10:18 am, January 1, 2024
Predicting what the next year may bring for the motor trade isn’t easy – but as it’s the festive season I’m going to give it a go anyway.
As we look towards the new year and another 12 months of fun and games in an industry we all know and love, I’m certain there’ll be a few things taking up more of our time than others.
Last year, six out of my nine predictions came true, including a guess that Pendragon would go private and the 2030 EV plan would be dropped. So, I’ve set a high target for my 2024 list.
No, I haven’t got a crystal ball, but I’ve used my better judgement to come up with this year’s look to the next 12 months.
Fortunately no one diarised the previously predicted December mickey-taking session of my 2023 shouts, so I feel that perhaps this year I’ll be a little more bold. Sort of.
EVs will be even tougher to sell
Ok, I’ve started safe, but as the months roll on, and those tough sales targets manufacturers face start to really sink in, car dealers will come under increasing pressure to sell (register) more EVs. In 2024, car manufacturers must ensure 22% of the cars they sell are EV or face punishing fines.
But this comes at a time consumers have fallen out of love with electric. In 2023 the petrol and diesel ban was pushed back and the incentives to buy an EV have now all evaporated. Convincing buyers to go electric next year will be tough and will have to come down to heavily incentivised deals. I predict 2024 will be the year the EV bargains really begin.
Used price crashes will begin to level out
We’ve seen a crash in used car prices in the latter part of 2023 with models dropping back considerable percentages – cars fell back 8.4% in October and November alone. The realignment that many had predicted for so long has finally happened.
But as next year rolls on, those new cars that weren’t sold in the dark days of 2020 will fail to feed the used car market and I genuinely believe we’ll see prices firm up. I’ll stop short of predicting a rise, but I can see the monthly book drops becoming much smaller. Which brings me on to…
Consumer confidence will rise – and so too will car sales
Consumer confidence is linked inextricably to house prices. If you feel your investment in your home is sound and rising, then you feel more wealthy. And when you feel more wealthy you’re more likely to splash out on things you want, rather than need – cars. What we’ve seen in 2023 is a drop in house prices, but I take solace in the fact it wasn’t nearly as bad as experts had predicted the crash would be.
At the start of the year some were prophesying a near 10% drop in house prices. Halifax recently admitted it had been ‘better than expected’ with just a 1% drop in prices. There are still stormy waves in the housing market, but as things begin to settle this will start to filter through to consumer confidence. That will mean we’ll move away from a market driven by people that need to buy a car to those that want to buy a car again – a subtle but vital difference.
Interest rates will start to come down again
Ok, so I am no economist, but I do read a lot of the papers and the shock fall of inflation to 3.9% in November has already led to talk of interest rate cuts. As soon as money gets cheaper – and importantly those remortgages are less painful – it will bounce consumer confidence and, you guessed it, see more people buying cars again.
I’d hasten to bet a lot of people had squirrelled away some worry money for when their cheap mortgage deal ends and their new one starts. We’re already seeing five year mortgage deals fall below 4% and analysts predicting more drops in 2024, so as these come down more people will be willing to splash out that cash they’d tucked away just in case, or factored into their monthly bills in the future.
Vertu finally goes private
Let’s face it, Vertu is a sitting duck. A well run, profitable business with a good mix of brands and a recent acquisition of some desirable marques through its Helston deal, makes Vertu’s position as the sole survivor on the stock market an untenable one. Constellation has been busy upping its stake in the group – now to more than 7% – and let’s face it, they’re pretty canny with their investments.
The 20% stake the firm had in Lookers turned out to be a sensible investment after all. I am sure they’ve seen the writings on the wall for Vertu and with a share price hovering around 70p at the time of writing this and analysts predicting a buy-out deal would need to be around 120p, it’s only a matter of time before we see a bid. The great American shopping spree of 2023 will go down as a landmark year of change for our industry and it’s only a matter of time before Vertu joins its former listed colleagues in the hands of overseas investors.
Chinese steal a larger slice of car sales pie
Continuing the American analogy one point further, the Chinese have had a taste of the traditional car maker’s sales pie and now want a larger slice. I’ll put that strange analogy down to an eggnog haze, but the sentiment remains. We’ve already seen MG challenge traditional brands in the UK and steal their market share – it outsold many including the likes of Peugeot, Seat and Renault.
And there’s more to come. While GWM Ora will unlikely make many waves, brands like Nio and Chery will. BYD is also one to watch. Its cars look great, they’ve have been positively reviewed and they’ll only get cheaper. And here’s the thing – the Chinese can afford to chop the prices of their EVs considerably to boost demand and in 2024 that will be vital.
Agency sales delays will continue
We’re doing it, oh, now we’re not doing it. Oh we might do it in the future. We’re definitely doing it one day, but not now. We’ll see how others get on. That’s the agency debacle currently raging in manufacturer boardrooms across the country. All eyes have been on Mercedes who say they’ve made it work, but we all know they’re had to force sales into other easier areas and buy business with heavily subsidised finance deals. BMW has recently delayed the roll out of agency to 2026 while Stellantis told us they’ll be delaying it too. I predict in 2024 a few more car makers will realise they’re making big mistakes and ‘delay’ their agency plans too.
More consolidation
My contacts tell me the appetite for mergers and acquisitions is as strong as ever – and the recent purchase of Rybrook by Sytner shows the big guys want a slice of the action too. My guess would be this isn’t the last purchase Sytner make as the hugely profitable business continues to grow. The fact it teamed up with Hedin to attempt to buy Pendragon this year shows it has big ambitions. Take one look at the Car Dealer Top 100 and you’ll find plenty of well run family businesses that might be tempted by an open cheque book. I wouldn’t put it past Arnold Clark to put their hand in their pockets too.
AI will start to proliferate in the motor trade
You might have seen I’ve been attempting to start my own used car dealership with the help of AI. It’s been an amazing journey so far and I have been blown away by what it can do. It’s helped write emails to customers, advised me on setting up the business, help write copy for my website, penned car adverts and even produced the logo. The car dealers I’ve shown it to so far have been amazed at its capabilities. In 2024 we’ll see even more people in the industry start to apply it to their businesses.
And finally… Cazoo will disappear
It’s a bold one, but the online only used car dealer has already sounded the warning bells that it may run out of money in the second half of next year. It’s been a car crash since the start with its share price now a paltry 0.1% of what it was when it listed. The recent used car price crash will have been punishing for Cazoo as it holds far more stock than many other dealers and the write down pain will have been extreme. It might have recently refinanced its debt, but that’s only given it a little breathing room. I can’t see many firms rushing to lend the business money and, sadly, I suspect next year will be its last. But that’s my opinion.
What are your predictions for 2024? Let me know by emailing me using the email button next to my face (below). I read all the emails we get so will be interested to hear your thoughts
