FEATURE Howes Percival
Interesting times for
motor dealers
Pity the poor motor dealer: not only emerging from the worst period for new car sales in living memory but also getting to grips with the New Normal and fi nding that things were not as they were before the pandemic. T e changes can be put into two main categories.
First are the things that were happening anyway; but second are those that look like a lasting legacy of COVID19 – as in other industries, whilst there may not have been a digital revolution, there has certainly been an acceleration of changes that have been building for a while.
Things that were happening anyway Perhaps the most significant shift is the march towards electrifi cation. According to What Car?, electric or hybrid vehicle sales account for 15% of the new car market so far in 2021. Anecdotally, our dealer clients tell us it’s a long time since they sold a diesel, as manufacturers delete them from their ranges and announce ambitious targets for all-electric ranges. Almost 50% of those surveyed by Direct Line
said they’d be happy to have an electric vehicle in the future, despite well-publicised ownership
6
Andy Harris Partner & Head of Automotive Team Howes Percival
Pictured above with Hannah Pryce
concerns; and young drivers are very much driving this view: over half of the above were under 35. And it seems that those who have taken the plunge would never go back: 90% of EV drivers would not return to petrol or diesel. Lower running costs were the main attraction for 56% of owners, but
an even greater number (65%) said they wanted a car that was better for the environment (What Car?). However, there are still some important factors holding people
back, most notably the relatively high price of electric/hybrids, and the patchiness of the charging infrastructure: stories abound of owners nervously wondering if they have enough charge left to get to not just the nearest charging point, but the one after it, assuming that the nearest is likely to be in use or may be inoperable.
Changes accelerated by the pandemic One unforeseen change is the unprecedented hike in used vehicle prices – according to Auto Trader, the average used car price rose 14.1% in July 2021, and research by ASE Automotive Solutions suggests that car retailers enjoyed a 27.5% year-on-year increase in profits during the same month, as appreciating used car values boosted sales. The used car boom is driven by the semi-conductor shortage
which has hit the manufacture and supply of new cars and left the market starved of new stock; and also by pent-up demand during lockdown, when nobody went anywhere, leaving many consumers with additional spending money. However, used car prices seem likely to correct once the current supply chain wrinkles are ironed out – although indications are that this may still take a while. A recent report by Nomura said that the spread of the Delta variant combined with the relatively low vaccination rate in many ASEAN economies meant factory production disruption and port closures
ALL THINGS BUSINESS
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