Automotove Insight Market Report - The latest Automotive Market Insight report from Experian highlights that the severity of the UK recession had begun to abate towards the end of the first half of 2009. However, the beginning of any kind of recovery is not expected until we enter 2010, and this is going to be patchy.
The purchase of big-ticket items requires both available finance and confidence in the ability to afford repayments, and in a recession that began with a credit crunch and led to rising unemployment, the new and used car markets were unsurprisingly hard hit, as they had been in the previous half-year (H2 2008). The new car market suffered worst, whereas used car vendors were able to adjust prices to sustain a smaller fall in volumes. In Q2 of this year, the UK government’s scrappage incentive scheme began to bring a new breed of buyers into new car showrooms. Meanwhile, cutbacks in automotive production capacity and the retention beyond term of leased cars by businesses led to a shortage of nearly-new vehicle stock, which bolstered trade used car values.
Whether this reduction of stock will be followed by signs of sustained recovery in the new and used car markets, and to what extent the scrappage incentive may have brought new car sales forward at the expense of future demand, is likely to become clear towards to the end of Q3.
Vehicle Sales Analysis - Used car sales were down 6.6 per cent in the second quarter of this year compared to the same period of 2008, having fallen 5 per cent year-on-year in the first quarter. While used car sales rose 17 per cent in the first quarter of this year compared with the fourth quarter of 2008 - which represented the largest Q4-to-Q1 increase in six years – they declined by 1.1 per cent from Q1 to Q2 2009. That was the first such seasonal decline since the beginning of the new century, and the second quarter fall brought the year-on-year decline in the used car market in the first half of 2009 to 5.9 per cent.
The decline of used car sales in H1 2009 was more clearly than ever linked to the decline of the new car market. New car registrations declined throughout the first half of this year, rising only in July (for the first time in 15 months), and then only by 2.4 per cent, and largely thanks to the impact of the government’s scrappage incentive scheme. By the end of the second quarter, the new car market had fallen by 25.8 per cent, or 322,524 units, and by the end of July, it had declined by almost 550,000 units over the past 12 months.
(Experian, 08.12.09)

Satellite site closures give opportunities to independent garages - The emergence of franchise dealer “ghost towns” where even major manufacturers have no little or representation are creating new service and repair opportunities for independent garages.
Many franchise dealer groups have closed satellite sites in the last couple of years, leaving many medium sized towns with few or no franchise dealers, said motor industry consultancy Network Automotive.
Managing director Colin Bruder said: “Closing satellite sites has been an easy way for dealer groups to make economies during the recession and many have gone down this route, intending to continue operating in these areas with collection and delivery services from their nearest remaining location.
“However, this kind of remote operation is often not easy to implement successfully however good the dealer’s CRM. The fact that the local site has disappeared means that customers often start to look elsewhere for servicing and repair, especially for vehicles outside of the warranty period.”
High quality independent garages with visible local sites often stood to gain business in these situations, Bruder added, and the best were busy exploiting the vacuum created by departing franchisees. (AM Online, 10.12.09)

Motor industry disappointed at no deferment of showroom tax and scrappage deadline - The RMIF has welcomed several measures in the Pre-Budget Report however said it is "disappointed" with inaction to extend scrappage and defer the first year VED tax.
Sur Robinson, RMIF director, said: "The RMI is disappointed that there has been no extension announced to the car scrappage scheme. The current scheme is self-financing and has stimulated the new car market.
"By 29 November, the Department for Business Innovation and Skills (BIS) had received notification of 282,898 orders for new vehicles under the scrappage scheme.
"The industry would have welcomed a further extension to off-set some of the negative market forces that could occur in 2010, particularly with the rise in VAT rate."
She added: "The motor industry has serious concerns regarding the impact on consumers that an introduction of first year registration fee for new vehicles would cause that was announced in the budget, April 2009.
"This introduction will lead to increased costs to the public of buying a vehicle and will directly stifle demand during a time of recovery for the automotive sector.
"We would strongly urge the Government to review the introduction of this tax."
(AM Online, 10.12.09)

Westover predicts prestige car and van surge in 2010 - Westover, the south of England-based dealer group, anticipates an increase in demand for prestige cars and light commercials in 2010.
Operations director Paul Dillon (pictured) said sales had shifted this year to smaller and more economical cars, which he expects to continue into the new year.
Increases
"We expect to see more of the same in 2010, although it's likely that prestige models will start to sell in greater numbers as bonuses are re-introduced and salary freezes start to ease up.
"We also anticipate that commercial sales, of everything from pick-ups to tippers, which have held up reasonably well, will start to burgeon as business optimism rises," he said.
Diversity
"The size of our operations and the diversity of manufacturers we represent has also seen us better placed than most to weather 2009's economic storm."
Westover, rated 66 in the latest Motor Trader Top 200, operates 21 sites across Dorset, Hampshire and Wiltshire and employs around 500 staff.  (Motortrader, 10.12.09)

Scrappage sales breakthrough 250,000 barrier - Scrappage sales have smashed through the 250,000 barrier, according to the SMMT.
RegistrationsNew car registrations through the government-backed scheme, which was launched in May, totalled 251,629 by the end of November.
LCV registrations over the same period totalled 3,882 units; just 1.5 per cent of the total scrappage market.
Unfulfilled orders: Meanwhile there are currently over 30,000 unfulfilled scrappage orders in the system, according to the latest figures from the Department for Business Innovation and Skills (BIS).
Having been forced to recount the number of orders it had on its computer system, following the recent discovery of mistaken double-counting of some customer orders, BIS confirmed it now has records of 282,898 orders on its system.
Emissions drop: According to the SMMT the average CO2 emissions of a car bought through the scheme is 133g/km, 10 per cent below the overall new car market average and 27 per cent below a scrapped car's emissions.
Totals: According to the SMMT the scrappage scheme accounted for 21.6 per cent of all new car registrations in November, in line with rates recorded in previous months. The scrappage scheme has also helped lift overall new car registrations in each of the past five months. The scheme accounted for 3.9 per cent of LCV volumes in November.
Over the May to November period total new car registrations increased by 5.7 per cent. Excluding all scrappage volumes the market was down 15.9 per cent. (Motortrader, 09.12.09)