Motorists will be the winners in this year’s push to increase new car registrations in Britain.
That’s the view of the UK’s independent car information experts, CAP Automotive.
Exclusive research by CAP reveals that many franchise dealers are concerned about manufacturer pressure to register more new cars this year.
But franchise dealers’ pain will be the motorist’s gain, CAP believes.
Main dealers fear that, without a surge in new car retail demand, the only way to meet new car volume targets will be by price-cutting. This could start in the coming weeks as the March plate change approaches. Cars that were registered toward the end of last year may well need to be sold urgently before fresh new stock overshadows it – and this problem will be compounded when the next plate change occurs.
The pressure on franchise dealers to register more cars this year stems from the collapse in registrations across much of Europe, prompting manufacturer plans to drive sales harder in the UK.
Car sales in the EU last year fell to a 22 year low, while the UK saw registrations rise last year by 5.3%. This prompted accusations that manufacturers were reporting ‘false’ sales here as dealers registered cars to themselves to qualify for volume bonus payments.
But at the same time, consumers were benefitting from massive discounts as dealers were forced to move pre-registered stock on as quickly as possible. In combination with historically low interest rates and increasingly competitive motor finance deals, motorists emerged as the clear winners.
Now the scene is set for more of the same in 2013.
Research by CAP reveals fears among many franchise dealers that they will be forced to use increasingly large discounts to keep new car stock moving. In January, those who still had new car stock registered at the end of 2012 were privately concerned that they could lose money on those cars when they put 2013 stock into the showroom.
Not all dealers will suffer, though. CAP’s research also suggests that many car supermarkets are set to make the most of increased new car supply causing an influx of nearly new vehicles into the marketplace, which they can price aggressively for retail.
And despite the inevitably difficult year facing franchise dealers, independent used car specialists in general will welcome an increase in new and nearly new car sales as it will generate much-needed part exchange stock. Independents were complaining about the high prices of good quality ‘bread & butter’ trade stock for much of last year. Such cars were often hard to find due to the collapse in new car sales after the Credit Crunch of 2008 caused used car stock to dry up 3 and 4 years later.
CAP’s Retail & Consumer Specialist, Philip Nothard, said: “Whichever way you look at it, motorists will emerge the winners in this year’s challenging market.
“Franchise dealers will almost inevitably have to use serious incentives to keep up with new car targets. Car supermarkets will have more nearly new cars to stock and because they operate on a low margin, high volume, basis this will mean even more competitive deals on offer.
“If more people are tempted into the market to replace their car, independents will welcome the increased availability of part-exchange type stock in the marketplace. The probable weakening of trade prices due to higher supply will also give them more room for manoeuvre on the deals they offer to consumers.
“This is going to be a tough year for manufacturers and their dealer networks but their pain looks set to be the motorist’s gain.”