6:48 am, March 10, 2024
Massive discounts and plenty of incentives will be offered by manufacturers desperate to shift their EV stocks and avoid being fined.
That’s the view of former UK CEO and president of Hyundai Tony Whitehorn, who said the ball had already started rolling with a financial deposit allowance of up to £8,000 on one volume-selling vehicle alone as UK car brands try to speed up the switch to electric.
Whitehorn, who led the UK arm of the South Korean manufacturer from November 2011 to December 2018, is now an automotive consultant, and in an e-learning webinar he told delegates that bargains were to be had by EV buyers as carmakers were under pressure over the electrification of the UK vehicle parc.
The event, organised by The Lead Agency and attended by dozens of its partners and clients, aimed to provide attendees with information across a range of automotive subjects – with electrification one of the main topics.
Whitehorn said EV manufacturers operating in the UK faced hefty fines under the ZEV mandate if they failed to hit certain targets.
They therefore needed to encourage more people to buy them. Customers, however, were put off by the higher prices of EVs so were reluctant to make the switch.
This, in turn, meant that manufacturers needed to offer substantial discounts to boost demand – but that then led to margin erosion since EVs are more expensive to make than ICE cars.
‘Car manufacturers are not making as much money out of EVs as they are out of vehicles with internal combustion engines. But they’ve got to sell a whole load more battery-electric vehicles to avoid paying hefty fines.
‘Therefore, there are going to be big discounts and a lot of incentives to tempt people to purchase them.
‘Already I’m seeing a large number of 0% finance offers, with huge financial deposit allowances – up to £8,000 on one volume-selling vehicle, which surprised me.’
And he said the best way for manufacturers to sell larger numbers of discounted cars would be to make the most of digital retailing.
‘That’s how you can change someone from being a tyre-kicker to a contracted customer – and quickly.’
He added that there were some 50,000 EV charging points in the UK whereas in South Korea there were 200,000. ‘By the end of 2024, we will have 80-100,000 chargers, so we are getting there.’
Meanwhile, Alban Treglohan, who runs the VW account for media agency PHD, told delegates that although there had been ‘a steady improvement’ in the number of car registrations since the pandemic, there had also been pockets of downturn in demand.
‘Last year was a very challenging year for the EV market, and it’s becoming increasingly difficult to generate new demand for electric vehicles,’ he said.
‘Discounting is actually becoming a dangerous drug for car manufacturers.
‘You only had to switch on commercial radio last year and you would be inundated with car advertising offering generous deposit contributions and reductions in APRs.’
He urged manufacturers and dealers to be ‘a bit braver’ in their approach to promoting electric models.
Although buyers seemed reluctant and press coverage was sometimes negative, ‘once you’ve sat in an electric car and driven one, it’s actually a great experience,’ he said.
Treglohan added: ‘These vehicles have all been built from the ground up and their quality is increasing exponentially.
‘Brands need to stop being so bland with their EV advertising – make it more exciting! – and drive digital strategies hard to get bums on seats.’
Whitehorn and Treglohan were joined on the webinar by Jason Cranswick, MD of Norton Way Group, as well as automotive consultant Patrick Fuller, who was the host.
