8:20 am, February 6, 2023
Cox Automotive has backed the UK’s new car market to enjoy a strong year but warns ongoing volatility could ‘change the shape of the sector for years to come’.
The company has released its latest AutoFocus report, in which it studies the most likely scenarios for the industry in the coming years.
The firm’s experts believe that new car registrations are likely to rise by six per cent in 2023, which would leave them at around 1.7m.
While that figure would still place registrations 26 per cent down on pre-pandemic levels, it would still represent a strong recovery from recent years.
‘Last year was challenging for the new car sector, yet we began 2023 with a welcome, albeit small, feeling of positivity,’ said Philip Nothard, insight and strategy director at Cox Automotive.
‘There were signs in the closing months of last year that manufacturers were increasing supply levels, reducing market volatility, with added reports of tactical registration activity and increased activity in the leasing sector; we have signs of a “normal” car market.’
As well as its most likely scenario, Cox has also produced reports that forecast their best and worst case situations.
Its best case scenario – which depends heavily on a resolution to the conflict in Ukraine – would see an 18 per cent hike in registrations to around 1.9m.
On the flip side, Cox’s experts believe a worst case scenario would see around 1.61m new car registrations, similar to 2022’s result.
A full breakdown of the projected figures can be seen here:
Concerns remain over charging and agency sales
The AutoFocus report also looked into what wider trends would be likely to shape the new car market in 2023.
High up on the list were concerns surrounding EV prices and infrastructure. While one-fifth of all UK registrations were plug-in vehicles during 2022, there are major fears that the UK’s charging network may still be insufficient.
Agency sales are also set to be a hot topic this year, as well an influx of Chinese OEMs entering the market.
Nothard said: ‘As we edge closer to the Zero Emission Vehicle Mandate regulation, more needs to be done for EVs to truly become the dominant mode of transport.
‘Significant investment is still needed in the charging infrastructure to support a growing EV parc. In addition, there are still barriers to entry for many people, with the cost of EVs being higher than their petrol/diesel counterparts.
‘Another area of caution around the agency model is its pressure on cash generation, working capital and market volatility, all exposures currently managed by retailers.
‘It could prove advantageous for those OEMs not entering immediately.
‘However, even in countries such as Australia, where many manufacturers felt compelled to transition their dealer network to the agency model due to the supply disruptions resulting from the pandemic, it remains unclear what the impact is on both volume and profitability.’
He added: ‘The timing couldn’t be better for Chinese manufacturers as established OEMs step away from affordable but ultimately unprofitable legacy models.
‘This has left a void to fill as people still need small, cheaper cars.’
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