10:14 am, August 27, 2020
With the new car market improving month-on-month since the start of lockdown, there’s an air of positivity in the motor trade at the moment.
Off the back of an encouraging set of July registrations – up 11.3 per cent – August is set to be a strong month too, but all eyes are on the September plate-change.
How will September perform? Will it cancel out the losses suffered during lockdown? Will manufacturers go big and push new car offers like never before and will it be the most important September in decades?
We’ve put those questions to a panel of industry experts, and here’s what they had to say.
Lack of supply will hamper brands wanting to push hard
Ian Plummer, commercial director, Auto Trader
Even with a strong September and Q4, getting the market to the renewed target of -30 per cent by the end of the year will be challenging. Many brands still have supply issues and won’t have ideal stock coverage across all models, and there’s legitimate concern around the potential impact the end of the government’s furlough scheme may have. We anticipate many brands will push hard in September to make hay while the sun is shining, and then hunker down for what is the smallest quarter of the year.
We’ve also seen a trend in June and July where the end of month closing activity has been noticeably lower than in previous years. Given that there’s probably still a lower appetite among retailers and manufacturers to risk spending lots of money to close target gaps, this could happen in September as well.
Some brands are lacking enough supply to be able to push harder even if they wanted to. Even without the global pandemic, ‘summer shutdowns’ make it harder to get September cars into the UK, which will only be exacerbated by the current gaps in the transport infrastructure. Typically, in March and September, the road haulage system works at well over 100 per cent capacity, often relying on foreign drivers to meet demand. Given international travel restrictions along with many UK drivers still on furlough, the networks will be under considerable pressure.
Going ‘big’ isn’t the best strategy
Sepi Arani, head of OEM, Carwow
September will be an even more critical month than ever this year. With all brands looking to recover as many lost sales as possible in what is traditionally the last ‘big’ month of the year, we are seeing both consumer offers and media campaigns ramp up significantly this September.
For the wider market, one view is that the the relatively strong sales figures seen in June and July represent pent up demand from consumers that have had to buy a car out of necessity, for example those on fixed term finance contracts and that the back end of this year could represent a much harder time for the automotive sector in what is usually a quieter final quarter.
If customers have their eye on a car at the moment, it’s not unrealistic to see a slight uplift in manufacturer deposit contribution during September, or an improved, or 0 per cent interest rate.
Going ‘big’ isn’t necessarily the best strategy for any manufacturer in the current market climate. The bigger challenge this September for brands will be achieving a share of voice in what is set to be a very busy month for automotive media and advertising. We are more likely to see increased marketing budgets to keep brands front of mind in consumers minds.
Will there be loads of new car offers in September?
Offers from the brands you wouldn’t expect
Steve Fowler, editor-in-chief, Auto Express, Carbuyer and DrivingElectric
There will be plenty of people looking at September as a clue to what the rest of the year (and beyond) is going to look like, but there are big challenges over the next few months, not least with stock availability. Factories and suppliers are still playing catch-up after lockdown, which is severely restricting the supply of models for many brands. What we can say for sure is that there’s no shortage of interest.
There’s still a fair bit of pre-lockdown stock around, while there are still targets to be hit. So yes, there will be some great deals out there.
The usual tricks to tempt buyers will come to the fore – low rate finance, deposit contributions, decent discounts – but with an increase in the popularity of private lease deals, it’ll be interesting to see how aggressive dealers and manufacturers are on those.
Many manufacturers will be playing the offers game – and it may well be some that you wouldn’t normally associate with such tactics!
Expect affordable offers for customers
David Johnson, director, Nationwide Vehicle Contracts
Since seeing the decline of new car registrations in March, falling by 44.4 per cent, the automotive industry definitely has a ladder to climb. Now with more people travelling to work, we are hoping to see an increase in sales as things start to go back to normal and the new registration plate is launched.
There is stock in the market and as factory production returns the motor manufacturers will be keen to see growth in registrations and we expect to see affordable offers for customers
For us, we know EVs will play a huge part of our future, therefore we are trying to push our electric vehicles including the Corsa-E, Renault Zoe, Kia E-Niro and Tesla Models to encourage our customers to start thinking about making the switch to electric.
Currently, we are waiting to see what deals will be released in September. If manufacturers begin to release offers, this is an indication that they will have an appetite for marketing for the rest of the year.
Stand-off so far as brands angle for market stimulus
Mike Jones, chairman, ASE Global
September is always important, but with retailers missing out on the final week of March where the real profitability is earnt, a strong September will be vital to help retailers get their results into the black for the year. Indicative signs are good, with order-banks building well. We should also get through September before the real effects of the ending of the furlough scheme start to bite, which may well put a break on Q4 and Q1 2021.
Across the world we have seen brands drive incremental volume through enhanced retail offers and there is no reason to think the UK will behave any differently. To a certain extent we have seen a standoff to date, with brands not providing enhanced offers as they try and convince the government to provide increased incentives through a scrappage scheme. This does not look like happening so I would expect the brands to start opening up enhanced offers.
Around the world we have seen many of the premium brands producing significant campaign offers to drive volume and speed the bounce-back.
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