouraged people to return to work where it is safe to do so, said AA Cars. The government’s call for workers to avoid using public transport where possible has led to many commuters without a car to consider buying one.
In May, AA Cars recorded a 71% month-on-month increase in views of used cars for sale on its platform. It also saw requests for car finance jump by 134% compared to April and email enquiries from dealers rise 129%. These results indicate a resurgence in consumer demand, as well as strong intent to purchase.
AA Cars has also seen 68% more enquiries for trade-in valuations this month, through its consumer car selling service. Dealers can purchase this stock directly rather than paying costly auction fees.
James Fairclough, chief executive of AA Cars, commented: “This has been a challenging time for dealerships, so we are glad to be able to do our bit to support them by extending our 50% discount into a third consecutive month.
“We know dealers in England will be working round the clock to add extra social distancing and hygiene standards so customers can visit, test drive and buy with minimal risk.
“There are positive signs that interest in purchasing used cars has greatly increased in the past month. The growth in car finance in particular demonstrates that consumers are showing strong intent to purchase, offering some good news for dealerships which are about to reopen.”
Auto Trader extends support into June, includes 25% discount
Auto Trader will be extending its support for its retail partners into June, offering a 25% discount on all advertising packages and extending its double stock offer until 16 July.
For customers in Scotland, Wales and Northern Ireland, Auto Trader will remain free while retailer forecourts are required to remain closed. March payment terms for all customers have been extended by a total of 60 days and packages will also remain free for all customers for the remainder of May.
The online marketplace has also introduced a range of free online features to help highlight the safety measures retailers have put in place to make the car buying experience safer.
Nathan Coe, chief executive of Auto Trader, said: “This recent government announcement is an important step forward for the automotive industry. We will continue to support our customers, which is now about helping them to sell as many vehicles as possible, which is the focus of everyone at Auto Trader.
“We understand that returning to trading will be challenging for our Retailer partners, but we are confident we can help given our scale and the unusually high levels of demand we are seeing on our platform.”
Car showrooms set to reopen on Monday 1 June
Boris Johnson confirmed during yesterday’s Daily Briefing that car showrooms will be able to open from Monday 1 June, as part of the next stage of the easing of lockdown measures.
This is in response to the progress made in controlling the spread of Covid-19 and the country’s ‘R-number’ remaining below 1, said the prime minister.
A guidance is being published for the sector “detailing the measures they should take to meet the necessary social distancing and hygiene standards. Shops now have the time to implement this guidance before they reopen. This will ensure there can be no doubt about what steps they should take.”
Alok Sharma, business secretary, added: “The guidance we have set out today provides a vital framework to get shops open in a way that is safe for everyone. It explains how retail workers who are not currently working can go back to work as safely as possible and feel confident in their workplace.”
The announcement will be good news for the automotive industry, which has already been hit by losses of more than £8bn due to the closures caused by Covid-19.
Commenting on the announcement, Sue Robinson, director of the National Franchised Dealers Association (NFDA), said: “NFDA has worked closely with SMMT to produce guidelines for retailers in line with the government’s recommendations. Retailers have been working hard to put all necessary measures in place to ensure social distancing can be observed.
“As lockdown measures start to ease, many of us will need cars to get back to work and it is crucial that automotive retailers are open to serve the workforce. The retail automotive sector looks forward to welcoming customers back into showrooms.”
The announcement comes after latest calculations from the Society of Motor Manufacturers and Traders (SMMT) revealed the closure of showrooms was costing the Treasury £61m each day during the lockdown.
Other ‘non-essential retail’ stores are due to open from 15 June.
iVendi expects ‘step change’ in online motor retail
Dealers returning to trading as the lockdown eases are likely to prompt a “step change” in online motor retail, according to iVendi.
James Tew, chief executive of iVendi, said a shift away from showroom-based interaction seems inevitable in the medium term at least, and that it has already seen a recent uptick in interest from dealers who want to upgrade their online presence.
He said: “The showroom-based retail model has persisted in the motor industry for much longer than almost any other sector but, for the medium term at least, that picture is likely to change and perhaps substantially.
“Even if the government allows dealers to reopen their doors in June, consumers are likely to remain wary about utilising showrooms in numbers for the foreseeable future and, in truth, a socially distanced premises may just not be much fun to visit.
“There is every reason to believe that click-and-collect and home delivery will be the dominant methods of trading as we emerge from lockdown, and that showrooms will become more like fulfilment centres where vehicles are processed. There will be some face-to-face vehicle retail, but it will probably be relatively limited.”
“We believe that conditions are going to be difficult over the coming months and probably years in the motor industry but also, for us, this is a moment when we can prove exactly how well online processes work when it comes to selling vehicles.”
MotoNovo sees positive surge in business activity
MotoNovo Finance has seen a surge in proposal and business activity since the company lifted its lending restrictions as lockdown measures were loosened.
In the period May 11-15, MotoNovo saw finance business activity return to around half of pre-lockdown volumes. Proposals were up 71% week-on-week, while there was a 79% increase in payouts.
“The first week of activity following our move to lift lending restrictions has delivered an encouraging impact; especially since the lockdown was very largely in place and that showrooms were and must remain closed,” said Mark Standish, chief executive of MotoNovo.
“This data provides a promising indication for dealers in England looking to develop a click & collect service; it also points to the importance of finance. From experience in previous challenging economic times, we expect to see strong demand for dealer finance because access to unsecured lending is often more restricted than secured HP/PCP finance.
“The increase in customer finance activity at our findandfundmycar.com over recent weeks is evidence of this trend. Leading on finance availability and affordability will be important to dealers looking to create customer interest.
“While I am heartened by these early results, we must recognise that we are not going back to business as normal. It is time for dealers to reassess their business models to get leaner and closer to their customers.”
Auto Trader to roll out lockdown-friendly retail tools
Auto Trader is launching a set of retail tools to help retailers navigate sales through the lockdown period, including click and collect and home delivery options.
From 20 May, retailers will be able to show consumers via their adverts on the site the measures they have taken to make the buying experience safer. Retailers who offer a home delivery service will be able to feature a corresponding indicator flag, and where available, potential car buyers will have the option to book a Live Video Viewing directly with the retailer.
There will also be a section for Covid-19 safety measures to indicate whether the retailer offers appointments only or contactless collection, as well as a free text box to allow retailers to tell consumers about the specific Cvoid-19 safety measures they’ve introduced.
Karolina Edwards-Smajda, Auto Trader Director of Commercial Products, says: “In a world where, regardless of what the government says, consumers are still hesitant about going out, it’s vital that we support retailers to create an outstanding online experience for consumers.
“Everything from the browsing experience, to reassurances around the vehicle, its price and the retailer’s safety measures are necessary to instil trust with consumers and help retailers to convert sales. We have created these tools, to support both the retailer and the consumer to drive trust, transparency and of course much needed sales. We are all really focused on helping retailers to get back to business as quickly as possible.”
The new features are free to all Auto Trader customers.
iVendi tracks ‘proportional increase’ in motorcycle and van finance
There has been a proportional increase in motorcycle and van finance applications, according to data from iVendi.
The company reported that at this point in May 2019, motorcycles accounted for around 7% of all applications and vans 5%. This has increased to 10% and 8% respectively year-on-year.
“While the overall number of finance applications we are seeing this year is, as you would expect, much lower than 12 months ago, the proportion of applications for motorcycles and vans is noticeably higher,” said James Tew, chief executive at iVendi.
“The obvious reading from this is that we are seeing two coronavirus-related trends feeding through into the figures. Firstly, there is an increased demand for light commercial vehicles for use by key workers in important support roles.
“Secondly, we are hearing anecdotal stories of some people understandably choosing to move out of public transport because of the risk of infection on trains and buses, instead moving into alternatives. The motorcycle sector is clearly part of this, especially when it comes to mopeds and other types of commuter bike.”
Tew added that there was a reasonable likelihood that this shift in iVendi’s finance application statistics would continue into both the medium and long-term.
“We’re almost certainly going to see a change in the transport mix as a result of the coronavirus situation. People overall might end up making fewer journeys overall but be very reluctant to share their transport with others when they do have to travel.
“It is likely that this will drive sales of cars, especially small hatchbacks, as people look to find alternative ways of getting to work, but it could also see the popularity of everything from bicycles and e-bikes to electric scooters and mopeds rise.”
Aston Barclay extends online auction programme
Aston Barclay has extended its online auction programme based on the results of a buyer survey following Boris Johnson’s lockdown address on 10 May.
In the survey, 52% of buyers said they are expecting a strong demand for used cars as soon as dealers open for business, with 80% expecting to buy up to 30 used cars during the next month. These statistics match closely buyers’ pre-pandemic buying patterns. Six in 10 said they would be buying stock in the £5-15,000 price bracket, while buyers also predict SUVs will retain their popularity in the market.
A further 44.9% of dealers said they will be buying stock online once the market gets back to normal, reinforcing the impact online buying has had in the first seven weeks of lockdown.
No physical buyers will be allowed on site to inspect or bid on the stock. Even when social distancing is relaxed Aston Barclay envisages allowing only a restricted number of physical buyers attending each sale to maximise on site safety, a trend that will become the ‘new normal’.
“Every part of our recent business review focusses on what the new future will look like to enforce the safety of our colleagues, buyers and vendors. Combine that with the results from the buyer survey where the industry is predicting a healthy used car market in place from the off, we believe we are in a good place and ready to play our role in supporting the industry as it returns to work.” explained Neil Hodson, Aston Barclay’s group chief executive.
Close Brothers: dealers want prolonged government support
Six in 10 motor dealers want to see prolonged support with government grants and loans to help with their recovery, according to a survey from Close Brothers Motor Finance.
A month after the UK lockdown began, 55% of dealers confirmed that they’d taken out more finance to stay afloat. Businesses were struggling, with a huge impact on employees; 47% of dealers had furloughed their staff, and 43% laid them off entirely. Half of dealers (49%) reported issues sourcing stock.
Half (49%) of respondents had dealt with customers unclear about whether to/ how to buy a car during lockdown, and a quarter (25%) with customers unclear about how to collect a car they had already ordered/ agreed to purchase.
Looking to the solution, dealers are most keen to see prolonged support with grants and loans from the government, with 61% saying this would aid recovery. Some 53% would like to see more support for car manufacturers, and 47% are keen for further support with employee salaries.
Beyond the direct impact of Covid-19, wider regulatory hurdles persist. 47% of dealers want to see a reduction on import tariffs, and 43% are calling for changes to the timeline on the diesel/ petrol ban. In February, the ban on petrol and diesel cars was brought forward from 2040 to 2035, and dealers expressed concern at the time that the ambition was overly challenging without more investment in infrastructure and education.
In terms of online interest, 45% of dealers reported increased social media interest as consumer demand shifted online, and a 31% have taken lockdown as an opportunity to build up the online presence of their dealership to support current and future sales. Almost one in five (18%) have introduced a delivery service in order to safely meet the continued demand.
Seán Kemple, director of sales at Close Brothers Motor Finance, said: “Covid-19 has brought the UK economy to its knees, and with most showrooms and forecourts closed the motor industry has been hit hard. Government has already introduced a number of measures including cuts to business rates, the furlough scheme, and frozen fuel duties, but the environment remains undeniably difficult.
“It’s really positive to see some UK car manufacturers safely returning to work, but with social distancing measures in place the speed of production will be severely limited. This, combined with damaged consumer confidence, means the future is uncertain. Dealers are working hard to find ways to support their staff and their customers, and as the backbone of the car industry, it’s vital that they are properly supported.”
European auto CEOs discuss recovery plan and Green Deal
Chief executives from across the automotive value chain met with the European Commission to discuss a recovery plan for the sector, with a view to stimulating the wider economy.
The European Automobile Manufacturers’ Association (ACEA) and the European Association of Automotive Suppliers (CLEPA) were also present to hold discussions with Frans Timmermans, the commission’s executive vice-president for the Green Deal, and Thierry Breton, commissioner for internal market.
With extended factory closures across Europe, a loss in production of 2.4m vehicles so far and car sales down by more than 95% in major EU markets last month, the whole sector is at risk of liquidity shortages and sees its performance threatened for some time to come. The situation in the automotive industry has a significant knock-on effect on other parts of the economy.
“The number one priority of the industry is to re-launch the market, thereby enabling production to resume at manufacturing sites across the EU,” stated ACEA director general, Eric-Mark Huitema. “Given the near-total collapse in sales, it will be crucial to provide a strong market stimulus to enable vehicle makers to fully re-open production facilities and keep people in jobs.”
During the meeting, ACEA and CLEPA called on the European Commission to coordinate national fleet renewal schemes to ensure that the market conditions are harmonised across the continent, and to supplement these with the EU budget.
“As we work on putting the wheels back in motion, we must look for win-win solutions, addressing the pressing environmental, industrial and broader societal needs,” said Sigrid de Vries, CLEPA secretary general. “The purpose of recovery measures should therefore be two-fold: to re-start the industry and to employ the full range of technology solutions that are available and needed for carbon-neutrality. Hand in hand with investments in renewable energy carriers and infrastructure, this will propel the Green Deal as well as safeguard employment and industrial activity in Europe.”
Manheim resumes vehicle auction programme
Manheim has resumed its vehicle auction programme, following weeks of planning and implementation of necessary safety measures.
Auctions will be online only and will feature a wide range of vehicles and models from several vendors. Stock will be available to buy through ‘buy now’ events and ‘virtual auctions’ via Simulcast.
Buyers will not be charged the usual additional Simulcast fee until further notice. This concession also applies to any vehicles acquired from Manheim Online. Auctions are trade only and you must be a Manheim account holder to participate.
Buyers will be contacted following each sale to arrange collection. Collection must be by appointment only. There will be a strict handover process in place to ensure the ongoing safety of our team members and customers.
Buyers are also advised that vehicles purchased prior to lockdown can now be collected, with the same strict handover process in place. Auction centres are contacting customers to arrange handover appointments.
Chris Cush, director of auctions & transport at Manheim UK, commented: “We’re pleased to re-start our online auction operations this week. We’ve carefully planned the operational activity required to support each sale safely, both in terms of how our teams work and how customers receive the vehicles that they buy.
“We have established a strict operating process that ensures social distancing is maintained, and collections managed to ensure the safety of all involved. We will be ramping-up our sales timetable in the coming weeks but for now the focus is on ensuring we carefully manage activity to keep the wellbeing and safety of team members and customers absolutely front and centre of all we do.”
Ford restarts operations at European factories
Ford said vehicles again were rolling off production lines at factories in Germany, Romania and Spain following a seven week production suspension in response to the Covid-19 crisis.
“As part of a phased restart, production has begun at a low level and will gradually be ramped up over the next few months before full production is resumed. Priority will initially be given to sold customer vehicle orders from dealers,” the automaker said.
Global standards on social distancing and health and safety protocols are in place at all factories to protect returning workers.
Each day, employees are required to complete a wellness self-assessment process and also receive personal ‘care kits’ which include Ford made face masks and other hygiene items.
“The response from our employees has been incredible. Our teams have been highly proactive in helping support their local communities through the coronavirus crisis and now they are back to what they do best – making the vehicles that will help get Europe moving again,” said Ford Europe manufacturing chief Dale Wishnousky.
“We monitored the situation very closely to ensure the timing was right and all the measures were in place to provide a safe and protected workplace.”
Stop-start recovery ‘will define Covid-19 legacy’ in the short-term
The automotive sector will experience a ‘stop-start’ recovery, with the remainder of 2020 unlikely to return to any version of normality, according to a new analysis from Cox Automotive UK.
It also cautions that May and June will not be indicative of the longer-term picture, with pent-up demand and initial oversupply leading to a short-term spike in transactions before supply shortages starve the market of new and used stock.
Disrupted renewal cycles, subdued consumer confidence, fleet rationalisation and shifting personal mobility preferences will make for an unpredictable remainder of 2020.
But despite the inevitable impact on new and used vehicle sales, Cox Automotive does not think Covid-19 will wreak long-term destruction on the economy in the same way that the 2007-09 financial crisis did.
Philip Nothard, Cox Automotive’s customer insight & strategy director, commented: “Covid-19 has created a unique set of political, economic and social circumstances that will define a ‘new normal’. The automotive sector is very unlikely to return to what we knew before the pandemic but there are positives to be found.
“Our informed consensus is that we’ll see a ‘W’ shaped recovery* over the long-term, following the general path of the overall economy but with some notable deviations unique to our sector. Expect unusual things to happen with used prices as supply and demand imbalances work out.
“The new vehicle market will not return to any form of normality for some time. It will take time for manufacturers to restart operations, and we may never see output return to where it was pre-coronavirus for a while. The financial impact of Covid-19 will inevitably see some OEMs change their strategy, with some projects stopped altogether and others accelerated to respond to new consumer needs.
“We’ll also see consolidation amongst the dealer sector accelerate as liquidity issues take hold for some, and consumers switch to digital channels far more quickly than was otherwise anticipated. Used vehicles will be the dominant revenue opportunity for dealers and OEMs for the remainder of the year.
“Looking further ahead, we believe we’ll see several factors having a bigger impacting upon the sector including the clean air agenda, remote working and mobility. All will influence how consumers choose and use their vehicles.”
Startline: easy-to-use HP and PCP solutions key for online sales
Paul Burgess, chief executive of Startline, said that there needed to be fast, easy-to-use, robust and compliant hire purchase and personal contract purchase solutions to make online-based sales viable.
As a result, Startline has started working on motor finance processes with dealers who are intending to offer online-based home delivery used car sales.
“We have long offered the capability to carry out the entire task of processing motor finance online from both a car buyer and retailer point of view but, pre-lockdown, some dealers chose to maintain traditional processes.
“It is these retailers that we are now helping. When it comes to the vehicle handover, point of contacts needs to be minimised or eliminated, of course, including signing a paper motor finance agreement. Everything has to be online for home delivery and, if click-and-collect becomes widely adopted in the near future, the approach will be essentially the same.”
Burgess said that Startline had seen a significant increase in activity from dealers in recent days and that many, especially larger dealer groups and car supermarkets, were gearing up to adopt quite comprehensive online sales models.
“There is a definite intention to try and make online sales work among perhaps half of the dealers with which we have relationships. We undertook some research last year that said more than half of used car buyers would be comfortable buying and financing online, so there may be quite a substantial potential market but, at this point, no-one knows.
“However, it is important to bear in mind that, while many people are facing a difficult time financially, others have disposable income, especially because they are not spending on all kinds of things – from restaurants to concerts – that are currently unavailable to them.
“Also, anecdotally, there is a new, potential group of car buyers who are currently keen to enter the market because they no longer feel comfortable using public transport. Again, it is very difficult to say how large this market may be but there are certainly possibilities.”
ALD Automotive partners with Karshare for front-line support
Key workers from The North Bristol NHS Trust and the University Hospitals are being given free use of a fleet of 33 vehicles, provided by Bristol-based ALD Automotive and managed through Karshare’s free community car scheme. The 30 cars, two vans and a minibus, will be used to help key workers commute more safely, distribute supplies (including PPE) and support the community.
Tim Laver, ALD’s managing director, said: “As part of the Bristol community we all wanted to do something to help during this time of crisis, and providing vehicles was an obvious starting point. We therefore teamed up with Karshare to assist with the excellent work they were already doing in the Bristol area.”
Because public transport services have been cut and social distancing rules restrict the sharing of lifts to work, the vast majority of the ALD vehicles will be used to help key workers get to work. The first vehicles have already been handed over to staff working within the two local NHS Trusts, which manage hospitals including Southmead Hospital, Cossham Hospital, the new UWE Nightingale Hospital, Bristol Royal Infirmary, Bristol Royal Hospital for Children and Weston General Hospital.
Due to the volumes involved, and high levels of delivery driver absences, the ALD cars will also be used to transport essential supplies to health and care services including PPE, food and toiletries.
Laver continued: “We are proud to be able to help NHS staff and other key workers throughout this challenging time and Karshare has been a great help in this process. We hope that the vehicles will make life a little easier for them, enabling them to do their vital work in hospitals and around the community.”
Startline: resumption of motor finance essential to online sales
The resumption of widespread availability of motor finance will be essential for used car dealers looking to maximise online sales over the coming weeks and months, according to Startline Motor Finance.
The company points out that many motor finance providers had essentially closed their doors to new business when lockdown began, furloughing large numbers of staff in the belief that current conditions would make vehicle sales almost impossible.
Paul Burgess, chief executive of Startline, explained: “The clarification from the Government on home delivery and the likely adoption, following that, of click-and-collect models mean that many dealers who had essentially mothballed their businesses are now looking to put a lot of effort and resources into online sales – and to get up-and-running as soon as possible.
“However, the role that motor finance has to play in this scenario has not really been widely discussed. The majority of car sales are enabled by products such as hire purchase and personal contract purchase, and they will be needed to make sales possible.
“To make this work, two issues need to be tackled – integrating motor finance into online customer journeys and ensuring that providers are currently offering services.
“Firstly, the dealer and their finance panel must have successfully integrated motor finance into their online customer journey. The process must enable finance to be delivered in an easy-to-use, efficient and compliant manner.
“Secondly, their motor finance providers need to be in a position to write new business. Some have furloughed large numbers of staff based on the expectation that the market would essentially be dormant for the period of the lockdown. The possibility of online sales may well have taken these businesses by surprise and they are presumably currently looking at the possibility of gearing up to provide at least a skeleton service.”
Startline had chosen to remain fully operation during the crisis, Paul added, and had been writing amounts of business that it considered surprisingly high. Also, investments that the company had made in online technology had played a key role.
“For some of our largest introducers, for example, we saw April deals running at around two-thirds of the normal level. Yes, overall volumes were substantially down but we have found that staying open has been the right decision. This has not been a dormant market.
“Of course, all of the business that we have seen has been written online. There are no other routes to market at the moment, so digital capabilities have been essential.”
Burgess added that it was difficult to forecast the degree of online sales which might occur during lockdown but that it could provide an important lifeline for car retail businesses.
“Our view is that, even if you are retailing only 10-20% of the vehicles that you’d normally manage then, as long as you are making money, it is very worthwhile. Certainly, it is not impossible to envisage scenarios, especially for smaller dealers, where those handfuls of sales might make the difference between surviving this crisis or otherwise.”
VW expects ‘substantial impact’ on Q1 sales
Volkswagen said the COVID-19 pandemic had “a substantial impact” on business in the first three months of the year.
Deliveries fell 23% year on year to 2m vehicles. Revenue fell 8.3% to € 55.1bn. Operating profit plunged 81.4% to €0.9bn.
The group expects 2020 deliveries to be “significantly below the prior year” due to the virus.
Increasing competition, volatile commodity and foreign exchange and more stringent emissions related requirements are also challenging. Revenue is also expected to be significantly below last year with operating profit “severely below the prior year” but remaining positive.
VW passenger cars sales fell 16% in the first quarter to 765,000. Audi volume fell to 268,000 from 305,000. Skoda sales were off 13.7% to 237,000 vehicles and Seat was down 20.6% to 140,000.
Even Porsche was not immune to virus effects though sales dropped just 1.3% to 56,000 in the first quarter.
VW group finance chief, Frank Witter, said: “We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially.”
Meridian expects medium-term rental boost post-lockdown
Meridian Vehicle Solutions expects there to be strong demand for the medium-term rental market when the economy starts its recovery post-lockdown.
Phil Jerome, managing director at Meridian, predicted that the product was likely to meet the mood of the times, delivering immediate and low-cost transport without long-term commitment.
“We are almost certainly going to come out of lockdown in a measured and gradual fashion, and economic confidence is unlikely to be high. Many businesses will be wary of signing long-term leases because there will be so many economic unknowns.
“In that situation, medium-term rental is a very appealing solution and we expect there to be quite a lot of interest in a short space of time.”
Jerome said that Meridian also expected to see demand among people who wanted to maximise social distancing by having their own enclosed space in which to travel.
“There is going to be a proportion of the public – and it is difficult to say how many at the moment – who have habitually used trains and buses but will now be uncomfortable about being that close to so many people post-lockdown.
“Those people are going to be looking for a car. Some will undoubtedly buy a cheap runaround but medium-term rental again provides a solution that can be used to take them through a 6-12 month period until the coronavirus situation is hopefully resolved.”
Ford details gradual restart in Europe
Ford Europe plant workers, such as these in Romania before the virus outbreak, will see many changes as production restarts gradually
Ford Europe plant workers, such as these in Romania before the virus outbreak, will see many changes as production restarts gradually
Ford said it plans to restart production at most of its main continental European vehicle and engine plants from 4 May.
Manufacturing will resume from that day in phases at Saarlouis vehicle assembly and Cologne assembly factories plus an engine plant in Germany, Valencia assembly in Spain and Craiova assembly and engine plants in Romania.
Production will restart at the Valencia engine plant on 18 May but there are no resumption dates for the Dagenham, England and Bridgend, Wales engine plants as the UK is still in lockdown and central and regional governments have yet to detail an exit strategy or timing.
“We need to prepare for a new environment once we are past the initial peak of the coronavirus pandemic in Europe with the key priority in our ‘return to work’ plan being the implementation of Ford’s global standards on social distancing and strengthened health and safety protocols in the workplace. Our employees need to know that we are taking the appropriate steps to safeguard their well-being at work,” said Stuart Rowley, president, Ford of Europe.
Production will start at a low level, prioritising sold customer vehicle orders from dealers, and will gradually be ramped up over the next few months before full production is resumed.
Production plans take into account supplier readiness, national movement restrictions and, dealer sales sites reopening in key markets, as well as customer demand.
Planned safety measures include requiring anyone entering a Ford facility to use a company provided face mask, and a face shield in some manufacturing positions and other positions where social distancing cannot be met. All persons must have body temperature checked on entry with scanning equipment that meets local or national regulations and restrictions. Workers must complete a daily wellness self-assessment process to confirm fitness and readiness for work.
Work areas have been redesigned to ensure proper social distancing guidelines are maintained and a phased return to work will reduce employee density in buildings.
The company also will provide all employees with a personal care kit on return to work. They include disposable face masks, reusable thermometer and other hygiene items.
MotoNovo extends finance acceptance to 60 days
MotoNovo Finance has extended the validity of its finance acceptances to 60 days from the usual 30 days.
The move is designed to help dealers ready themselves to take customer reservations when the car sales return to the normal collection/delivery routine.
“The lock-down has seen a huge rise in online car buyer interest on our findandfundmycar used car marketplace and we are keen to help them and their chosen dealer,” said Karl Werner, deputy chief executive at MotoNovo. “Now, car buyers can reserve their car of choice with our finance, confident that their acceptance will be valid when the lock-down period ends.
“On another positive note, we are continuing to provide finance through the lock-down for essential or key workers as defined by government guidance.”
Evolution Funding sees 290% rise in online self-service finance
Motor finance broker Evolution Funding has reported a 290% rise in customers completing end-to-end, online self-serve finance sales – transactions where consumers propose themselves online and complete a distance e-Sign journey from home.
The company’s digital signing solution lets the customer complete the transaction without ever visiting the dealership. Prior to the COVID-19 crisis, 10.75% of all deals were completed in this way. During April, that percentage has risen to 31.2%.
Chris Coverdale, Evolution group sales director, said: “This rise in self-serve finance proves the importance of enabling customers to transact online. Many of the car sales platforms are reporting a surge in online activity. Our data shows us that buyers are willing to take the leap towards self-service. Indeed, we expect this to become the norm as social distancing measures continue and consumer behaviour adapts.”
Evolution has also increased anti-fraud procedures and enhanced due diligence calls to assist dealers in transacting and delivering at a social distance.
Coverdale added: “Those dealers that are already digitally-enabled are continuing to transact, albeit at much lower volumes. The tools that dealers can add to their websites are quick and simple to implement – from eligibility checkers through to finance calculators that invite online applications and deliver instant decisions. We believe that now is the time for dealers to get digital-ready for when the upturn happens.”
Production restarts at VW Wolfsburg plant
The production of vehicles at VW’s main Wolfsburg plant in Germany has begun today, after weeks of shutdown due to the impact of the COVID-19 crisis.
The first vehicle to be produced is a Golf and VW said that production will start at 10 to 15% of capacity, increasing to around 40 percent over the following week.
The company also said a 100-point plan provides maximum health protection for employees
Ralf Brandstätter, chief operating officer of the Volkswagen Passenger Cars said: “Step-by-step resumption of production is an important signal for the workforce, dealerships, suppliers and the wider economy.”
Production began with the early shift beginning at 6:30 am CET. Initially, Golf production will recommence on a one-shift basis — with reduced capacity and longer cycle times. VW also said some 8,000 employees are returning to the production halls. Production of the Volkswagen Tiguan and Touran models as well as the SEAT Tarraco begins on Wednesday.
VW said multi-shift operation is to get underway again the following week. At the same time, some 2,600 suppliers, the majority of them located in Germany, have resumed production for Volkswagen’s main plant. Measures to protect the health of the workforce have been significantly expanded.
“Step-by-step resumption of production is an important signal for the workforce, dealerships, suppliers and the wider economy. In terms of managing the crisis, though, this is just the first step. Additional momentum is needed to stimulate demand in Germany and throughout Europe so that production volumes can be successively increased,” said Brandstätter.
Cap hpi: dealers are holding firm in lockdown
The volume of vehicle adverts increased around the turn of the month due to some attractive offers by online portals to assist their customers, according to data from cap hpi.
Retail advertised prices remained stable throughout April as retailers have chosen not to reprice their stock in the current climate. Cap hpi said It is clear that prices are not the reason consumers are not buying, and reductions could lead to an unwelcome competitive race to the bottom.
Derren Martin, head of valuations UK at cap hpi said: “A dedicated team of industry experts and data analysts continues to review all available trade and retail data and will make adjustments if the data reflects the used car market. Since lockdown began, for obvious reasons, there has simply not been sufficient trade data to represent the market accurately, so no values have moved thus far.”
Physical auction halls have been closed since the lockdown announcement. However, trade, or wholesale, sales have not stopped completely. Data from auctions and leasing companies have accounted for around 3,500 cars sold in April, but this is only about 2% of normal levels.
“While we have seen a reduction in the number of valuations requested by our customers in our Valuation Anywhere product we still see thousands every weekday. The opening of dealer showrooms, with safe distancing measures in place, and the ability to buy and sell cars is likely to be in an early part of the release of lockdown and the earlier this is, the less of an impact there will be on value movements.
“It is likely that when we come out of lockdown, cheaper cars will be proportionally more in demand, for several reasons, including prudence and a reluctance to use public transport. It is unlikely that there will be an immediate desire for more expensive used cars, although used finance offers will help stimulate this.”
Heycar reports soaring online traffic during lockdown
Used car marketplace heycar has experienced a surge of interest from ‘lockdown browsers’ who are turning to the internet to plan their next motor purchase.
Traffic on the heycar website has risen 87% since the first week of April, with used cars seeing a particular increase in interest.
However the platform notes that maintaining interest is key. Reactive measures on the heycar site to keep a pipeline of customers for the future have included a ‘register interest’ button on all makes and models, allowing heycar and the relevant dealership to keep in touch until the time is right to buy.
Since being introduced to the site at the beginning of April, there has been a 46% increase in users signalling their interest. And, according to a recent survey, almost one in five car buyers are poised to make a purchase as soon as COVID-19 lockdown is lifted.
Chief Commercial Officer at heycar, Karen Hilton, believes savvy online dealerships who take the time to nurture prospective customers in the medium term will emerge stronger from the Coronavirus crisis.
She says: “It’s so interesting to look at the numbers of people who are coming on to the heycar site at this time. The visitors, the cars they’re browsing and the numbers who are registering interest suggests a pent-up desire to buy when the time’s right.
“We might be living through extraordinary times, but the signs are there that the industry will be able to pivot back to better times later in the year. Right now, that means nurturing every possible lead and having the best possible online offering for people to find you when they are stuck at home on their laptops and phones.”
iVendi: uptick in online activity indicates first signs of a rebound
iVendi has seen an uptick in online used vehicle activity over the last seven days, pointing to the first signs of a potential rebound.
For example, web site visits to view specific used cars, vans and motor cycles during the last seven days are running at 40% compared to the average during January and February, having fallen as low as 33% at the end of March.
Online eligibility checks – which allow a customer to see their chances of being accepted for motor finance – over the last seven days are now 66% of the January-February average, compared to a low of 34%.
Also, online motor finance applications over the last seven days are now running at 54%, compared to a low of 34%.
James Tew, chief executive at iVendi, said: “While it is important to be extremely circumspect in the current situation, there has been a definite uptick in activity over the last few days. During the end of March and the beginning of April, we saw extreme lows and there are now signs of some metrics heading back towards normality.
“Certainly, a relatively large number of people are looking at cars, vans and motor cycles and checking themselves for finance eligibility, and we see those as encouraging signs, even if they are not yet translating into many sales.
“However, perhaps the key statistic is that payouts by motor finance companies are currently running at less than 5% of the January-February level, with many of them committed to only approving essential workers at the moment. With the practicalities of used vehicle dealers effectively returning to work through online sales very much a hot industry topic at the moment, this may or may not remain the norm.”
FCA confirms support for motor finance customers
The Financial Conduct Authority (FCA) has confirmed the package of measures to support motor finance customers facing payment difficulties.
Christopher Woolard, interim chief executive at the FCA, said: “We have worked at pace to introduce temporary financial relief tailored for a range of specific credit products. Many firms are already working with their customers, but these measures ensure all consumers affected by the coronavirus emergency can apply for a temporary freeze on their payments.”
The FCA has confirmed the following measures:
- Firms to provide a three-month payment freeze to customers who are having temporary difficulties meeting finance or leasing payments due to coronavirus. If customers are experiencing temporary payment difficulties due to coronavirus and need use of the vehicle, firms should not take steps to end the agreement or repossess the vehicle.
- Firms should not alter Personal Contract Purchase (PCP) or Personal Contract Hire (PCH) agreements in a way that is unfair. For example, firms should not try to recalculate PCP balloon payments based on a temporary depreciation of car prices caused by the coronavirus situation. The FCA expects firms to act fairly where terms are adjusted.
- Where a customer wishes to keep their vehicle at the end of their PCP agreement, but does not have the cash to cover the balloon payment due to coronavirus-related payment difficulties, firms should work with the customer to find an appropriate solution. Given the increased potential for disparity between the balloon payment and the value of the vehicle in the current climate, firms should ensure that solutions do not lead to unfair outcomes. For example, refinancing the balloon payment might not be appropriate in the circumstances.
JLR plans Europe production restart in May
Tata-owned Jaguar Land Rover (JLR) plans to gradually resume production from 18th May, starting with manufacturing plants in Solihull in the UK as well as in Slovakia and Austria.
In China, it says it is ‘beginning to see recovery in vehicle sales and customers are returning to our showrooms’. JLR’s joint venture plant in Changshu has been in operation since the middle of February.
As countries are relaxing distancing guidelines and retailers are reopening around the world, the restart of production at other plants will be confirmed in due course, the company said.
JLR also said it is developing robust protocol and guidelines to support a safe return to work. “We will adopt strict social distancing measures across our business and are currently evaluating a number of different measures to ensure we protect and reassure our workforce when they begin to return to work,” the company said.
Jaguar Land Rover also said it is doing ‘whatever it can to support its communities through the current situation. The company’s thoughts are with those directly affected by COVID-19 and with the healthcare professionals, whose role in combating this virus is appreciated by all’.
Startline: coronavirus crisis ‘an opportunity’ to bolster customer relationships
The coronavirus crisis is providing an opportunity to advance the way the motor finance sector handles customer relationships, according to Startline Motor Finance.
Paul Burgess, chief executive of Startline, said that the industry had changed substantially and positively in this respect in recent years as a result of both its own initiatives and statutory interventions, but that the lockdown situation was providing further impetus.
“Obviously, no-one wants the world to find itself in this situation with the horrible cost in terms of both lives and economic damage. However, there are positives to be found if we look hard enough. What we have really noticed about every aspect of our interactions as a business over the last few weeks has been the way in which everyone is pulling together.
“Many of the people we are talking to are experiencing difficulties – whether dealers whose businesses are essentially frozen or motor finance customers who are facing financial difficulties – but the striking thing has been how generally calm and constructive these conversations have been on all sides despite the circumstances.
“In recent years, as a sector, we have become much more adept at treating the customer fairly. The crisis provides the opportunity to move further forward from there.
“Our view is that the public in general will remember the people and the businesses that treated them fairly and with respect during the crisis – it is a watershed moment for the country – and motor finance should do the right thing.”
Burgess added that there were financial realities to be faced in both the short and longer term but that he was hopeful these could be dealt with in a pragmatic manner.
“Everyone currently faces distinct financial difficulties, from motor finance companies to dealers to motor finance customers. The full extent of these problems is not yet clear but the news is likely to be quite bad for at least some people.
“However, our hope – and our aspiration – is that we are able to handle these issues in the right spirit and that this will be recognised by our customers. Talking to other motor finance companies, we are finding signs of a similar approach.
“Clearly, there are going to times when financial realities have to be acknowledged but we very much agree with the statement the FLA has issued where it says that we need to keep motorists in their cars wherever possible. This is certainly our aim at the moment.”
Dealerweb hits 20,000 enquiries since lockdown
Dealerweb has reported that its dealers across the UK have received over 20,000 enquiries since lockdown began on 24 March.
The firm is calling for dealers to ensure they act promptly to nurture enquiries to help their businesses recover when lockdown ends.
In the week commencing 13 April dealers have seen over 5,700 enquiries and sold over 500 vehicles.
Martin Hill, chief executive of Dealerweb, said: “Dealers must act now to ensure they are nurturing fresh enquiries, which are vital to post-lockdown sales. We should consider that 20,000 new enquiries represent 5,000 vehicle sales, at a 25 per cent conversion rate. While many of the cars sold over recent weeks won’t be delivered until after lockdown it is clear that there is an underlying consumer demand that needs to be served.
“If the UK follows the buying trends we are seeing in Wuhan, China, we can expect a strong bounce when lockdown ends. Dealers in the region are seeing pent up demand and new buyers as people buy additional vehicles to avoid having to use public transport.”
The National Franchised Dealers Association (NFDA) has issued guidance to its members on online sales in the COVID-19 lockdown. It says that while showroom activity is not permitted under the government rules, online activity is and that deliveries necessary for online sales can still take place.
Dealerweb reports that since March 24 it has seen orders taken for over 600 vehicles.
Hill added: “Now is the time to start putting in place the building blocks for a successful return to trading and hitting the ground running! Clearly, we need to do it safely with a focus on our teams, customers and communities, but the customers are there for the dealers that are responsive and proactive.”
PSA Group readies Ellesmere Port for restart
PSA Group is readying its Ellesmere Port Vauxhall/Opel factory in Britain for reopening but has yet to confirm a date.
It said the plant has remained “active” and implemented a protocol of reinforced health measures. This protocol, now approved by management, has been fully audited, in order to assess its implementation.
Management has invited Unite, the union representing plant employees, to make a final review of the safety protocols, before car assembly can resume.
The protocol comprises more than 100 measures covering all the company’s activities at industrial, administrative, R&D and commercial level.
For example, the protocol – specifically developed for industrial sites – requires checking employees’ temperatures, in addition to their self-monitoring of symptoms.
The wearing of glasses on site is also supplemented by a daily individual supply of masks, and respecting safe distances between people. Measures include break areas with markings on the floor, keeping doors open (except fire doors) to avoid contact with handles, frequent cleaning of tools and work surfaces, waiting time when exchanging unprepared parts in a hand to hand environment.
“The industrial recovery schedule, which will be comprehensively discussed with Unite, has not yet been specified and will take into account the operating capacity left to companies by public authorities to exercise their commercial and industrial activities,” PSA said in a statement.
iVendi offers online vehicle sales software free-of-charge
iVendi is aiming to help coronavirus crisis-hit car retailers by supplying them with its TRANSACT product free of charge.
The software will automatically be made available to its direct dealer customer base this week and can be used to progress sales digitally as far as possible in current conditions.
James Tew, chief executive of iVendi, said that development work on the product, which was originally due for launch later this year, had been accelerated because it was believed to be highly appropriate for dealers working in the current circumstances.
He said: “We’ve already been providing quite a lot of help to dealers on an individualised basis through our account management team, listening to what they are going through, giving assistance where possible and gauging their mood.
“In opting to make TRANSACT available to all our direct dealers free of charge, we didn’t want to be seen to be doing something just for the sake of it. We had to be sure that it would offer genuine help to those who will use it.
“What we are doing is presenting them with something that incorporates our very latest technology and thinking, and which we believe is the ideal solution to enable sales to be maximised and progressed as far as possible under current restrictions.
“Our research shows that 69% of used car sales don’t happen at the advertised price. There is price negotiation, warranties are upgraded, paint protection is added and so on. TRANSACT takes account of this and provides the means for the conversations to occur digitally as well as in the showroom.”
Tew added that in terms of delivering results for dealers both during and after the crisis, a key point was that the product didn’t require the dealer to change their website because it would work highly effectively within existing online infrastructures.
“During beta testing for TRANSACT in normal market conditions in January and February, more than £10.9m of vehicles sales were concluded, which included £8.6m of finance transactions. This far exceeded our expectations and is part of the reason that we believe it will deliver for dealers hit by the crisis.”
MotoNovo Finance welcomes FCA measures
MotoNovo Finance has welcomed the proposals by the Financial Conduct Authority (FCA) to support motor finance customers during the coronavirus crisis.
Mark Standish, chief executive of MotoNovo, said: “The announcement from the FCA reaffirms the steps that we and I’m sure other motor finance lenders have taken to help customers facing an unexpected financial challenge, as a result of COVID-19 impact are on the right track. It also underlines the importance of providing support at an individual level, recognising the 3-month payment freeze that has grabbed the headlines, may not be suitable to everyone.”
The value of providing a solution to each person impacted by COVID-19 was emphasised by the FCA’s interim Chief Executive Christopher Woolard, in announcing the FCA proposed measures when he noted: “We have tailored our measures to specific products. For most of these proposals, firms and consumers should consider the amount of interest which may build up, and balance this against the need for immediate temporary support. If a payment freeze isn’t in the customer’s interests, firms should offer an alternative solution, potentially including the waiving of interest and charges or rescheduling the term of the loan.’
Standish added: “We have already agreed support for circa 20,000 customers. We have also deployed an additional 122 people to our customer support teams, taking the total workforce to 288 to meet the increase in demand. These teams are primarily focused on calls and online responses, but we also have a number of digital solutions available to support customers to self-serve.
“Even with additional measures in place, the crucial importance of responding to each person that contacts us and understanding their circumstances means it will take time to respond to every person. This is far from ideal, but every person can be assured that our simple aim is to help as many people as possible to continue their car finance in a manner they can afford, minimising the financial stress they might otherwise face. It is a message we want to ensure all of our customers know and that dealers, who may be contacted by their customers can share.”
Auto Trader extends retailer support into May
Online car marketplace Auto Trader has extended its offer of free advertising to its retail customers, in light of the government’s announcement to extend business closures for another three weeks.
Nathan Coe, Auto Trader’s Chief Executive Officer, commented: “We remain committed to supporting our customers, our industry and our people. As our customers are not able to meaningfully trade, we will do what we can to support them such that when restrictions are lifted, they are able to get back to business.
“To the extent retailers are still able to engage with buyers, we are seeing plenty of activity through email, calls and text chat. Many retailers are treating these leads as a pipeline for future sales for when the market re-opens.”
FCA proposes support package for motor finance customers
The Financial Conduct Authority (FCA) has proposed a package of measures to support motor finance consumers facing payment difficulties due to COVID-19.
The FCA expects motor finance providers to offer a 3-month payment freeze to customers who are having temporary difficulties meeting finance or leasing payments due to coronavirus. If customers are experiencing temporary financial difficulties due to coronavirus, firms should not take steps to end the agreement or repossess the vehicle.
The FCA has also proposed that:
- Firms should not change customer contracts in a way that is unfair. For example, firms should not try to use temporary depreciation of car prices caused by the coronavirus situation to recalculate Personal Contract Purchase (PCP) balloon payments at the end of the term. We will expect firms to act fairly where terms are adjusted.
- Where a customer wishes to keep their vehicle at the end of their PCP agreement, but does not have the cash to cover the balloon payment due to coronavirus-related financial difficulties, firms should work with the customer to find an appropriate solution.
Christopher Woolard, interim chief executive at the FCA, said: “We are very aware of the continued struggle people are facing as a result of the pandemic. These measures build on the interventions we announced last week, and will provide much needed relief to consumers during these difficult times.
“We have tailored our measures to specific products. For most of these proposals, firms and consumers should consider the amount of interest which may build up, and balance this against the need for immediate temporary support. If a payment freeze isn’t in the customer’s interests, firms should offer an alternative solution, potentially including the waiving of interest and charges or rescheduling the term of the loan.”
The guidance includes hire purchase agreements (such as PCP agreements), conditional sale agreements or other credit agreements used to purchase a vehicle where the creditor is also the supplier (eg credit sale), as well as PCH agreements.
The proposals are intended to complement the measures already announced by the government to support consumers during the coronavirus pandemic.
The FCA is open to receiving comments on its proposals. Stakeholders are asked to respond by 5pm on Monday 20 April. The final guidance is due to be published by Friday 24 April 2020, coming into force shortly after.
ACEA publishes guidelines for re-launch of EU auto industry
The European Automobile Manufacturers’ Association has published four guiding principles for a successful re-launch of the European automotive industry.
“It is in Europe’s interest that this key strategic sector not only recovers, but also is revitalised in order to make a strong contribution to the EU’s industrial strategy, the European Green Deal as well as the continent’s global innovation leadership,” said Eric-Mark Huitema, director general of the ACEA.
The four principles are as follows:
Defining a coordinated strategy to safely relaunch vehicle production as soon as possible
The ACEA said it is vital that both manufacturers and suppliers can rapidly and simultaneously get their plants up and running across the whole supply chain and in all countries. ACEA is requesting EU-wide support for a coordinated re-start of activities and investments right along the supply chain.
“A top priority is to protect the health of all those who work in the auto sector,” said Huitema. “To that end, we need clarity on the relevant health and safety rules in each country for when production restarts.”
Stimulating market demand for all vehicle categories
Huitema: “As Europe looks to reboot its economy, it will be crucial that clean road transport and mobility are affordable for everybody across the continent. Given the fragile economic situation, however, many consumers and professional transport operators will be simply unable to purchase new vehicles.”
Therefore, fleet renewal schemes for all vehicle categories across the EU would be needed to help re-launch demand for the latest vehicle technologies.
Unblocking type approval and registrations of the latest-technology vehicles
Today’s standstill within the industry, technical services and national type approval authorities is understandably disrupting the approval or ‘homologation’ of new vehicles, meaning they cannot be sold. Similarly, if vehicle registration authorities are shuttered and cannot grant registrations, businesses and customers cannot use their new vehicles. ACEA therefore urges authorities in the EU member states to accelerate the type approval and vehicle registration process to the maximum extent possible, given the constraints currently in place.
Accelerating investment in recharging and re-fuelling infrastructure
An EU-wide network of charging and re-fuelling infrastructure will be key to ensuring that the fleet can be renewed in an environmentally-friendly way, according to ACEA.
VW to resume production ‘step by step’
Volkswagen has detailed a “step by step” resumption of passenger car production starting with Zwickau and Bratislava from 20 April and other German, Portugal, Spain, Russia, South Africa, North and South America plants from 27 April.
May will see production resumed in South Africa, Argentina, Brazil and Mexico.
Ralf Brandstaetter, COO of the Volkswagen brand, said: “With the decisions by the federal and state governments in Germany and the loosening of restrictions in other European states, conditions have been established for the gradual resumption of production.
“VW has prepared intensively for these steps over the past three weeks. In addition to developing a comprehensive catalogue of measures for the protection of our employees’ health, we have also forged ahead with the re-establishment of our supply chains.”
Short time working will continue at plants in Germany but the number of employees affected will be successively reduced in line with the resumption of production.
Production will be resumed in line with the current availability of parts, government requirements in Germany and Europe, the development of sales markets and the resulting modes of operation of the plants.
Irrespective of these developments, compliance with the stringent health protection measures for employees will be top priority.
Production and logistics chief Andreas Tostmann said: “We are providing safe workplaces and the maximum possible level of health protection with a 100-point plan. We are ensuring the economy regains momentum and cars once again leave the plants and reach our dealers and customers.”
Components operations had already started to resume production at plants in Brunswick and Kassel from 6 April, followed by plants in Salzgitter, Chemnitz and Hanover, as well as the Polish plants, from 14 April, to safeguard component supplies for vehicle production in China.
The company can also call upon experience gained with the production ramp-up at its plants in China where a large number of consistent health protection measures have been successfully implemented.
Some 32 of 33 plants in China have now returned to production and no cases of coronavirus have been reported among employees.
Cazoo offers £250 discount to NHS workers
Online used car platform Cazoo is offering a £250 discount on any vehicle to NHS workers, in response to their work during the COVID-19 outbreak.
Cazoo has reportedly seen a notable increase in demand from health workers seeking to buy a car over the past few weeks, as cars have become an essential mode of transport for many workers.
To claim their £250 discount, NHS workers must order a car via Cazoo’s website and then e-mail their NHS photo ID to firstname.lastname@example.org. Once the car has been delivered, Cazoo will refund the £250.
As with other online retailers, Cazoo has recently put in place measures to ensure a contactless delivery process to fully protect both its staff and customers. All vehicle handovers now take place from a safe distance with Cazoo delivery drivers wearing personal protective equipment and remaining outside the car, whilst still providing a full customer handover and explanation of all the key features of the vehicle.
Alex Chesterman, chief executive and founder of Cazoo said: “It is more important than ever that our amazing NHS heroes can get to work safely, and we are happy to try to make car buying as affordable as possible. This £250 discount to any NHS worker is our way of showing our gratitude for the remarkable work and sacrifices they are making every day. Last week, 50% of our orders came from health workers and it is only right that we support them at a time when, understandably, many are reluctant to use public transportation.”
China automotive sales fall 43% in March
New vehicle sales in China fell by over 43% to 1.43m units in March 2020 from 2.52m units in the same month of last year, according to wholesale data released by the China Association of Automobile Manufacturers (CAAM).
Last month’s sales were 4.6 times higher compared with the February 2020 total, the low point of the crisis when many parts of the country were under lockdown. February sales plunged by almost 80% year on year to a decades low of 310,000 units.
Encouraged by signs that the spread of the virus was slowing, the Chinese government began to ease restrictions on business activity in most areas of the country towards the end of February.
The government has also injected huge monetary and fiscal stimulus to help prevent the economy from collapsing while automotive specific policies have also been introduced to help the industry rebound quickly – including additional sales incentives and the suspension of restrictions on new licence plates by municipal governments.
State owned enterprises are also being encouraged to step up purchases of new energy vehicles.
Towards the end of February, vehicle manufacturers nationwide were urged to restart operations as soon as possible, while CAAM deputy secretary-general Chen Shihua said “we didn’t expect vehicle manufacturers to resume production so fast”.
The government last week said it had reduced restrictions on market access for new energy vehicle manufacturers to help the segment’s recovery. It no longer requires manufacturers to have local design and development capabilities but will impose higher aftersales standards.
First quarter vehicle sales were down by just over 42% at 3.67m units from 6.37m units in the same period of last year, according to CAAM data.
Chen suggested “the Chinese vehicle market is rebounding from the February low and is expected to return to normal in the second half of the year” while cautioning “the market is almost certain to see an overall fall over the entire year, however”.
FLA calls for urgent action to support non-bank lenders
The Finance and Leasing Association (FLA) has called on the government and the Bank of England to take urgent action to support the non-bank lending market.
Figures due to be released by the FLA next week will reveal that members provided almost £141bn of new business in the 12 months to February 2020 – representing a 2% year-on-year increase. Some £46bn of this total was provided by non-bank lenders.
Stephen Haddrill, director general of the FLA, said: “The asset, consumer and motor finance markets play a significant role in supporting businesses and households across all sectors of the economy. We have welcomed the financial support schemes that the government and Bank of England have put in place so far, but urgent action is now needed to ensure that non-bank lenders are able to continue to serve customers, both through new lending and forbearance.
“Non-bank lenders rely heavily on the capital markets and bank funding, which are essentially closed to them. Support needs to be provided to non-bank lenders to help them deal with the huge cashflow drain from forbearance, with Covid-related requests growing by more than 1000% in the week commencing 16 March, followed by a further 249% increase the following week.
“This sector needs urgent Government help to ensure that it is still in a position to lend to individuals and businesses when the current market disruption ends, because without their input, the UK’s economic recovery will be much slower.”
ACEA: 1.5m vehicles in production losses for European manufacturers
Factory shutdowns as a result of the COVID-19 crisis have resulted in lost production amounting to 1,465,415 motor vehicles to date, according to new figures published by the European Automobile Manufacturers’ Association (ACEA).
This figure – covering passenger cars, trucks, vans, buses and coaches – is up from 1.2m units compared to one week ago. The number could climb further if shutdowns are prolonged or more plants are closed, ACEA cautions. The average shutdown duration EU-wide currently stands at 18 working days.
In terms of employment, the jobs of at least 1,138,536 people working in EU auto manufacturing have been affected by these shutdowns so far (up from 1,110,107 last week). This figure only refers to people directly employed by vehicle manufacturers; the impact right across the automotive supply chain is clearly much more far-reaching.
ACEA is highlighting the impact of COVID-19 on the EU auto industry – in terms of the number of employees affected as well as lost production in units – in weekly-updated interactive maps covering the 27 EU member states and the United Kingdom.
COVID-19 ‘offers opportunities in the automotive aftermarket’
The COVID-19 pandemic impact is anticipated to lower replacement/scrappage of existing vehicles in use – making the parc last longer – and bringing an opportunity for repair and maintenance parts and components, according to research undertaken by GlobalData.
The COVID-19 pandemic is leaving a deep mark on the global automotive industry. While China may be in the process of recovery, the rest of the world is facing shutdown to combat the situation. The global impact of COVID-19, which was initially majorly on the supply-side, soon turned to the demand-side as most markets across Europe, North America and Rest of Asia witnessed lockdown.
This meant a decline in footfall in dealerships and eventually weaker demand for automotive products and related services. Customers globally have either parked or cancelled their vehicle purchase decisions as the governments emphasize ‘social distancing’.
However, a much bigger impact will be witnessed on new vehicle sales as the economic after-effects – declining wages, disposable income and employment – kick in. And the aftermarket, a profitable area for many vehicle manufacturers, will be impacted, GlobalData’s research suggests.
Research analyst Bakar Sadik Agwan says that global markets are expected to witness fewer new sales and slower replacement of older vehicles from the existing parc both in the private and the fleet segment making the existing parc’s replacement cycle elongated.
“This after-effect tends to have a negative impact on OEMs, but on the flip-side, it poses an opportunity in the aftermarket to generate substantial demand for replacement parts and consumables as older vehicles continue to be on road,” he says.
The announcement of three-months relaxation to passenger car and commercial vehicle owners to get their annual vehicle worthiness test (MOT) by the UK government and inclusion of auto service and repair as ‘essential’ business by the US government signifies that the production and adequate supply for replacement parts and consumables should keep going even during the crisis. Consumables and wear and tear parts are expected to be the key beneficiaries among all aftermarket parts and components.
The pre-COVID scenario of GlobalData aftermarket analysis estimates revenue growth of consumables and wear and tear parts at 5.9% and 6.3% respectively between 2018 and 2020, globally.
“The opportunity exists – maybe not immediately – as the automotive supply chain disruptions due to COVID-19 has affected both the OEM and the independent aftermarket businesses. However, the opportunity may present itself once the world enters the recovery phase of the COVID-19 crisis,” Agwan adds.
Virus clobbers Mercedes Q1 sales
Mercedes-Benz sold 477,378 cars in the first quarter of 2020, down 14.9% year on year.
The switch to battery-electric models only saw Smart plunge 78.3% to 5,863 units, while vans notched up 64,588 sales, down 14.9%.
“The pandemic developments in Europe and US and the consequences of the temporary closures of retail businesses in those markets had a significant impact on unit sales in March, Daimler said.
“2020 started well and we were able to increase sales of our core model series especially in January. The impact of the corona crisis seriously weakened our unit sales in March and we therefore did not achieve our target numbers in the first quarter,” said Marcus Breitschwerdt, head of Mercedes-Benz Vans.
Europe Q1 sales fell 15.9% to 188,963 vehicles with German volume off 8.8% to 64,332 cars.
Asia-Pacific volume was down 17.1% to 198,849 vehicles, while China sales fell 20.3% to 138,960 cars.
First quarter deliveries in North America were 78,501 vehicles. US sales were down 4.8% to 67,746 and Mercedes-Benz was the highest-selling premium brand there.
Meridian: company cars may need inspection following lockdown
Drivers will need guidance on returning laid-up company cars to the road when the coronavirus crisis ends, according to Meridian Vehicle Solutions.
Phil Jerome, managing director at the medium-term rental firm, said that some vehicles may not turn a wheel for months, depending on the length of the lockdown, and would need to be quite carefully inspected in a risk management context.
“Even if the lockdown lasts just another few weeks, there will be many, many cars out there that will not move at all during that time or just cover a handful of miles.
“This creates a risk management issue. The standard walkaround checks carried out by fleets are not really designed for vehicles that have been laid up for long periods of time. What we really need is detailed guidance for drivers so that they can check their vehicles regularly during the lockdown and also more information when it starts to be lifted.
“Issues could range from tyres that have lost pressure to flat batteries to seized brakes and more. Cars are simply not really designed to be left untouched for long periods.
“Also, it is reasonable to expect that on the days when drivers start heading back onto the roads in number, there will be a sudden and considerable demand on breakdown recovery services as drivers find that neglected cars have developed problems.”
INDICATA launches remarketing data tool
INDICATA, part of the Autorola Group, has launched Market Watch – a free information source for remarketing companies, with used market volumes and pricing data.
The platform holds data from the UK and 12 other countries, by analysing 9m used vehicle advertisements across Europe every day. It hopes to provide companies with valuable insight on market trends such as the current coronavirus pandemic.
Market Watch is available as a regular PDF hosted on the INDICATA UK country website, while access to a more comprehensive web-based market reporting tool is available to senior decision makers in the leasing, rental, OEM and dealer group sectors.
Andy Shields, INDICATA’s global business unit director, said: “Market Watch gives further support to the used car industry to help make sense of how to manage the impact of COVID-19. Our PDF and web portal provide used car decision-makers with the best real-time data to build both a short term and long-term strategy to efficiently manage used car supply and demand.”
FCA outlines coronavirus response for coming year
The Financial Conduct Authority (FCA) has set out its planned response to the coronavirus pandemic for the next year.
The regulatory body said it will be focused on ensuring that financial services businesses give people the support they need, that people avoid scams, and that financial services businesses and markets are aware of FCA expectations.
“Alongside HM Treasury and the Bank of England, the FCA has already made a series of interventions at unprecedented speed to protect consumers, firms and the markets,” said a statement. “These have ensured that customers retain access to essential banking services and are able to benefit from flexibility on mortgage and other debt payments.”
The full planned response can be read here.
Cazana launches support services website for key workers
Cazana has launched KeyworkerGarages.co.uk to provide key workers with information on the service centres that are still offering motor support services.
NHS workers, police, delivery drivers etc. in need of vehicle services can enter their postcode and the website will display the nearest service centre, including opening hours and contact details to get vehicles booked in as soon as possible.
The team at Cazana have collated the data of open service centres from their partner dealers that remain open. Cazana encourages any centres not listed to submit their details on the site and help us to keep this website up to date to give keyworkers a definitive list of locations that can help.
Cazana’s Tom Wood said: “This is a challenging time for both the automotive industry and all those who are on the front line fighting this pandemic and we wanted to do something as a team to help both the nation’s essential keyworkers and the dealer service departments remaining open. I’m massively proud of the team here at Cazana who have been collecting data and have built this new site over the past week with the intention of helping people to stay mobile during this crisis.”
PSA inks extra EUR3bn syndicated loan
PSA has signed an additional €3bn (US$3.2bn) syndicated loan in addition to the existing €3bn undrawn confirmed line of credit for a total amount of EUR6bn in the light of the coronavirus situation.
The syndicated loan has an initial maturity of 12 months with two optional three-month extensions.
“This operation reinforces our ability to face up this exceptional situation and prepare the future,” said PSA CFO, Philippe de Rovira.
“It also proves the confidence of our partner banks in the financial strength and recognised resilience of Groupe PSA.”
SMMT: new car registrations down 44.4% in March
New car registrations in the UK dropped 44.4% in March, as the coronavirus crisis causes showrooms to close, according to the Society for Motor Manufacturers and Traders.
The performance represented a steeper fall than during the 2009 financial crisis and the worst March since the late nineties when the market changed to the bi-annual plate change system. With lockdowns taking place in many European countries earlier than the UK, even more dramatic falls have been reported elsewhere, with Italy down 85%, France 72% and Spain down 69% in March.
In total, 254,684 new cars were registered in the month, with demand from private buyers and larger fleets falling by 40.4% and 47.4% respectively. Meanwhile, the numbers of petrol and diesel cars joining the road were down 49.9% and 61.9% respectively.
There was some good news for early adopters, who were able to take delivery of the latest alternatively fuelled cars before the crisis took hold in the UK. Registrations of battery electric vehicles (BEVs) rose almost three-fold in the month to 11,694 units, accounting for 4.6% of the market, while plug-in hybrids (PHEVs) grew 38%. Uptake of hybrid electric vehicles (HEVs), however, fell 7.1%.
While many car showrooms are likely to remain closed for the coming weeks, companies are still working to ensure deliveries to critical workers, and the industry is also striving to keep sufficient service and repair workshops open to maintain vehicles which are helping to deliver essential goods and services across the country.
The news comes as SMMT downgrades its interim market outlook for the year to 1.73 million registrations – a -23% decline on the previous outlook made in January and some 25% lower than the 2.31 million units registered in 2019. A further outlook will be published in April to reflect the latest conditions.
Read all of the reaction from the industry here.
COVID-19 will force auto retailers to embrace digital transformation
Early reports from most countries around the world indicate that auto sales in March have nosedived as efforts to mitigate the COVID-19 crisis begin to bite. With governments issuing stay-at-home orders, dealerships have seen customer footfall drop significantly or dry up altogether leading to markedly reduced auto sales.
We are already getting an indication of what auto sales might look like as the virus passes by seeing how dealers are approaching it in China, which is a few months ahead of the western world in terms of managing the outbreak. Geely, one of the country’s largest automakers, has already launched a no-contact car buying service – the vehicle is delivered to the customer, disinfected, and then the keys are sent separately via a drone.
However, selling vehicles isn’t as straightforward as selling other products – they tend to be expensive, require negotiation of sales agreements, and are often something a potential buyer wants to experience before they purchase. As a result, completely ‘faceless’ vehicle buying isn’t likely to take off in markets used to a more traditional way of doing things, such as the US – just look at the pushback Tesla has faced in trying to sell cars directly to customers without a dealership network.
We’re likely to see ‘halfway house’ solutions evolve, with dealers offering virtual tours of vehicles or negotiations over video calling services.
As a result, we’re likely to see ‘halfway house’ solutions evolve, with dealers offering virtual tours of vehicles or negotiations over video calling services. In the UK, a start-up from the founder of Zoopla called Cazoo, which aims to bring the simplicity of digitalretail to the used car market, managed to raise GBP100 million from investors in March despite the current market uncertainty.
One of the reasons investors were attracted to Cazoo is its focus on digital sales, which is expected to be a selling point once the pandemic comes to an end. Now more than ever, dealers must embrace new methods of selling cars to customers – especially those that allow more of the shopping and buying process to be done remotely. While we expect a relative return to normality once the pandemic passes, we also see a longer-term shift away from face-to-face sales as customers become more cautious about their interactions with others.
Stock security could be a problem for remarketing sector, says VRA
Security of used cars and vans without access to formal storage facilities could be a growing problem for the remarketing sector over the course of the coronavirus lockdown, says the Vehicle Remarketing Association.
The body said that large numbers of vehicles left largely unattended in storage could attract theft and vandalism.
Sam Watkins, chair of the VRA, explained: “Where cars and vans are being stored in large, structured facilities, it is much less of a problem, because there are going to be comprehensive security measures in place ranging from fencing to cameras as well as an ongoing human presence on the ground. Indeed, in most places of this type, security has largely been enhanced in recent weeks.
“The problems are likely to arise in smaller locations that were never designed to be left unattended for long periods of time, notably dealer forecourts and ad hoc storage compounds. Vehicles are quite vulnerable in these circumstances.
“Especially, if the lockdown experience in the UK parallels that seen in other countries, there will be some non-compliance as the weeks pass and it seems sensible to assume that there will be people leaving their homes, some with criminal intent.”
VRA members had been discussing the topic during a VRA webinar last week and Watkins said that two key aspects that needed tackling – insurance and security.
“Our initial advice for businesses using these smaller sites is to talk to your insurer. Your policy probably doesn’t cover you for vehicles that are left at a site that is essentially unattended for weeks at a time. It is possible or probable that this condition has been suspended by your insurer but you should check.
“The second is to look at security. Call your local police station and explain the circumstances and your concerns. They may be able to drive by the site every day or you might arrive at some other measure that maintains social distancing but reduces the likelihood that there is criminal activity on the site.”
US light vehicle sales in March down 39%
Light vehicle sales in the US fell nearly 39% in March compared with last year, according to industry sales data emerging today.
Data from Ward’s shows that 992,392 light vehicles were sold last month, also a sharp drop on February’s 1.4 million, according to Ward’s.
The sharp drop to US vehicle sales last month was widely expected as social distancing and lockdown measures took hold in the US in response to the COVID-19 public health emergency. Analysts say the sales trend worsened during the course of the month as the COVID-19 crisis deepened.
The seasonally adjusted annualised rate for US cars and light trucks sales was estimated at 11.4 million units, down from 16.8 million units in February, Ward’s reported.
The coronavirus crisis is causing government-induced recessions across the world, with new car sales and the automotive sector hit particularly hard.
GlobalData forecasts in its base case scenario that the US light vehicle market in 2020 will be around 14.7 million units – a drop of almost 14% on 2019’s total. The next few months are expected to be particularly weak, with a strong pick-up to vehicle sales in the third quarter forecast, as economic activity returns and population movement controls are relaxed.
NFDA calls for FCA to waive motor retailer fees
Sue Robinson, director of the National Franchised Dealers Association (NFDA), has urged the Financial Conduct Authority (FCA) to waive its fees for motor retailers, or implement a one-year deferral.
Firms such as franchised dealers groups that are regulated by the FCA pay an annual fee to be authorised to provide finance products.
In a statement, the NFDA said: “The Coronavirus outbreak is having a significant impact on the motor retail sector. Showrooms have now closed their doors for sales enquiries and/or deliveries, and, whilst repair centres may remain open to cater for essential key workers, the demand for essential service and repair services for other customers has declined as motorists make fewer journeys.
“Each measure that mitigates against the severity of the impact of the Coronavirus will be vital in retaining jobs and investments. This simple yet effective measure would ease the burden on motor retailers and give them additional breathing space to meet obligations to staff and creditors.”
Ford postpones NA production restart indefinitely
Ford is delaying the restart of vehicle production at its North America plants and has put no date on a future restart. The company had been aiming to restart production April 6 at Hermosillo Assembly Plant and 14 April at several key US plants – and now has further postponed re-start dates, which will be announced later.
“The health and safety of our workforce, dealers, customers, partners and communities remains our highest priority,” said Kumar Galhotra, Ford president, North America. “We are working very closely with union leaders – especially at the UAW – to develop additional health and safety procedures aimed at helping keep our workforce safe and healthy.”
The auto industry has been heavily hit by decimated demand as result of the COVID-19 coronavirus crisis and population lockdowns that have also shut down dealerships.
Ford and others are repurposing some capacity to meet rising demand for healthcare equipment.
Ford said the Rawsonville Components Plant will restart the week of April 20 to produce the Model A-E ventilator, in collaboration with GE Healthcare, supported by paid volunteer UAW workers. The Model A-E ventilator is a basic, cost-efficient design that addresses the needs of most COVID-19 patients. Production will quickly scale up to produce 50,000 ventilators by July 4 – helping to meet the growing demand in the U.S. Approximately 500 paid volunteer UAW workers will be building these ventilators. At this time, ventilator production will be the only work being done at the Rawsonville plant.
“Today’s decision by Ford is the right decision for our members, their families and our nation,” said UAW International President Rory Gamble. “Under Vice President Gerald Kariem, the UAW Ford Department continues to work closely with our local unions and Ford to make sure that as we return to production all members are safe, and our communities are protected from this spreading pandemic.”
French car registrations down 72% in March
Car registrations in France dropped by 72% in March, due to the outbreak of coronavirus and the subsequent lockdown in the country.
This is according to the latest figures from the French motor association CCFA, which found that registrations dropped 73.4% at PSA, which owns Peugeot and Citroen. At Renault, registrations were down 71.6%.
In the first quarter of the year, registrations dropped by 34%.
ACEA: 1.1m EU auto workers affected by COVID-19 crisis
The jobs of over 1m Europeans working in automobile manufacturing are affected by factory shutdowns as a result of the COVID-19 crisis, according to data from the European Automobile Manufacturers’ Association (ACEA).
This figure only refers to those people directly employed by car, truck, van and bus manufacturers – the impact on the wider automotive supply chain is even more critical.
EU-wide production losses due to factory shutdowns amount to at least 1,231,038 motor vehicles so far. The average shutdown duration is 16 working days at the moment. Production losses are obviously set to increase if shutdowns are extended or additional plants are brought to a halt.
In total 2.6m direct manufacturing jobs are provided by the EU automotive industry, with vehicle makers operating 229 vehicle assembly and production plants across the region, according to the ACEA. The wider auto sector provides indirect and direct jobs for 13.8m people in the European Union.
“Right now, the primary concern of ACEA and all its members is to manage the immediate crisis facing the auto industry, which has essentially come to an abrupt halt – something the sector has never experienced before,” stated Eric-Mark Huitema, ACEA director general.
“Our first priority is to protect the health and jobs of the almost 14 million Europeans who work directly or indirectly in our sector.”
VW ‘cautiously optimistic’ about March sales in China
Volkswagen expects its car sales in China to quadruple in March, as sales begin to pick up with factories and showrooms reopening.
Stephan Woellenstein, head of VW’s China business, said: “We are cautiously optimistic that the worst effects of the crisis will be behind us in two to three months.
“There are more and more signs that business is recovering. By the middle of the year, we could be back to last year’s planning. Hope is returning to the Chinese market.”
Despite continued limited demand, Woellenstein said he expects vehicle sales of up to 1m in March, quadruple the figure of sold cars in February.
Automakers reach for credit lines as crisis bites
The rapid spread of COVID-19 has caught most of the auto industry on the back foot. With potential customers suddenly stuck in lockdown all around the world, some OEMs may see months without meaningful sales volume and suffer a subsequent hit to revenue and profitability. In addition, automakers are bearing the financial burden of supporting furloughed workforces and, in some cases, re-purposing factories and supply chains to provide much needed ventilators and medical equipment.
These extreme circumstances have pushed some automakers to access sizeable credit facilities to shore up their financial positions. Most recently, Japanese giant Toyota announced it was seeking a JPY1 trillion ($9 billion) line of credit from Sumitomo Mitsui Banking Corp. and MUFG Bank Ltd. Of all the major Japanese OEMs, Toyota is the largest and has the best credit rating – Moody’s Investors Service previously held it at an A1 grade – but, with the virus placing incredible pressure on the auto industry’s earnings, it has since dropped Toyota’s grade to Aa3.
Across the Pacific, US automaker General Motors also announced it would tap its credit lines to access an additional $16 billion in funding to respond to COVID-19. The OEM will combine the credit with its cash reserves and aggressive austerity measures to ensure it remains funded during the outbreak. GM was gearing up to build ventilators with Ventec Life Systems but confusion from the Trump administration led to the project being briefly cancelled after the White House implied the machines were too expensive – GM said it would not make any profit on the machines. The President then signed an order forcing GM to build the ventilators, despite the fact it was already preparing to do so.
In Europe, Volkswagen has stated that it is currently spending around EUR2 billion ($2.2 billion) per week to remain afloat. The group’s Chief Financial Officer, Frank Witter revealed that it had access to credit lines worth around EUR20 billion ($22 billion), but that it would only use those as a matter of last resort. Witter went on to call on the European Central Bank (ECB) to begin purchasing short-term debt as quickly as possible to avoid having to take more drastic measures to keep the automaker funded.
EU passenger car market down 7.4% in first two months of 2020
In February 2020, the EU passenger car market contracted by 7.4% to 957,052 units registered. This decline was the result of a combination of factors, including changes to vehicle taxation in various EU member states (which brought registrations forward to December 2019), weakening global economic conditions and consumer uncertainty. Germany recorded the most significant drop (-10.8%), followed by Italy (-8.8%), Spain (-6.0%) and France (-2.7%).
From January to February 2020, total registrations of new cars in the European Union were 7.4% lower than in the same period the year before. So far in 2020, each of the four major EU markets faced falling demand: Germany (-9.0%), France (-7.8%), Italy (-7.3%) and Spain (-6.8%).
How COVID-19 is affecting MOT guidelines – Moneybarn
As of Monday 30 March, the Department for Transport has granted vehicle owners a six-month exemption from MOT testing. This comes in light of the current coronavirus pandemic and government-sanctioned lockdown.
The exemption will enable vital services like deliveries to continue, key workers to commute and people to get essential food and medicine.
To help you understand what this new policy means for you, vehicle finance provider Moneybarn has put together a helpful guide.
SMMT responds to Ventilator Challenge UK
Mike Hawes, chief executive of the SMMT, said: “The essential and extraordinary work of this consortium will offer a beacon of hope to our NHS and all of society, and is a shining example of how the wider automotive and other manufacturing sectors can help in this time of crisis.”
The Ventilator Challenge UK features a group of UK manufacturers which have been tasked with producing medical ventilators for the NHS to treat coronavirus patients. The consortium is led by Airbus and includes Rolls Royce, McLaren and Ford.
Hawes continued: “The entire sector stands ready to help the national effort in every way possible, from production of critical medical equipment, to supporting delivery of essential supplies, maintaining emergency service vehicles and providing transport for key workers to support the most vulnerable in our communities.”
Nigel Stein, chairman of the Automotive Council, added: “This announcement is a welcome boost for the country at this critical time and shows what can be achieved when government and industry work together. Such collaboration has helped make this vital sector globally competitive, with a highly skilled, dedicated and productive workforce that will be essential to getting the economy back on its feet once this crisis is over.”
Volkswagen urges ECB to accelerate emergency lending
Volkswagen has urged the European Central Bank to accelerate emergency lending plans to help businesses cope with the effects of the coronavirus, according to the Financial Times.
Last week, the bank announced a €750bn package of extra asset purchases to support businesses, pledging to make non-financial commercial paper “eligible for purchase” under its quantitive easing programme.
However, the scheme has not yet been launched as the ECB continues to sort the technical and legal details for companies buying non-financial commercial paper.
Frank Witter, chief financial officer of VW, said: “There is a lot of pressure on the incoming money flow. We have different diversified funding sources available, but not all of them are as liquid as they were.
“Providing funding opportunities is something essential in this crisis. The earlier, the better.”
FTA calls for Brexit transition extension
British logistics association, FTA (Freight Transport Association) is asking for an extension to the Brexit transition period as Europe remains resolutely fixed on fighting the coronavirus pandemic.
The challenges posed by the Covid-19 virus will make the effective implementation of any new legislation impossible in the short term, says the FTA.
As a result, the industry is petitioning government urgently to seek an extension to the current transition period for leaving the European Union, as well as suspending other planned domestic legislation which will impact the logistics sector.
“This is not about the relative merits of Brexit, or any trading arrangements which our industry will need to adopt,” said FTA policy director, Elizabeth de Jong. “This is purely and simply so the businesses tasked with keeping the UK’s supply chain intact can concentrate on the serious issues which the Covid-19 pandemic is placing on the industry.
“Logistics is facing unprecedented challenges, both in terms of keeping the UK economy supplied with all the goods it needs to function, as well as coping with the increased disruption to staffing levels caused by sickness and self-isolation and concerns about the viability of their businesses.
“Our first priority is always to deliver for our customers and there is simply not enough capacity available to plan the major structural changes needed to implement a successful departure from the EU, as well as the myriad other planned legislation changes on the horizon [and] dealing with unprecedented pressures caused by Covid-19.
“Logistics is a flexible industry, but such significant change cannot happen overnight, and there is simply not the capacity for planning and delivery of new legislation at present within the system.
“Covid-19 has created a once-in-a-lifetime emergency situation which needs the full attention of the whole sector – adding in a host of new legislation would place untold, unnecessary pressure on a supply chain that is already stretched. Our industry needs the support of government, not to be broken by it.”
Volkswagen extends suspension of production in Germany
Volkswagen is to extend the production suspension at its German plants for a further four days until 9 April. The suspension includes its assembly and component making plants. Volkswagen said it is responding to the ‘fall in demand on the automobile market and the challenges faced by the supply chain’ but hopes to start making vehicles again ‘soon’.
In a statement, VW said an application for an extension of short-time working for a total of 80,000 employees of Volkswagen AG has been submitted. It is planned to end short-time working with the night shift of April 9 to 10. The plants affected are Dresden, Emden, Osnabrück, Wolfsburg and Zwickau as well as the Volkswagen Commercial Vehicles plant in Hanover, the plants of Volkswagen Group Components at Brunswick, Kassel, Salzgitter, Chemnitz and Hanover and the German plants of SITECH.
At the same time, VW said it is ‘preparing intensively for the resumption of production’.
Andreas Tostmann, Member of the Volkswagen brand Board of Management responsible for Production and Logistics, said: “The health of our employees has the highest priority. We will ensure that they can return to safe workplaces when production and logistics activities are resumed. In our task force, we are working on a comprehensive package of measures.
“In this context, we are also incorporating our experience in China where almost all our plants have now resumed production and the market seems to be gradually returning to normal. To date, there has not been a single case of corona among our employees in China.”
US vehicle market ‘heading for 35.5% March decrease’
Analysts at Edmunds say that March will see a much reduced US vehicle market in the wake of the COVID-19 coronavirus crisis, with overall sales down by a forecast 35.5% and the SAAR down at a depleted 11.9 million units.
Edmunds estimates that 1,044,805 new cars and trucks will be sold in the US for an estimated seasonally adjusted annual rate (SAAR) of 11.9 million. This reflects a 35.5% decrease in sales from March 2019 and a 23.4% decrease from February 2019.
Edmunds experts note that the downturn in March will also lead to a drop in quarterly sales, forecasting that 3,546,415 new cars and trucks will be sold in the first quarter of 2020, which reflects an 11.8% decrease from the first quarter of 2019.
“The first two months of the year started off at a healthy sales pace, but the market took a dramatic turn in mid-March as more cities and states began to implement stay-at-home policies due to the coronavirus crisis, and consumers understandably shifted their focus to other things,” said Jessica Caldwell, Edmunds’ executive director of insights. “The whole world is turned upside down right now, and the auto industry is unfortunately not immune to the wide-ranging economic impacts of this unprecedented pandemic.”
Edmunds analysts note that the nationwide shutdown of auto manufacturing facilities and limited inventory mean that automakers aren’t currently pressured to offer attractive incentives on new vehicles, but that will likely change as the COVID-19 crisis continues to evolve.
“Automakers can count on capturing some deferred demand once we get past the worst of this pandemic, but since they’ll be competing with so many other companies for consumer spending at that point, they’re really going to need to create incentives to spur some sales,” said Caldwell.
“Things might look a bit bleak as automakers are taking a hit right now across the board, but the massive stimulus package deal that was just announced is an encouraging update. History has shown us that this industry can survive through almost any financial or natural disaster, and we’re confident that they’re going to come out of this tough period on the other side.”
Some analysts say that sales over the past week are more than 80% down in areas of the US in stay-at-home mode.
MG Motor UK supplies 100 EVs to NHS agencies
MG Motor UK is supplying up to 100 fully-electric MG ZS cars to NHS agencies across the UK for use by NHS staff, as the government intensifies the battle against COVID-19.
The cars will be supplied via MG’s nationwide dealer network for up to six months, completely free of charge, to support the national effort to overcome COVID-19. By providing additional transport capacity with low running costs to the NHS, MG and its dealers are doing their bit to support the national effort in these unprecedented times.
The first six cars have already been supplied to Lancashire and South Cumbria NHS Trust by MG dealer Chorley Group.
Daniel Gregorious, head of sales and marketing at MG Motor UK, said: “As a proud British brand, MG is more than just a car manufacturer. Together with our dealer network, we want to do our bit to help the country to come through this uncertain time.
“By providing 100 electric cars to our NHS heroes, we hope that we will help to keep healthcare moving so that as many people as possible can receive the support they need. It’s also our way of saying thank you to those selfless people who work so hard to keep us all safe.”
Aston Martin suspends operations at UK manufacturing sites
Aston Martin has temporarily suspended all manufacturing at its UK plants in line with the latest UK government instructions on the fight against COVID-19.
“The business has taken this difficult but appropriate action in its determination to fully support the UK government’s measures on slowing the spread of COVID-19 and, crucially, to protect the health and safety of its workforce, its suppliers, and their families,” the luxury sportscar maker said in a statement.
“The period of manufacturing suspension is initially planned to Monday 20 April 2020, however, the business will continue to review the situation and will look to resume operations as soon as it is reasonable to do so.”
Aston Martin Lagonda president and Group CEO, Andy Palmer, said: “It is our responsibility to ensure we do all we can to support the government’s efforts in slowing the spread of COVID-19 over the coming weeks and, with the health of our amazing workforce front and centre of our minds, we have taken the tough decision to temporarily suspend operations at our sites around the UK.
“I hope and believe that our national fight against this dreadful virus will be successful and, as soon as we have the ability, we will, of course, return to normal operations. In the meantime, I would like to wish everyone associated with this great company good luck, and good health.”
Medium-term rentals ‘remain consistent’ heading into lockdown
Demand for medium-term rental stayed consistent in the days leading up to the coronavirus lockdown and there are already signs that future bookings will continue to be made during the crisis, according to Meridian Vehicle Solutions.
Phil Jerome, managing director of Meridian, said that the situation was creating what he described as a “two-speed fleet economy” where some sectors were seeing considerably-increased demand while others had effectively closed down.
“The parts of the economy that are staying open are very busy, whether that be food retailers or workers directly involved in the fight against coronavirus. There is a need for immediate transport for some people and we are helping to satisfy that.
“On the other hand, there are many parts of the industry that have effectively closed for business, and new orders have fallen to almost zero in those sectors.
“It’s very much a two-speed fleet economy but the fact that we remain relatively optimistic means that, even in the last few days, we have ordered almost 100 additional cars for our fleet. We’re expecting ongoing demand.”
Jerome added that because car rental was classified as an exempt business, it remained effectively the only form of vehicle provision available to many private and public organisations while car dealerships remained closed.
“There are reports that daily rental levels have increased for some suppliers in recent weeks. While that is a different market to ours, what we can say is that we are seeing consistent demand and are still taking orders.
“The main issue that we face is that, because the majority of our cars are delivered new from dealers, whether we can get them all safely processed and sent out but we are dealing with this on a case-by-case basis.”
INDICATA analyses impact of COVID-19 on automotive industry
As COVID-19 looks set to stay and affect the global automotive industry for a sustained period of time, INDICATA has published a report on the extent of impact and offers advice on how different sectors can survive.
For leasing companies, INDICATA said the challenge will be to manage the current volatility in the market while respecting the fact that there may be no short-term recovery in RVs. The report noted that in 2008/09 many leasing companies extended contract and ran on vehicles.
“With the risk that used vehicle prices are suppressed for an extended period of time, an immediate run on vehicles may not be ideal. Even so, vehicles will still need to be remarketed over the downturn.”
heycar: online demand remains strong among car buyers
There is still strong online interest from UK car buyers, despite the coronavirus lockdown, according to heycar.
According to the online car marketplace, dealers should be pivoting to accommodate digital customers, continuing to make sales now or maintaining interest for when the outbreak has passed.
Data from heycar, which has more than 3,500 dealerships nationwide using it, shows that in the weeks leading up to the start of the crisis, a strong pipeline of customer leads had been established.
And heycar chief commercial officer, Karen Hilton, believes it is the nurturing of these prospective customers in the medium term that will be key to the industry emerging from the coronavirus crisis in the best shape possible.
Hilton said: “Everyone knows inbound leads are going to continue to drop as the government has implemented further measures to halt the spread of the virus and keep our community safe.
“However, this situation WILL change and when it does dealers must be ready to build again. That’s why it is particularly interesting to look at the numbers of people continuing to show interest in changing their cars. This suggests there are good pipelines of existing customers to nurture and develop in order to tide dealers over the next few months.
“Our site data shows that before the start of the initial government measures on social distancing, demand in the market was still showing normal seasonal increases. Top of the funnel site traffic and car views were at seasonal highs and these are still high now as people spend more time at home and online.”
The numbers using heycar’s onsite ‘value my car’ tool have also remained strong since the introduction of social distancing, indicating that people are still planning for a car change – as long as it is safe to do so.
Manheim suspends all physical auction programmes
Manheim UK, part of Cox Automotive UK, has immediately suspended all of its physical auction programmes to comply the with latest Government restrictions on business (issued 23 March 2020). They will remain closed whilst these Government restrictions are in place.
All other Cox Automotive UK physical locations are also in the process of being closed, with only a security presence remaining on site thereafter. The planned auctions on Simulcast for today (Tuesday 24th) will not go ahead whilst we make the preparations for closure.
Customers are advised that Manheim UK sites will only accept arrivals today and the removal of any purchased and paid for vehicles needs to take place immediately. We will not charge buyers for storage for vehicles remaining on site during any lockdown period (currently expected to last at least 3 weeks).
Martin Forbes, chief executive of Cox Automotive UK, said: “The government’s instructions are very clear. We are legally and morally obliged to cease auctions with immediate effect. The health and well-being of our employees as well as our customers and business partners are top priority. We are working closely with customers and supporting them as much as possible during this challenging time. Together we will get through this.”
FCA to produce protective face masks
Fiat Chrysler Automobiles (FCA) says it manufacturing and donating more than one million protective face masks for emergency workers per month.
Production capacity is being installed this week and the company will start manufacturing face masks in the coming weeks with initial distribution across the United States, Canada and Mexico.
The face masks are to be donated by FCA to police, EMTs and firefighters, as well as to workers in hospitals and health care clinics. This action is the first of a multifaceted global program being developed by the company through applying manufacturing, supply chain and engineering expertise to support the global fight against the Coronavirus pandemic.
Commenting on this initiative, FCA CEO Mike Manley said: “Protecting our first responders and health care workers has never been more important. In addition to the support we are giving to increase the production of ventilators, we canvassed our contacts across the healthcare industry and it was very clear that there is an urgent and critical need for face masks. We’ve marshalled the resources of the FCA Group to focus immediately on installing production capacity for making masks and supporting those most in need on the front line of this pandemic.”
FCA will be working through national, regional and city authorities to ensure that the donated face masks are being directed to the people and facilities in the most immediate need. The company will disclose further actions related to the fight against the Coronavirus in the coming days.
Lookers temporarily closes UK dealership network
Car dealership group Lookers has announced it will be temporarily closing all of its trading locations in the UK until further notice.
In a statement, the company said: “The board is incredibly grateful to our brilliant employees who have been working hard to continue to serve our customers and the community safely in difficult circumstances.
“However, the board has carefully considered the impact of COVID-19 and the current advice of the UK Government. The board’s priority is to support the welfare of our colleagues and customers and to play our part in the national effort to reduce the further spread of the virus.
“Over the past 48 hours it has become clear that maintaining safe social distancing measures whilst continuing to operate car dealerships has become increasingly difficult.
“Against this background and with the support of our OEM brand partners, the group is temporarily closing all of its trading locations with immediate effect. This decision has not been taken lightly, however, the board is clear that the priority during these unprecedented times is the safety and welfare of our people and our customers.”
Chief executive Mark Raban added: “On behalf of everyone at Lookers, our first thoughts are for those impacted by the virus and their families. The group’s key priority is to protect its employees and customers and do everything possible to prevent the further spread of the virus. I want to particularly thank our colleagues and our OEM partners for their decisive support during this challenging time.”
FleetCheck add coronavirus symptoms to fit-to-drive declaration
FleetCheck has added coronavirus symptoms to the fit-to-drive declaration included in its Vehicle Inspection app.
The Vehicle Inspection app is designed to increase fleet safety for cars, vans, HGVs, buses and coaches and is widely used, having been used to complete 2m checks.
Peter Golding, managing director at FleetCheck, said: “The fit-to-drive declaration is an essential part of the app as well as fundamental fleet risk management itself. It means that a driver is making a declaration each day that they consider themselves OK to work.
“Clearly, when we’re all dealing with something as contagious as coronavirus, this takes on a whole new dimension, especially as many of the fleets still working on a daily basis are home delivery companies that are dealing with the public.
“The new, coronavirus-based declaration that we have written and made available to our customers provides a simple and easy reminder for drivers of the symptoms that they are likely to be experiencing if infected.
“Last week, as an example, 170,000 checks were undertaken using the app so it is no exaggeration to say that the fit-to-drive declaration could help to play a useful part in stopping the spread of the virus among and by drivers.”
Shutdowns ‘to cost European auto industry £29bn’
Sweeping announcements by the region’s automakers mean that over one million vehicles will be lost from production in the period up to the week beginning 27 April, according to GlobalData estimates.
The COVID-19 coronavirus is cutting a swathe through the economic and social fabric of the world and bringing incalculable human cost. Indeed, it is presenting an economic crisis few expected to see again in their lifetimes after the 2007/8 global financial crisis.
Once again, the automotive sector, as one of the most powerful economic multipliers, is at the forefront of the economic crisis. Hardly an hour has gone by in the past few days without an announcement by an automaker that it was stopping production. A multitude of reasons are given for the stoppages – be it supply chain disruption, softening demand or a need to protect the safety of workforces – but all have the coronavirus pandemic at their core. Thus far, 95 out of 103 light vehicle production plants in Europe have announced production stoppages to some degree.
The cost of the stoppages to the OEMs and their suppliers is huge, but what sort of numbers are we looking at?
Taking GlobalData’s latest European light vehicle production forecast sheds some light on this question. According to our assessment, in the six-week period from the beginning of March to 26 April over 1.3m light vehicles will be removed from production. That’s the equivalent of what four average-sized car plants would expect to manufacture in a year. Or taking the average value of a new car at some £22,000 it amounts to £29.3bn in lost revenues.
These are just the short term costs to the industry over a six week period. This crisis is a negative sum game across all industrial and consumer sectors and walks of life and the numbers could be set to become a whole lot worse before they become any better.
VW chief: expect plant closures to be extended
Volkswagen Group chief executive Herbert Diess has warned that VW Group temporary plant closures will likely last longer than the periods so far announced.
In a LinkedIn post, Diess noted that most of VW Group’s factories in Europe have said they will close for close for two or three weeks. But he warned that it is “likely that the measures will take longer. The spread of the virus is unlikely to have stopped in several weeks. So we have to be prepared to live with the threat for a long time – until effective medication or vaccination becomes available.”
Some health sector experts have warned that a COVID-19 vaccination ready for widespread use could be a year away, although tests for the coronavirus anti-bodies and immunity could be available sooner.
Diess also said that Volkswagen is working closely with government ministries and administrations. At the beginning of the outbreak, it said it had donated protective masks to China and that it is “building up production capacity for protective masks in China and helping to support the German health care system with temperature measuring devices, respiratory masks, disinfectants and diagnostic devices”.
“We are trying to bring in our global presence, logistics chains and resources to deal with this global crisis,” he said.
In the social media post, he also said VW is acting to secure liquidity and ensure the ability to deliver, for spare parts or the continuation of critical vehicle projects, such as the ID.3 start-up and the supply of battery cells.
On a positive note, Diess also said that over 100,000 Volkswagen employees in China are starting up their business activities again. “The sanitary and organisational measures are being continued there with great discipline – exemplary in my view – in order to keep the spread of the virus under control even after acute containment,” he said.
Jaguar Land Rover confirms UK plant shutdowns
Tata-owned Jaguar Land Rover (JLR) has confirmed that it will temporarily suspend production at its UK manufacturing facilities. The company’s intention is to resume in the week of 20 April, subject to review.
Jaguar Land Rover said in a statement that it is operating in line with advice from the NHS and Public Health England to minimise the spread of the coronavirus, whilst implementing plans to safeguard its business continuity. The company will “work towards an orderly return to production once conditions permit” it said.
Currently, Jaguar Land Rover’s manufacturing plants in Brazil and India continue operating. The company’s joint venture plant in China reopened in the week of 24 February, as “life begins to get back to normal in the country”.
JLR said the company’s thoughts are with those directly affected by COVID-19 and with the healthcare professionals, whose role in combating this virus is appreciated by all.
Motorpoint launches free home delivery service
Independent car retailer Motorpoint has launched a free home delivery service for customers in light of the current coronavirus outbreak.
The service, which is now live, is available seven days a week and free to customers within a 100 mile radius of their nearest Motorpoint branch. Customers over 100 miles would incur a charge. Furthermore, staff delivering vehicles will observe recommended ‘social-distancing’ measures at all times during the handover of the vehicle.
Mark Carpenter, chief executive of Motorpoint, explained: “These are challenging times and to help minimise the disruption to our customers’ lives Motorpoint is rolling out a home delivery service with immediate effect to those people who aren’t in a position to physically collect their vehicle from our branch network.
“You can already search, find and reserve any one of our 6,000 plus cars from your home via our website. From today you also have the option for your car to be delivered to your door on a date and at a time that suits you courtesy of Motorpoint.”
BCA goes online only from Thursday 26 March
BCA will be moving all of its sales processes online from Thursday 26 March as the company prioritises the well-being of customers in relation to the ongoing COVID-19 situation.
All BCA sales will only be accessible through BCA Live Online and the BCA Buyer app, with no physical buyer attendance at sales anywhere in the BCA network. This is introduced as a temporary measure and will be reviewed regularly.
BCA will continue to run the full programme of sales nationwide, with all centres selling digitally. The full programme of online-only auction sales, Bid Now and Buy Now sales will continue as normal.
Stuart Pearson, chief operating officer of BCA UK Remarketing, said: “BCA has continued to operate normally for as long as possible to support our customers, but we have decided that from Thursday 26 March all BCA sales will only be accessible online.”
“We remain committed to providing customers with access to our market leading remarketing services, offering buyers the best choice of stock and sellers a range of remarketing platforms to meet their needs. In the current circumstances, we believe this will be best done digitally to prioritise the well-being of customers and our people alike.”
Customers can still pay for vehicles at their local BCA auction centre. Alternatively, BCA can email the invoice with payment instructions to pay online.
Buyers can continue to collect vehicles from their local auction centre, with BCA advising customers to contact the auction centre in advance to check the arrangements. BCA can also organise delivery for customers, with online booking available.
Tesla and Toyota top vehicle maker rankings after COVID-19 review
A ranking of top vehicle manufacturing companies worldwide compiled by data and analytics company GlobalData shows the impact of the COVID-19 coronavirus crisis will be strongly adverse across the industry this year, with all major companies impacted. The GlobalData ranking – which takes into account factors impacting company performance such as positioning for disruptive megatrends, as well as the impact of the COVID-19 coronavirus crisis – shows Tesla and Toyota leading the 32-strong field of automotive companies.
The COVID-19 theme has been newly introduced to the GlobalData ‘thematic’ scorecards and it stands out as the number one short-term theme for the automotive sector. However, themes such as electric vehicles are just as important for medium- to long-term prospects – which partly drives Tesla’s position at the top of the pile.
Attention this year will be firmly focused on the impacts on the sector coming from the COVID-19 crisis that is forcing temporary manufacturing plant shutdowns of uncertain duration.
“The COVID-19 crisis is hitting automotive companies hard on both the supply- and demand-side this year,” says GlobalData analyst Calum MacRae. “Supply chains are being disrupted and market demand has suddenly plummeted across the major regions of the world during March. It looks like the market demand crisis and loss of volume for companies will extend into the second quarter before some stabilisation and recovery thereafter.”
However, MacRae also notes that the sector was under pressure before the coronavirus crisis hit. “This crisis is rather unhelpfully layered on top of already rapidly growing pressures on company bottom lines arising from the need for increased investment in costly advanced technologies such as electrification and automated drive systems. In Europe, manufacturers were also facing challenging new CO2 averages that European companies said impeded their global competitiveness.
“The industry is now clearly facing even tougher conditions and headwinds this year.”
Codeweavers offers three months free use of services
In response to the restrictions put in place due to the spread of coronavirus, Codeweavers is offering retailers three months of free access to some of its services.
“Codeweavers is acutely aware of the stresses that many businesses are under at the moment,” said Roland Schaack, chief executive of Codeweavers. “It’s clear that face-to-face contact is going to be severely restricted for a long time to come and so it’s going to be critical to be able to facilitate remote/online sales.
“Because of this, we have decided to offer retailers who do not have access to similar tools from their web providers three months free use of some of our newest online and showroom digital commerce tools.”
Retailers will now have free access to the online Checkout and Remote Apply services on Codeweavers. Checkout enables customers to buy and finance vehicles online and arrange collection or delivery, while Remote Apply lets retailers generate vehicle and finance offers to send to customers.
As many customers begin to self-isolate and quarantine, there will likely be a significant drop in showroom footfall, said Codeweavers. As a result, companies need to be able to provide their customers with the ability to find, finance and take possession of their vehicle through their websites and other digital channels.
Roland continued: “Here at Codeweavers, we have a clear, well-defined plan that will enable us to provide continued support for our services throughout the crisis.”
Auto Trader waives April fees to support motor dealers
Auto Trader has revealed that it will be waiving all fees during April and deferring March payments by 30 days, to support customers as they deal with the effects of the coronavirus.
A statement on the company website read: “We have chosen this approach not in response to immediate pressures on our business, but rather to continue to support an industry that we have supported for the past 40 years, and one which has supported us.”
Nathan Coe, Auto Trader Group’s chief executive officer, commented: “In these unprecedented times, we have made this decision because it is the right thing to do for our industry, for our customers, and for our business.
“It remains important for retailers to advertise their stock online as people are still buying cars and if they can’t see those cars, it will be even harder for retailers to make sales.
“It is equally important that we continue to prioritise the wellbeing and safety of our people, and we are taking all necessary action to ensure that they are receiving the support they need to continue to serve our customers.”
Auto Trader account managers are now working from home but are still on the phone and fully available to support our customers through this time.
carwow launches remote buying in response to COVID-19
Vehicle comparison site carwow has launched ‘Delivered & Disinfected’ remote buying to assist customers preferring not to visit showrooms.
Dealers on the platform will now be able to facilitate home test drives, offer vehicle video tours and the ability to purchase 100% remotely.
carwow partner dealers can commit to ‘Delivery & Disinfection’, where the delivery driver will spray and wipe down the interior, keys and door handles. The driver will also drop documents through the customer’s letter box, leading to a zero contact buying experience.
“Speaking to dealerships over recent days it’s evident that there is, understandably, social interaction concern among consumers. That’s reinforced by our survey which highlights that almost a third of consumers would now welcome a home delivered test drive vehicle with sanitised touch points,” said James Hind, chief executive of carwow.
“It’s our job to address these concerns and help facilitate dealers and the automotive industry as a whole to keep the economic wheels turning at this unprecedented time. That’s why we’ve worked quickly to add functionality to our website so buyers can now easily identify which dealers are remotely supporting the search-to-purchase journey, helping them buy with confidence from the security of their own home, if they choose.”
A carwow survey of 1,000 UK motorists indicated that despite the coronavirus, a strong appetite from motorists to change their cars still exists, with 54% still intending to change their car in the not too distance future. That figure jumps to 70% in Greater London.
However, the survey confirms that social interaction and exposure fears are a barrier, so dealers need to be quick to adapt their sales processes to make it easier for consumers to buy with confidence. Nearly 30% of people surveyed called for home delivered test drives and 28% would like a home delivery service for their purchased car.
GM and FCA join Ford in NA plant closures
General Motors and Fiat Chrysler (FCA) have joined Ford in shutting their North American manufacturing plants through March 30 in response to the deepening COVID-19 coronavirus crisis.
The US ‘Big 3′ have all coordinated their initial response to the crisis, working with the UAW.
GM said it will begin a systematic orderly suspension of manufacturing operations in North America due to market conditions, to deep clean facilities and continue to protect people. The suspension will last until at least March 30. Production status will be reevaluated week-to-week after that, the company said.
“GM and the UAW have always put the health and safety of the people entering GM plants first, and we have agreed to a systematic, orderly suspension of production to aid in fighting COVID-19/coronavirus,” said GM Chairman and CEO Mary Barra.
“We have been taking extraordinary precautions around the world to keep our plant environments safe and recent developments in North America make it clear this is the right thing to do now. I appreciate the teamwork of UAW President Rory Gamble, UAW Vice President Terry Dittes and local leadership as we take this unprecedented step.”
“UAW members, their families and our communities will benefit from today’s announcement with the certainty that we are doing all that we can to protect our health and safety during this pandemic,” said UAW President Rory Gamble. “This will give us time to review best practices and to prevent the spread of this disease. We appreciate General Motors’ actions today and will continue to work with them on health and safety plans to be implemented when we resume production.”
To ensure that production stops in a safe and orderly fashion, GM plants will suspend operations in a ‘cadence’, with each facility receiving specific instructions from manufacturing leadership.
Manheim UK goes digital-only in response to virus
Manheim UK, part of Cox Automotive, has taken the decision to temporarily move all physical auctions online via its Simulcast platform.
From Monday 23 March, neither account holders or members of the public will be permitted on site to view or bid on vehicles. The Simulcast platform, which broadcasts every Manheim auction, is open to Manheim account holders, trade buyers and sellers only.
Martin Forbes, chief executive of Cox Automotive UK, commented: “These are unprecedented times. We believe that this change is the right thing to do [as a temporary measure] to ensure the health, safety and well-being of our employees, customers and partners.
“Like all businesses, we are trying to navigate our way through the challenges presented by COVID-19. We are monitoring the advice from the UK Government, and following their recommended actions. We are also working closely with customers and communicating our plans to help them keep trading with us in a safe manner.”
Effective from 19 March, the additional Simulcast buyer fee has also been waived by Manheim to make the transition to digital as easy as possible for customers. This concession also applies to any vehicles acquired from Manheim Online.
Forbes added: “All our auction centres remain open in accordance with current UK Government advice. We will continue with the scheduled programme of auctions at each of our UK locations. Vehicles will be driven through the auction lanes as usual and there will be a live auctioneer on the rostrum, but no buyers permitted in the auction hall.”
At each auction centre, there will be a controlled “handover” location for any physical paperwork/payment exchange and for vehicle collection. In addition to the physical auction programme, Manheim is running more “virtual’ auctions and online only events to increase the amount of stock available to purchase.
BMW expects pre-tax profits and vehicle deliveries to drop significantly
The BMW Group has said it expects the spread of coronavirus and required containment measures to have a significant impact on delivery volumes and pre-tax profits.
The carmaker also said it is preparing to suspend operations at factories in Europe and South Africa until 19 April – in response to lower demand and a measure to combat the spread of the virus. The plants will be closed by the end of the week.
In a statement, BMW said: “The current uncertainty regarding the further global spread and the effects of coronavirus makes it difficult to provide an accurate forecast of the BMW Group’s business performance for the financial year 2020.
“Accordingly, a negative effect on the EBIT margin of the Automotive segment for the full twelve-month period is expected to be in the region of 4 percentage point. Based on the latest forecast, the EBIT margin of the Automotive segment is therefore expected to lie within a range of between 2 and 4%.
“In the Financial Services segment, the number of new contracts is expected to decrease and the risk provisioning expense to increase. As a result, the return on equity is forecast to be slightly below the previous year’s level.”
Pendragon takes protective measures against coronavirus
To combat the effects of coronavirus, car dealership group Pendragon has taken some additional protective measures.
These include deferring commitments in its capital expenditure programme, increasing the flexibility in marketing spend, closely monitoring inventory levels and developing alternating work schedules and home-working options for employees.
Pendragon said it is has seen minimal impact on business due to the virus, but is closely monitoring the evolution of COVID-19.
The group noted that its new vehicles are predominantly sourced from the EU and UK. Although some manufacturers have announced short-term shutdowns to their production facilities, Pendragon understands that most OEMs have inventory buffers of several months. Therefore, the group does not anticipate its supply of new vehicles to be significantly disrupted before autumn 2020.
Pendragon also acknowledged the potential impact on consumer shopping habits in the UK. “Most of our new car sales and a substantial proportion of used car sales are made through a Purchase Car Plan or similar arrangement which provides an incentive to customers to change their vehicle at the expiry of the arrangement.
“Consumers can purchase both new and used cars with associated finance over the telephone or internet without visiting dealerships. We also offer vehicle delivery to the customer’s chosen destination. This provides underpinning for vehicle sales, although if the situation worsens, we anticipate there may be some level of deferral.”
The company said it has modelled the impact of a severe reduction in vehicle sales over a sustained period on our financial covenants and bank facility limits and remains comfortable that it is well-positioned, with mitigants available in the more severe scenarios where headroom becomes more limited.
Bill Berman, chief executive of Pendragon, said: “2019 was a year of transition for the Group that played out against challenging market conditions, however, we returned to profitable growth in the second half and this provides us with a solid platform for the coming year. At the moment, we are closely monitoring the impact of COVID-19 on the economy as the situation continues to develop.”
Government announces £330bn loan package for UK businesses
Chancellor Rishi Sunak has committed £330bn, equivalent to 15% of UK GDP, of government loans to UK businesses to combat the effects of coronavirus.
“The government will stand behind businesses, small and large,” said the Chancellor in a speech. “Any business that needs access to cash to pay their rent, their salaries, suppliers, or purchase stock, will be able to access a government loan or credit on attractive terms.
“If demand is greater than the initial £330bn I’m making available today, I will go further and provide as much capacity as required.”
The support will be offered through two main schemes: to support liquidity among larger firms, there will be a new lender facility with the Bank of England, providing low-cost, accessible commercial paper.
For small and medium-sized businesses, the government is extending the business interruption loan scheme, announced in the Budget last week. Rather than loans of £1.2m, the scheme will now provide loans of up to £5m with no interest due for the first six months.
Both of these schemes will be available from the start of next week.
Commenting on the new measures, Mike Hawes, chief executive of the SMMT, said: “We welcome the additional and significant emergency support for business announced by the Chancellor today. The UK automotive industry is inherently strong and globally competitive but now stands on the precipice and will urgently need extraordinary measures such as these to avoid falling over the edge.
“We are already seeing plant closures as global demand falls and supply chains are stretched. The continued success of this industry is critical not just to the country’s economic performance but also to the hundreds of thousands of people across the country who rely on the sector for their livelihoods.”
Government seeks automakers’ help with health equipment production
The UK government has asked manufacturers, including automakers Ford and Honda plus aircraft jet engine maker Rolls Royce, to help make health equipment including ventilators to cope with the coronavirus outbreak.
It has also asked British construction equipment maker JCB if it could transfer some of its skills to ventilator production as the coronavirus pandemic increasingly concentrates European governments’ minds
According to Reuters, the British government announced it was ramping up its battle against the coronavirus outbreak, shutting down social life and ordering the most vulnerable to isolate themselves for 12 weeks.
Prime minister Boris Johnson had spoken to over 60 manufacturing businesses and organisations to ask them to help step up the production of “vital medical equipment” such as ventilators for the National Health Service, a spokeswoman for his Downing Street office told Reuters.
“The prime minister made clear responding to coronavirus and reducing the spread of the peak requires a national effort,” the spokeswoman told the news agency.
“He asked manufacturers to rise to this immediate challenge by offering skills and expertise as well as manufacturing the components themselves. Businesses can get involved in any part of the process: design, procurement, assembly, testing, and shipping.”
Hotels will be used as emergency hospitals, retired doctors are being asked to come back to work and some elective surgery is being canceled.
Health Secretary Matt Hancock said there had been an enthusiastic response to the call for British ventilator production.
“We will buy as many ventilators as are made,” he later told parliament, Reuters reported. “It is not a question of putting a target on it, we are just going after as many as we possibly can.”
NFDA urges government support for automotive retailers
The National Franchised Dealers Association (NFDA) has written a letter to Chancellor of the Exchequer Rishi Sunak to urge the government to support franchised retailers during the outbreak of coronavirus.
The NFDA is concerned that government support is currently only targeting one group of businesses – SMEs. Franchised vehicle retailers pay very high levels of business rates and operate on much tighter margins than most SMEs, with an inherent high fixed cost exposure including rent, business rates, VAT and wages.
As a result, NFDA recommends that:
- Temporary business rates relief be extended to all retail businesses, regardless of their rate bill
- The British Business Bank be authorised to extend the Coronavirus Business Interruption Loan Scheme to any retail business, regardless of size
- Statutory Sick Pay (due to Coronavirus) relief should be provided for the first two weeks to all retail businesses, regardless of size.
Sue Robinson, director of the NFDA, said: “The retail automotive sector employs 590,000 people in the UK and businesses must be protected through supportive fiscal measures during the outbreak of the Coronavirus.
“The impact of the virus is going to be felt across every part of the economy and especially in the retail sector. Revenues from vehicle sales and services will not only be impacted by the introduction of social distancing measures, but also by the widespread shutdown of European car and parts manufacturing.
“There is a real danger that if the Government is only targeting support at one group of businesses (SMEs), some big businesses will fail, causing business interruption in any case for SMEs that contract with them. The automotive retail sector needs to be protected regardless of size.”
Volkswagen to suspend production at European plants
Volkswagen Group has outlined plans to suspend production at its manufacturing plants in Italy, Portugal, Slovakia and Spain this week.
Other VW factories around Europe are also preparing to shut down due to the spread of coronavirus. The company said in a statement that it is uncertain how long the coronavirus will affect the group, and “it is almost impossible to make a reliable forecast”.
Herbert Diess, chief executive of VW, said: “Given the present significant deterioration in the sales situation and the heightened uncertainty regarding parts supplies to our plants, production is to be suspended in the near future at factories operated by group brands.
“2020 will be a very difficult year. The corona pandemic presents us with unknown operational and financial challenges. At the same time, there are concerns about sustained economic impacts.”
Motor dealers facing ‘rent crisis’ in face of COVID-19
Car dealers are facing a rent crisis as the coronavirus continues to spread around the world, with automotive consultant Accendia advising dealers to engage with their landlords over potential rent arrears.
“Dealer groups and OEMs need to implement an emergency rental strategy now to mitigate the impact of coronavirus as consumers are put off unnecessary purchases,” said Accendia.
“Buying a new car will be among the first retail casualties as consumers follow government advice to stay home and limit social contact. For a sector already grappling with falling registrations and lean margins, the effect could be catastrophic for smaller groups and single-site operators.”
UK dealerships should engage with landlords as soon as possible to structure a temporary agreement in respect of forthcoming rental obligations, said Accendia.
Richard Adams, director of Accendia, added: “Several retail clients have approached us to ask what can be done to keep cash in the business and it seems to us that early intervention, by approaching landlords immediately, would be prudent. Many landlords will be expecting an approach and should recognise that properly constructed solutions will benefit landlord and tenant alike.”
General Motors offers 0% financing to spur sales
In the US, General Motors and Ford Motor have launched a range of new vehicle financing options to encourage sales amid the outbreak of coronavirus.
Through the company’s GM Financial arm, General Motors is offers 0% financing for seven years, and four months deferred payments for those with an A+ credit rating.
“We wanted to reassure customers that we’re here for them and our dealers are here for them,” said GM spokesperson Jim Cain. “We’ve never done this combination before.”
Such measures could soon be deployed in the UK, as COVID-19 looks set to severely impact consumer confidence and dealer footfall.
Groupe PSA closes European plants
French car manufacturer Groupe PSA, owner of Peugeot and Vauxhall, will be closing its plants across Europe yo prevent the spread of coronavirus.
A statement from the company read:
“Due to the acceleration observed in recent days of serious COVID-19 cases close to certain production sites, supply disruptions from major suppliers, as well as the sudden decline in the automobile markets, the Chairman of the Executive Board with the members of the crisis unit, decided the principle of the closure of the vehicle production sites, according to the following schedule and until March 27.
March 16: Mulhouse (France), Madrid (Spain) March 17: Poissy, Rennes, Sochaux (France), Zaragoza (Spain), Eisenach, Rüsselsheim (Germany), Ellesmere Port (United Kingdom), Gliwice (Poland) March 18: Hordain (France), Vigo (Spain), Mangualde (Portugal) March 19: Luton (United Kingdom), Trnava (Slovakia)
“Groupe PSA remind that until then, compliance with the barrier measures, going beyond the recommendations of the health authorities on the sites, are the best protection to prevent the spread of the virus.”
Online sales could be ‘lifeline to disrupted dealers’
Online sales could provide a lifeline to car, van and motorcycle dealers whose business will be disrupted by coronavirus, according to iVendi.
James Tew, chief executive officer, said that online could still provide an effective route to market in the event of consumers avoiding showrooms. “We’re raising this subject with all due sensitivity, but, in the event that footfall to dealerships falls dramatically, businesses need to find a way to keep functioning as normally as possible. Moving more sales online is a potential solution.
“There is a potential parallel to the existing situation. We know that when people are sitting at home for extended periods, they shop online. Every year, across Christmas and New Year, usage of our platforms increases dramatically.
“Now, we’re not glibly suggesting that a pandemic is the same as a public holiday. It’s not. But there are lessons to draw. People with money to spend may well want to shop for a car, van or motorcycle at the most unlikely times.”
Step one for dealers would be to maximise their online presence, said Tew, while step two would be to consider how the fulfilment side of the business would work.
“Really, this is the time to ensure that, in terms of the online motor retail facilities that you offer, you have your house fully in order. Effectively, you need to be able to allow the customer to choose and finance their car online as a minimum.
“Then, you have to look at which aspects of the deal can be handled remotely that are currently undertaken on a human level. For example, can you put a process in place where someone can show you their part exchange via their mobile phone – for example, through a Facetime call?”
Tew added that he was confident that iVendi would continue to operate on a business-as-usual basis while the coronavirus situation followed its course.
“Effectively, we were designed from our launch a decade ago to be a 21st century mobile business, so in the event of any restriction on movement of people by the government, our entire team will be able to work from home and there should be no disruption to any aspect of our service provision to dealers and other customers.
“In the meantime, we are following all official advice in terms of personal and office hygiene, keeping an eye on staff for signs of coronavirus and also minimising travel where necessary. It is about putting the health of people first.”
Car market forecasts likely to be revised as public health crisis deepens
Following news that car sales in China plunged 80% in February due to the impact of measures to tackle the coronavirus (Covid-19);
David Leggett, automotive editor at GlobalData, offers his view: “There are signs that attention in the auto industry is shifting away from tackling immediate supply chain disruption towards the prospect of much lower demand through 2020.
“China’s 80% market decline in February is a stark warning of the potential for lost sales in the global automotive market in the months ahead. Forecasts for car markets are likely to be revised down as the public health crisis deepens – especially in Europe and North America.
“Vehicle manufacturers and suppliers alike will be anxious over the duration of the expected coronavirus impacted market downturn and the speed of recovery later in the year. Even without the added impact of the Covid-19 pandemic, the global vehicle market was heading for a decline of around 2% this year with the US, China and European markets flat or slightly declining.
“The demand outlook has now deteriorated further.
“If the global vehicle market decline in 2020 is nearer 10%, that will inevitably result in much lower earnings for automotive companies, many of whom are experiencing rising cost pressures formed by the necessity to invest in expensive technologies such as electrification. Indeed, the new stronger headwinds on the global car market come as they face the burden of much tighter regulatory hurdles on CO2, especially in Europe.
“While welcome signs of a nascent recovery to activity have been evident in China in recent weeks, the rest of the world is still very much heading into an economic downturn of uncertain depth and duration. Automotive companies will be especially nervous.”
Budget 2020: industry reaction
Paul Burgess, chief executive of Startline Motor Finance, said: “It’s extremely welcome that the Government has unveiled a range of measures designed to protect the economy but really, the used car market over the next few months will depend very much on the spread of coronavirus in the UK and how the public react.
“It is noteworthy that the Government is now saying that the impact on the country will be ‘significant’. Certainly, it seems probable that people who are working from home and generally curbing their travel are probably going to be less likely to change their car, whatever steps are taken to protect businesses. There are simply a lot of unknowns.
“However, the longer-term investments that the Government are making are to be welcomed, especially in roads and EVs. Coming out of the other end of the coronavirus crisis, the economy will need boosting in the medium-long term, especially as we settle into a post-Brexit scenario, and it looks as though borrowing will be taking place to make that happen.”
Phil Jerome, managing director of Meridian Vehicle Solutions, said: “The shadow of coronavirus looms large over this Budget. It is probably not the financial plan that the Government planned to deliver even a few weeks ago but they have shown, with the wide range of mitigating measures that have been introduced, that they are taking the economic aspect of the threat of epidemic seriously.”
Mike Hawes, chief executive of the SMMT, said: “Unprecedented situations call for unprecedented measures so today’s emergency funding and wider measures to support businesses and workers in managing the likely effects of coronavirus is very welcome.”