The Financial Conduct Authority (FCA) has confirmed it will introduce a ban on motor finance discretionary commission models. The announcement followed a consultation in October 2019. “In the light of consultation feedback and the additional operational pressures which the sector is facing at present the FCA has agreed to give firms limited additional time to implement the new rules, with the ban coming into force on 28 January 2021”, FCA said.
Over two-thirds (69 per cent) of car owners over 55 bought their car outright without using finance, compared to half (50 per cent) of 34 – 54yrs and a third (33 per cent) of under 34s, according to a survey of over 2,000 UK drivers. On average, over half (56 per cent) of cars were bought outright via cash or debit card, 10 per cent were bought on hire purchase, 11 per cent using personal contract purchase (PCP), 5 per cent loan from a bank, 5 per cent on lease and 3 per cent were given as a gift. The Opinium survey, commissioned by InsuretheGap, an independent provider of GAP (Guaranteed Asset Protection) car insurance, finds that almost one in five (17 per cent) under 34s use a PCP to finance a car purchase, compared to just 9 per cent of over 55s.
The world’s light vehicle market is forecast to decline by 17.2 per cent to 73.6 million units in 2020 due to the impact of the Covid-19 pandemic and its associated economic fallout, according to data and analytics company GlobalData. Calum MacRae, automotive analyst at the company, comments: “This is a bigger one-off shock than witnessed in the two years of the global financial crisis.”
Following the SMMT’s June round of car registrations figures, analyst Deloitte wonders if there is cause to think a UK automotive landmark has passed. While much of the focus has been on the historic depths the country’s car sales have hit, the proportional demand for hybrid and electric vehicles has continued to rise at pace. Michael Woodward, UK automotive lead, Deloitte, said: “The automotive industry is taking positive steps towards recovery from the impact of COVID-19. Socially-distanced showrooms have been reopened in England for a full month, and factory production is ramping up again, in some cases faster than expected.
Commenting on the SMMT car registration figures, Sue Robinson, director of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle retailers in the UK, said: “Pent-up demand helped sales during the first weeks, but the market will need to be monitored closely to support the sector over the coming months”
UK new car registrations fell -34.9 per cent in June, according to figures from the Society of Motor Manufacturers and Traders (SMMT) as the market began a tentative restart after more than two months of lockdown. The drop was an improvement on May’s -89.0 per cent wipe-out but, with 145,377 new car registrations, this still represented a significant decline of 78,044 compared with June 2019, as dealerships in Wales and Scotland remained closed for much of the month.
On Friday 19 June, the National Franchised Dealers Association (NFDA) wrote to Scottish first minister Nicola Sturgeon MSP to highlight the potential impact of the delay in allowing dealerships to reopen in Scotland. While dealerships could reopen on 1 June in England, 8 June in Northern Ireland and 22 June in Wales, dealers in Scotland have been given the green light from 29 June. Acting on behalf of its Scottish members, NFDA states that it has repeatedly urged the Scottish Government to consider reopening as soon as possible in view of the specific circumstances of the sector. The NFDA previously said there had been “positive trading” at dealerships in the other parts of the UK since reopening.
The European Automobile Manufacturers’ Association (ACEA) predists that the market for cars in Europe will be down a quarter in 2020. The association revised its forecast radically due to the economic challenges the COVID-19 pandemic poses to the auto industry. Around 3 million fewer cars will be sold in 2020 according to the forecast. EU sales numbered 12.8 million in 2019, but are now forecast to be as low as 9.6 million in 2020.
With the automotive industry taking a hit during the Coronavirus pandemic, The Car Buying Group has resumed trading with tens of thousands of customers looking to sell their car. Claiming its success is down to its contactless car buying method, the firm’s CEO advises that this is the future for the industry.
Ending lockdown has “unleashed a surge in demand for cars,” according to the online car supermarket BuyaCar.co.uk. While spectacular increases in every measure of consumer interest during June are somewhat tempered by equally spectacular declines in the preceding months, BuyaCar contends that enquiries from buyers are not simply bouncing back from the depths of the coronavirus crisis. They are already beginning to overtake pre-pandemic levels.
The reopening of car showrooms is good news for the industry, as new research finds that the majority of car owners (76 per cent) still buy their cars from a showroom, with nearly a quarter (24 per cent) of these second-hand cars. The survey of 2,000 UK drivers, which was commissioned by InsuretheGap.com, a leading supplier of GAP Insurance (Guaranteed Asset Protection) for new and second-hand cars, found that car showrooms are particularly popular with the over 55s with four fifths (81 per cent) buying from a showroom, compared to two thirds (66 per cent) of 18-34s.
For the three national markets of France, Italy and Spain, combined new light vehicle sales fell by 55 per cent on last year to 268,000 in May, which compares with a 75 per cent drop in March and a 93 per cent decline in April. This represents a slightly better scenario than had been anticipated, as Calum MacRae, automotive analyst at GlobalData, explains: “After the seized up and locked down markets of March and April, this is a welcome sign of life in markets that were the first in Europe to be engulfed by the COVID-19 outbreak.
Following the news that car dealerships in England can re-open from 1 June, David Leggett, automotive analyst at GlobalData urged caution that car demand will continue to be “well below normal.” The analyst currently forecasts that the UK new car market will be 30 per cent down, year on year.
Analysts have commented on the “unsurprising” news that UK new car sales have plummeted to depths not seen for 70 years in April. Automotive industry observers at Deloitte and KPMG looked to the future, suggesting cautiously that the reopening of showrooms could provide opportunities for consumers, while suggesting that sales digitisation could be important for dealers.