Industry has reasons to be cheerful but challenges still lie ahead

Time 4 months ago

With January’s new car sales tumbling to a low not seen for more than 50 years, industry experts have been sharing their thoughts.

Short-term positives

Rachael Prasher, managing director, What Car?

‘There are short-term positives to be taken from these figures – albeit clouded by longer-term concerns.

‘Crucially, January’s figures are an improvement on those recorded in the first lockdown in April, when registrations fell by 97 per cent. This demonstrates the tremendous strides the industry has made in adapting, including developing new online services and virtual showrooms.

‘The chief concern is that lockdown is likely to remain firmly in place until March, undermining any prospects of a bounce back in what are traditionally some of the busiest and most profitable months of the year.’

Supply issues need addressing

Karen Hilton, chief commercial officer, Heycar

‘Despite the challenging conditions, there are welcome signs that general demand for drivers looking to change their car remains strong.


‘At Heycar we saw a surge in the volume of leads going to our network of dealers in January – up 22.8 per cent month on month.

‘As the vaccine roll-out gathers pace and infection levels continue to drop, there is a light at the end of the tunnel. But until supply issues are overcome, the new car market can expect a bumpy ride ahead.’

Encouraging signs

Ian Plummer, commercial director, Auto Trader

‘As expected, the overall new car volumes are quite substantially down on last year.

‘But as we move into the new year there are encouraging signs that the market will pick up, as some very strong lead indicators are likely to flow through into sales in the weeks ahead.

‘Consumer demand for new cars on the Auto Trader marketplace soared last month. We observed a significant uplift in users viewing new cars on our marketplace, which in turn drove record levels of new car leads being sent to retailers. There’s also been a very high demand for vans.’

Two crucial questions

James Fairclough, chief executive, AA Cars

‘In the short term, the focus is on two crucial questions: when will dealerships be allowed to reopen, and what will be the impact of the new registration plates introduced at the start of March?

‘New plates typically give sales a welcome boost, but the benefit could be muted if forecourts remain closed to the public.

‘The fact that lockdown is also making it more difficult for customers to sell their existing cars could potentially dampen demand further. The challenge will be for dealers to capitalise on the new plates by using their new lockdown-friendly sales channels.’

Consumers need confidence

Alex Buttle, director, Motorway

‘If the situation is to change for the better in the short term, consumers need more confidence to start spending freely on new cars again. And that’s only likely to happen once we’re out of lockdown and some degree of economic certainty can return.

‘An increasing percentage of buyers looking to upgrade their vehicles are turning to the used car market to find more value in their next vehicle purchase.

‘We’re also seeing growing numbers of buyers who don’t usually buy used considering buying second-hand this year. The used car market continues to be the main beneficiary of a stagnant new car backdrop.’

Concerning start to year

Karen Johnson, head of retail & wholesale, Barclays Corporate Banking

‘Lessons learnt from the first lockdown have seen traders bolstering their e-commerce propositions to meet the changing purchasing habits of the consumer, selling cars via delivery and on a click-and-collect basis.

‘But their valiant efforts fell short last month, and with January historically being a quieter month for car sales, it’s a concerning start to the new year.

‘It is encouraging to see the growing demand for alternatively fuelled cars registered last month, but in reality the increase is coming from a low base and the dial won’t significantly move until there is more certainty around the availability of charge points.’

Will diesel pick up?

Rod Dennis, data insight spokesman, RAC

‘While new car sales remain depressed due to the pandemic, it’s still the case that the very cleanest vehicles represented some of the biggest leaps in the numbers sold compared to a year ago. This is extremely encouraging.

‘Bar last April and May when the first effects of the pandemic were being felt, January 2021 was the worst month for diesel sales since car showrooms were allowed to reopen.

‘It remains to be seen what the rest of 2021 will bring when it comes to drivers’ appetite to opt for diesels, and whether the numbers sold will ever return to pre-Covid levels.’

More turning to online

James Hind, founder and CEO, Carwow

‘As we look ahead to the rest of 2021, there is at least the hope that, thanks to vaccine roll-outs within Britain and a tariff-free trading relationship agreed with the European Union, production and car sales will be able to show signs of improvements.

‘For the time being, and as we look at a further extended period of lockdown here in the UK, the ways in which buyers are searching for and buying their vehicles is more frequently taking place online.

‘Here at Carwow, consumers have been more engaged with our offering than ever, with almost 800 million interactions across all channels.’

Risk of price rises

Seán Kemple, managing director, Close Brothers Motor Finance

‘This month, we heard that production in 2020 slumped to its lowest levels since 1984. This has squeezed the new car market significantly, limiting availability and hiking up waiting times for consumers.

‘The impact of Brexit is also starting to show. Ford has upped the prices on some models due to the nature of their production lines across the globe, and there’s a risk other manufacturers will follow suit.

‘However, the silver lining is a surge in electrification in the UK as carmakers ramp up electrifying traditional models.’

Recovery likely in second half

Michael Woodward, UK automotive lead, Deloitte

‘Whilst there is considerable uncertainty within the industry, early indications point towards a recovery in the second half of the year once lockdown restrictions have eased.

‘The extension of some major government and private sector income-support measures, such as the furlough scheme and payment holidays on loans, mortgages and credit cards, has boosted consumer confidence in personal finances.

‘Increased personal savings, as a result of fewer opportunities to spend, also point to favourable conditions for renewed consumer activity, which could unleash pent-up demand.’

EVs offer silver lining

David Borland, automotive leader, EY UK & Ireland

Get more from Car Dealer

  • Premium stories
  • Used car data
  • Magazine early access

‘The continued rise and popularity of electric vehicles is the silver lining for the industry, with positive sales helping the UK achieve its net zero targets.

‘The market is likely to remain particularly challenging in the short term, as manufacturers face production and supply chain limitations affecting the manufacture of new vehicles – a particular concern in Q1 as the order banks are being filled for the all-important month of March.

‘Then there is the inevitable end of the furlough scheme, which is likely to add a further layer of disruption and challenge, affecting industry employees and consumers alike.’

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

More stories...

Server 51