2011 - European new car sales falling in Q1

The Europe wide figures for new car sales across europe fell by nearly 2 percent in the first quarter of the year. Whilst some countries experienced an increase a number of factors, including economic troubles in Portugal and Greece contributed to the overall reduction. Within the top five markets: Spain, Italy and Great Britain all experienced negative retail figures for new car sales.

Whilst this is gloomy news for much of the Motor Trade (particularly within the UK), there have been some brands that have bucked the trend. Alfa Romeo sales have increased 60 percent within the year to date, much of this change has been attributed to new models such as the Mito and Giulietta - which have provided unprecedented recent success for the brand.

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Motor Dealers urged to extend opening hours

Over half of the visits to Car Dealer websites occur outside of the traditional 9-5 office hours. Online enquiries tend to peak, between 7-10pm - but a response is usually not processed until the following day. The automotive director of Google UK stated that the average time for a UK dealer to respond to an online enquiry is 72 hours (compared to just 4 hours in the US).

Motor Traders can use a variety of services to deal with enquiries out of hours, including call centres or 'live chat' applications to respond to site visitors. In the current trading climate, effectively processing these out-of-hours enquiries can make the difference between profit and loss. For car dealers who are currently processing their out-of-hours enquiries in under 15 minutes, they report a higher conversion rate and quality of enquiry outside of the standard working day.

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Motor Trade facing tough challenges in 2011

Figures for January 2011, indicate a tough trading climate for the Motor Trade during the coming year. The SMMT statistics recorded a fall of 11.5% in new car sales. Increasing unemployment, lack of available finance and increases in VAT and fuel prices are all effecting consumer confidence and personal budgets.

Motor Traders and manufacturers are providing incentives to buyers to help revive flagging sales. However most consumers are taking a cautious approach with job security proving a factor with large numbers of public and private sector workers.

Many Car Dealers are focusing their stock on smaller more efficient cars, to help with rising fuel costs, with prices currently at a record high. The early indicators for this year are that their is a marked downsizing in cars and engine size. Electric cars are also becoming more attractive to buyers as the costs of petrol and diesel continue to increase. However the range of the current crop of electric cars and the number of public charging points needs to increase before this becomes a viable alternative for most road users.

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Car Dealers should focus on customer relationships

Freely available pricing information available to consumers online for car prices and servicing costs is driving down Motor Trade profits. To maintain profitable businesses many dealers are investing in improving relationships with their customers.

Typically the increasing reliability reduced frequency of servicing on newer cars, effects the number of opportunities Motor Traders have to interact with their customers and the income streams for Motor Trade businesses.

To keep regular customer contact, many car dealers are increasing spend on IT systems, marketing and staff training. The increased spend is focussed on keeping a business relationship with the customer after the initial vehicle purchase.

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Car Dealers launch VAT saving offers

To help encourage demand within the Motor Trade during the traditionally quiet first quarter, some manufacturers and car dealers are offering to absorb the VAT rise. When dealers opened for business they and their customers faced an increase in VAT to 20%, the highest rate since the introduction of VAT within the UK.

Already in 2011 Seat and Subaru have announced deals to absorb the cost of the VAT rise, when purchasing new vehicles. Many car dealers will be watching to see if this provides a significant boost to sales and may well follow suit.

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Information for Car Dealers: UK vehicles with the lowest depreciation

A survey by Glass's conducted on vehicles registered three years ago, has produced a list of the top ten cars for maintaing residual values. If you work in the Motor Trade and buy and sell vehicles, this is essential information for your business.

The vehicle values below are calculated on three year old vehicles with recorded mileage of 37,000. The vehicles each show a percentage figure, which is the amount of the original list price retained after the first three years.
 

1. Volkswagen Tiguan SE 4Motion 5d (68%)
2. MINI 1.6 Cooper 3d (65.9%)
3. Honda CR-V 2.2 CTDi SE 5d (64.3%)
4. Land Rover Freelander 2 GS Td4 Auto (63.8%)
5. Audi Q7 3.0TDI Quattro S Line Tip (63.8%)
6. Land Rover Discovery 3 2.7TD (63.7%)
7. Audi TT Coupe 2.0T FSI (63.6%)
8. Nissan Qashqai 1.6 2WD Visia (63.3%)
9. Land Rover Range Rover 2.7TD Sport (62.5%)
10. Audi A5 2.7TDI Sport Coupe Multitronic (62.2%)

The VW Tiguan tops the charts for residual values, this is partially due to limited numbers available as this has never been strongly marketed to UK customers. This limits the number of cars available, but there is also the brand value of the VW badge, which is synonymous with quality.

Another detail to note for Car Dealers looking to make astute purchasing decisions is that despite cost and environmental factors, 7 of the top 10 vehicles are SUV's. Many industry watchers expected values of these larger thirstier vehicles to fall, but the smart money is sticking with 4x4's.

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Car Dealers still purchasing at auction during the freeze

Despite the arctic conditions many of the major vehicle auctions are reporting steady levels of vehicle sales during recent snow and wintry conditions. Many Motor Traders now purchase from auctions using online services and this method of buying saw spikes in usage during the heaviest snow and ice. Some vehicle auctions experienced increases in online bidding and purchase activity of over fifty percent.

Within the Motor Trade many are grateful to have online tools such as Simulcast to keep buyers and sellers trading, during very difficult travel conditions and the early freeze across much of the country.

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Mobile vehicle valuations for the Motor Trade

There is a new online service for mobile available from Glass's which provides valuation tools for Car Dealers whilst on the move. The mobile revolution for web usage has continued to grow during 2010 with online traffic from mobiles increasing 3-fold. The new service 'GlassNet Unlimited Mobile' reflects this trend and the increasing diversity of the Motor Trade.

The new mobile service will provide greater flexibility for Car Dealers who visit a customers to value vehicles, work on multiple sites and motor traders working from home. The mobile service will allow dealers to input specific vehicle information such as mileage and options to get an accurate valuation of any vehicle.

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Positive annual sales for the UK Motor Trade

The annual figures for new car sales are up by nearly 5% on the vehicle sales for the first ten months of 2009. This is good news for Car Dealers, however figures for October were much lower than last year, as the scrappage scheme was still active in the latter months of last year. This makes the overall annual increase all the more impressive and provides much for motor traders to be positive about for 2011.

The total number of new car registrations in 2010 is expected to top 2 million in the UK. Industry analysts expect continued improvements in the Motor Trade market, driven by improving consumer confidence and modest economic growth to fuel higher sales for the coming year.

Currently the top five selling cars in the UK (for 2010) are:

1. Ford Fiesta
2. Volkswagen Golf
3. Vauxhall Astra
4. BMW 3 Series
5. Ford Focus

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Car Dealers report increasing demand to beat the VAT increase

Many car dealers are reporting an increase in forecourt demand during the past month, due to the impending VAT increase. In January 2011 the rate of VAT increases from 17.5% to 20% which will have a hefty impact on new car buyers. For example the increase in purchase price on a mid-range Ford Focus will be in excess of £500.

The more expensive the vehicle, the larger the increase in cost becomes if you wait until the new year to purchase your new car. This is driving demand for new cars, which is expected to continue to accelerate during the final two months of 2010. The VAT increase doesn't just effect consumers, but will also have far reaching effects on the Motor Trade, which has thus far been relatively resilient in the tough trading conditions since the start of the economic downturn. Whilst this rise in VAT brings in large sums for the Exchequer many Motor Traders have questioned the timing of the increase, just as many of the current spending cuts are beginning to bite.

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Internet Marketing is becoming critical to Motor Traders

Much of the Motor Trade has been slow to harness the power of the internet, as a tool to drive new business, however this is rapidly changing. As consumer patterns are changing, prospective customers are increasingly likely to book vehicle servicing, repairs and purchase vehicles online. For those Motor Traders that have not already harnessed the power of promoting their business online, it is becoming increasingly important to drive visitors to their website - or be left behind by competitors.

In many other industries, but particularly insurance this transition is a familiar story. The insurance industry has been revolutionised by changing consumer patterns. If we look at the example of Motor Trade insurance, companies that haven't been able to gain a strong online presence have ceased to exist.

Although the Motor Trade has been slower to adapt to an online market place, a solid strategy for online marketing for Car Dealers, Mechanics and Valeters is becoming ever more important. The first place that a customer will research for your services are online. The actual purchase may happen on the phone, or face-to-face but the majority of customers will complete their research on the net. So whatever type of Motor Trade activity you are involved in, you should review your website and how prominently it appears within Google for your products and services.

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Warnings for Car Dealers on HMRC tax bills

Motor Dealers have been claiming overpayment of VAT on sales of demonstrator vehicles. The resulting claims have been paid with minimal queries by HMRC to dealers who submitted claims.

However HMRC has begun reviewing this process and believes they may have made overpayments to Car Dealers, in some cases with substantial amounts. This is related to a partial exemption status for VAT for the claims submitted. Within this retrospective review, which dates back two years many of those who have already received refund payments from HMRC have utilised the funds within their business - and will now be asked for repayment.

Many of those effected by the current process will be larger Motor Dealers with substantial claims. Understandably many of those effected are unhappy with the retrospective nature of the current review.

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Customer complaints on the increase reports OFT

The Office of Fair Trading has reported an increase in the number of used car complaints from consumers, the number of reported complaints has risen to 38,000 during the first half of 2010. From the perspective of car dealers this is causing costs to rise and increases the importance of choosing the right Motor Trade Insurance policy.

Whilst reputable used car dealers, take every reasonable precaution with vehicles they sell - there is still the potential that a substantial claim could arise from a defective vehicle that has been sold or serviced by you. Therefore indemnity insurance cover on your Motor Trade policy can help protect against this potential risk to your trading activity.

In response to the recent increase in customer complaints, the OFT has launched a campaign to help customers better understand their rights when purchasing a vehicle. Most of the complaints recorded within the figures, have become apparent in the first three months. In such circumstances the dealer will often be responsible for fixing the issue, with no charge to the customer.

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Motor Traders profits on the rise in 2010

Car Dealers have reported an average profit rise of eighteen and a half percent during the first half of 2010, when compared to the same period in the previous year. The latest figures support the feedback from many motor traders that a fledgling recovery is underway in the vehicle sales sector of the economy.

This result is doubly impressive when the wider economy is experiencing much slower growth than the figures achieved by car dealers. However the confidence that the year-on-year improvement will continue to gather momentum is lacking. In the second half of 2009 vehicle sales were driven forward by the popular scrappage scheme introduced by the government. The predictions for the later half of the year are considerably more modest.

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Car Dealers need to embrace electric cars

According to a recent industry survey many motor traders and car dealers have been hesitant to become involved in the electric car revolution. Whether electric cars really are the answer to 'green' car use, is still a subject of debate. However there is an increasing popularity with consumers, for both environmental and economic reasons.

Also the Motor Trade should keep site of the fact that electric cars will need much less dealer servicing than current vehicles with combustion engines. This will have a direct result on Motor Dealer revenues from servicing. The onus will move to the dealer to ensure that they provide a service that is compelling for drivers to require the dealer. This may involve maintenance for wear and tear on parts and safety checks on vehicles. It may transpire that to try and retain servicing incomes the car dealers may end up visiting the customer and providing a more 'bespoke' service.

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Motor Traders need to prepare for the end of scrappage scheme

The governments scrappage scheme has been a victim of it’s own success and is expected to finish before the end of 2009, possibly as early as October. Although the scheme has seen vehicles sales increase and generated 150,000 new registrations; car dealers need to consider the strategy for new car sales within their business.

Car dealers who are pro-actively looking at ways to increase sales, should consider marketing to customers who recently purchased vehicles for after-sales servicing and marketing of customers in their existing database who purchased a vehicle over 2 years ago, for new vehicle sales. There will still be opportunities for strong income to dealers after the scrappage scheme is finished, but the motor trade industry as a whole will need to work harder to secure their share of the revenue.

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20% increase in used car values

Since the beginning of 2009 motor traders are reporting an increase of 20% in the values of used cars. This is particularly timely news in advance of the number plate change at the start of September. You could find when trading your car in for a new vehicle that you are pleasantly surprised.

Although the new car market is beginning to recover with the introduction of the scrappage scheme, there has been a marked fall in the number of used vehicles coming into the market. According to many car dealers this has only served to increase prices even further. The current situation of demand outstripping supply of used vehicles is something that hasn’t been seen in many years.

Buyers looking for high trade in values are being encouraged to do their home work. If you have a vehicle that the car dealer wants and you know that dealers are running short of supplies, this puts you in a strong bargaining position. The current incentives in the form of the scrappage scheme for vehicles over 10 years old and higher trade in values for vehicles of a lesser age, have resulted in a buyers market if you have the purchasing power.

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Motor Traders asked if scrappage should continue

The vehicle scrappage scheme has had a positive impact on new vehicle sales in the UK. Although due to the investment required to fund the scheme in discounts there have been mixed reactions from manufacturers and car dealers. The Retail Motor Industry Federation is currently discussing with it’s members if they should lobby government to extend the scheme.

Currently the vehicle scrappage scheme is over half way through the allocated Government funding (£300m) and is expected to end before the allocated time of February 2010. There have already been over 150,000 orders for new vehicles under the UK scheme. There has been a significant footfall reported by car dealers in showrooms up and down the country, which more importantly has translated into increased vehicle sales. This has helped the Motor Trade during particularly difficult trading conditions.

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UK car sales up for the first time in 2009

For the first time in 2009, the monthly car sales figures are up on the previous year. In July there was a 2 percent increase compared to figures for July last year. This is widely acknowledged to be a direct result of the governments vehicle scrappage scheme; which has made a more buoyant market for car dealers.

However within the coming months the money for the scrappage scheme is expected to run out. The motor trade is extremely keen for the scheme to continue, as this has provided much needed relief in the industry. The June figures were the smallest fall of the year, now with the increase in July it is hoped that a continue of the scheme will see the industry return to a healthier position.

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Motor Traders switch to online marketing

In a recent survey of two hundred car dealers in the UK, the top 3 marketing methods are all internet generated (Promotion of vehicles on their own websites, being coming out top). There has been a pronounced shift away from traditional media to get customers buying cars.

Car dealers have also confirmed the success of the vehicle scrappage scheme. With 53% of dealers experiencing improved sales compared to the first half of 2008. The improvement of car sales is even more pronounced for used vehicles, with 75% of dealers seeing improvements in this sector.

This improvement is all the more remarkable, with the reduction in marketing spend; 77% of dealers have reduced their marketing budgets. The Traders that are doing well in the current market, are those who have switched their focus to small hatchbacks, superminis and family cars. Those who are struggling have a business model based on 4x4’s or luxury cars as many buyers are carefully considering their choice of vehicle.

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