September new car sales fall ‘will have brutal impact on some dealers’ profitability’

Time 3 years ago

THE 20.5 per cent fall in September’s new car registrations will have a brutal impact on some dealers’ third-quarter and full-year profitability.

That’s according to Coachworks Consulting, as it reacted to the SMMT’s figures released this morning.

The independent consultancy said the decline was against a backdrop of dealers reporting high levels of customer inquiries for the month. However, many were unable to register sufficient numbers of new cars because of stock shortages caused by the introduction of the new Worldwide Light Vehicle Harmonised Test Procedure (WLTP) regulations on September 1.


‘The introduction of WLTP at the beginning of the 68 plate-change always had the potential to have a disruptive impact on registrations in the second biggest sales period of the year, but the ability of manufacturers to manage the impact has been mixed,’ said Coachworks Consulting managing director Karl Davis, pictured.

‘The impact on retailer profitability in September will be brutal as each delayed delivery will be compounded by the loss of revenue from finance, GAP and aftersales. It’s not just about chassis profit.’

The gravity of the situation was also acknowledged elsewhere, with Alex Buttle, director of car buying comparison website, saying: ‘These figures will send shock waves through the industry. A 20 per cent drop on last year’s numbers is astonishing.

‘We are now entering a crucial and unprecedented period for the car industry, as the next new number plate will be March 2019 when the UK is due to leave the EU. It’s likely to be a rollercoaster ride for new car sales figures for the foreseeable future, but it feels like we have just plunged into a deep canyon.’

Meanwhile, Ian Gilmartin, head of retail and wholesale at Barclays Corporate Banking, said: ‘A collective “ouch” will be heard though the industry this morning as getting September right is vitally important for the new car market. That said, September was a far from normal month for the sector, with new testing requirements impacting supply and blurring the picture.

‘Also, following hot on the heels of an unexpectedly robust set of August figures, today’s data has to be viewed in context, as backlogs will inevitably ease and consumers will be presented with an even wider range of new-tech cars to grab their attention.’

James Fairclough, chief executive of AA Cars, said: ‘After the new car market enjoyed an “Indian summer” in August, it’s disappointing to see that sales fell off in September, especially as the arrival of new plates usually encourages buyers to the forecourts.

‘The run-up to Christmas is a traditionally more muted time for the industry, but as we saw over the summer months, which historically tend to be quieter, the new car market has the ability to defy expectations. All eyes will now be glued on dealerships to see whether this month’s sales slowdown is a one-off or an ominous sign of things to come.’

Auto Trader director Ian Plummer said: ‘September’s performance was a matter of basic economics – there simply weren’t enough cars on forecourts that met the new WLTP standards for retailers to sell.

‘However, there were some brands that were better prepared than others. While the Volkswagen group brands struggled, other German prestige marques, such as Mercedes and BMW, performed much better and seem to have better anticipated the production of WLTP-compliant cars in advance of the new regulations. For volume brands, Mitsubishi also had a very strong month, and as a result is joining Seat as one of this year’s fastest-growing brands.’

Andrew Hooks, chief operating officer of Carwow, said: ‘The car-buying public is confused and frustrated. This is why the numbers of new cars being bought is falling. The hysteria around diesel has not yet died down, and added to that many consumers are facing long lead times on the cars they want to buy coming out of the factories.

‘On a more positive note, it’s worth noting the significant year-on-year uplift in electric vehicle sales. We know from our own research that one in seven drivers are intending to purchase one in the next two years. However, if the government is serious about enabling drivers to “go green” then it needs to take positive action. Urgent action is required from our government to invest in the infrastructure needed to allow Britain to embrace the electric revolution.’

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