March 2020: A review of the year so far

As we enter the final month of what has turned out to be a very eventful first quarter of 2020, it seems a good time to reflect on all that has happened, and to anticipate what is to come in Q2. Though it is still early days in terms of annual outcomes, some of the curve balls which have already been thrown at us over the past couple months will undoubtedly have an impact on overall figures at the end of the year.

It was interesting to read the SMMT commentary on February and the current year to date, in particular its appeal to the government to remove VAT for BEV, Plug-in & Hydrogen fuel-cell vehicles. Given the demands on public funding for the NHS and police, reducing income to revenue at this time seems ambitious. Equally, what is the route to delivering the ambitious ‘end’ to new ICE vehicles by 2035? There is also the huge investment required in building EV infrastructure across the UK.

Personally, I think February is a difficult month on its own to read too much into because of its inevitable low volumes ahead of March and the new “20” registration plate. But there is the irrefutable continuing downward trend in registrations.

Our own analysis of February YTD picks out the following low/high points:

  • Total YTD registrations are down 14k and 5.8% comparatively to 2019, at a total of 228,873.

  • Fleet registrations are down just 2k and 1.4%.

  • Diesel registrations are down 23k and 33% of this accounts for the full YTD market decline.

  • The other real decline is in sales to the private buyer; down 13k and 11.7%; is this customer group being well served by the OEM and government? Are consumers confused by the best way forward? Is there sufficient choice and at affordable pricing currently available from the OEMs?

  • I’m not sure we can tell too much at a brand level at this stage in 2020; is this driven by demand or vehicle availability particularly the brands with BEV, PHEV. MHEV etc models; superficially, Audi, BMW, VW, Lexus, Toyota, MG, and Volvo, among others, all have PHEV & MHEV and are showing growth; other brands although not exclusively without these alternative fuel offerings are showing decline including Ford, Vauxhall and Peugeot to name just three. The luxury and sports car sector with Bentley and Porsche has started positively.

  • Although the SMMT also highlighted the decline in February of small van registrations, the YTD position for the LCV sector as a whole remains positive, but again two months is a short period to read too much into a performance, but the SMMT does publish a rolling 12 months graph which elaborates further.

  • The impact of the COVID-19 outbreak continues to have a significant impact on the global automotive industry. While output is slowly recovering in China, a country which accounts for 30% of the total sector, the impact of the production slump on top-line revenue for global OEMs and Tier 1s will be considerable, at an estimated 10% drop.

  • Another interesting point to note is that the cancellation of the Geneva Motor Show has not stopped manufacturers such as McLaren Automotive and Aston Martin from proceeding with their planned unveilings, as the event continues online. Could this be where the future of motor shows lies? Events such as this have been under threat for some years, due to a continued decline in consumer interest; though recent feedback on this more efficient approach to product launches appears positive. It seems that the damaging environmental impact and high cost of transporting people and cars around the world for these shows has become unnecessary.

  • Popularity of electric vehicles seems set to increase, as the number of EV charge points installed by supermarkets doubles in the past two years at an increase of 542 units. However, despite this improvement, the proportion of supermarkets offering charging is still low. The SMMT figures state a huge 243.1% increase in BEVs in February, as well as further increases in PHEV and HEV, which suggests to me that much more needs to be done in terms of infrastructure to support these vehicles.

To summarise, the industry is in decline YTD which, to be honest, is unsurprising when considering previous estimations and the recent outbreak of coronavirus. Consumers, particularly the private buyer, are holding off from purchasing; perhaps due to a lack of communication from both OEMs and the government. There are often mixed messages between what the government promises vs the reality of what the industry can support, particularly in terms of EV technology, which has perhaps led to uncertainty and confusion among consumers. Continuing this environmental trend, the traditional ICE vehicles are under pressure with diesel in freefall.

It will be interesting to see the future set of results for 2020. Though times seem unstable at the moment, continued developments in technology and EV are definitely one to keep an eye on for future growth.  

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