We asked our good friend Darren Tear to explain to us the UK car sales for 2020. In this two-part series, he gives us the latest information on the state of Electric Vehicles (EVs) and the wider car market. Darren is a professional car broker. You can connect with him here to get the best price for your electric vehicle company fleet.
Well everyone knew 2020 was never going to be a good year for UK car sales. With the Covid-19 virus dominating last year, vehicle factories had to close for 3 months, showrooms for longer. Travel by whatever means has been discouraged ever since.
Unemployment soared. The hospitality industry was shut down for much of the year making it impossible for people to travel for holidays and leisure. So although the media made much of it, I think it’s actually a pretty good performance for new car UK sales to be “only” 29% down on 2019.
Retail sales were 26% down, fleets 31% (mainly rental sales, rental companies were badly hit by lack of business and holiday travel). Small business sales by a whopping 43%. Small business is the category that pre-registered cars go into, and as there was no stock due to factory closures there was no need to pre-register.
So if you take the lack of rental company sales (they normally represent around 10% of the market) and pre-registrations (maybe almost 5%) means the TRUE fall in sales is perhaps around 15-20%.
Now given everything that has gone on I think that is an amazing achievement. Of course you won’t read that in the tabloid press but I’m happy to say this is the truth of the matter.
Van sales were down 20%, but three points here:
- First is a shortage of supply facing strong demand. Factory closures meant no new vans but rental companies have been desperate for new vans, mainly to supply courier companies working flat out on home deliveries. And the construction industry which as it is defined as “essential” remains very busy.
- And the courier companies that buy their own vans rather than rent are also queueing for new vans.
- Pre-registration normally takes a bigger share of total “sales” in vans than cars, but again there were very few.
Taking all this into account, I firmly believe that with free supply and normal pre-registration activity UK van registrations would have been HIGHER in 2020 than in 2019. Again not what the tabloids will tell you.
Winners & Losers
Given UK car registrations fell by 29% anyone who did better than that can be called a winner and vice versa.
Well the biggest winners were: electric cars up 186%, Mild PHEVs up 184%, other PHEVs up 91%. PHEV = Plug In Hybrid Vehicle by the way.
Biggest overall loser was diesel cars down 55% (although used demand for diesels stays strong).
Amongst the manufacturers, by far the best performer was MG up 41%. MG offered great value for money and the cheapest electric car on the market. Also, they expanded their dealer network. With others like Ford and Vauxhall cutting their networks and Mitsubishi dealers looking for new opportunities, MG will expand their dealer body increase further this year.
Only “Other Imports” showed another increase being 78% up, almost all Tesla as I said last month. In fact, the Tesla Model 3 was the best selling car in the UK in December! Everyone else was down on 2019.
Bentley did best “only” 16% down. Audi, Skoda, and Nissan did very well at all being 22% down, and Land Rover helped by the new Defender 24% down. Those who really suffered were ones like Alfa Romeo 38% down, Citroen 45%, Fiat & Ford 35%, Honda 37%, Mazda 43%, Mitsubishi 44%, Subaru 68, Suzuki 43% and Vauxhall 40%.
Ford, as ever, did really well in the van market with the Transit Custom being best seller and the 3rd best selling vehicle in the UK behind only Ford Fiesta and Vauxhall Corsa and ahead of the VW Golf. Had free supply been available, the Custom would have done even better.
What Next?
We’re now in Lockdown 3 and every indication is that the rules will be tightened soon.
Currently, dealers are working well with “Click and Collect” but this is already banned in Northern Ireland, has been banned today in Scotland, and may well soon be banned in England.
This means dealers will be very largely closed as far as vehicle sales are concerned until further notice. This is SERIOUS, but not of course remotely as serious as the pandemic. January is normally a peak month for used car sales. It also begins the lead up to March new car sales March being the biggest month of the year with the introduction of the first new registration plate of the year.
Now it seems a lot of this will be put on hold for a while.
I deliberately say “on hold”. Ever the optimist I believe the vaccination programme will take us back to something like normality sooner or later, hopefully, sooner. When that gradually happens there will – it seems to be – a lot of pent up demand.
When we entered Lockdown 1 almost a year ago a survey said that:
- 3.5% of in-market buyers were looking to buy a car within 4 weeks.
- 8% in 4-12 weeks.
And currently:
- 20% are intending to buy within 4 weeks.
- Another 25% in 4-12 weeks.
People have got used to “life goes on”.
So the first quarter of the year will be rough for the industry. But not to be too selfish; it’s not as remotely rough as for many others in other industries: particularly hospitality. And most of all nothing like what is going on in our wonderful NHS. We need to keep a proper sense of proportion. Selling cars isn’t really at all important in the grand scheme of things. However I will rabbit on a bit more:
Used Electrics
While as reported above sales of new electric cars are booming and sales of new diesel cars are plunging. In the used market it’s almost the opposite.
In the new market company, car drivers are embracing EVs mainly because:
(i) They don’t pay the much higher new price.
(ii) They save a lot on the Benefit of Kind Tax they pay for receiving a company car.
Used car buyers who pay for the car and the fuel themselves take a very different view. As new diesel sales fall, the supply to the used market inevitably falls. So by the solid rules of supply and demand used diesel values will inevitably rise.
Tesla Expand Dealer Network
Last year Tesla increased the number of UK dealer points they operate (they own them all) from 19 to 25. And are planning at least one or two more for this year. As I said last month, we can’t get entirely accurate figures for Tesla sales. But 25000 last year is a pretty accurate guess, which means just about 1000 per dealer point. So Tesla sells almost as many as Citroen and Honda, for instance, both of whom have around 100 dealers, and more than the likes of Mazda, Suzuki, and Porsche who again have many more dealers.
PSA/FCA Merger Gains Shareholder Approval
PSA comprises Citroen, Peugeot, Opel and Vauxhall. FCA is Fiat Chrysler Automobiles which covers Fiat, Lancia, Maserati and of course Chrysler, Dodge etc. These two have now come together with the combined entity to be named Stellantis (don’t ask me why!).
The new company will have the ability to sell more than 8.7 million vehicles worldwide which will make it the fourth largest manufacturer in the World. The merger is forecast to produce cost savings of £3.2 Billion a year with no planned plant closures.
Well, there might not be any planned currently but I’d say, it will be difficult to save that amount of money without? Certainly, the Vauxhall plant at Ellesmere Port near Liverpool remains at risk. It is also rumoured that there is likely to be “franchise consolidation” with a smaller number of bigger dealers handling two or more of the group’s brands. The Chief executive will be PSA boss Carlos Tavares. He has certainly done an admirable job of turning around Vauxhall/Opel since PSA took it over, making it profitable within 18 months when under GM it has lost money for 20 straight years.
Makes you wonder where the next big merger will come from? My money’s still on VW Group and Ford of Europe.
Peter Vardy Group Exit Vauxhall Franchise
Older readers will remember a dealer group named Reg Vardy which Peter Senior (later Sir Peter Vardy) developed from one small garage in the North East to a national chain before selling out. Then his son (also Peter) started again with one Vauxhall dealership in Motherwell and expanded throughout Scotland with now six Vauxhall dealerships and many others including Jaguar Land Rover, BMW/Mini and Porsche.
Now Vardy’s have announced they are to relinquish all six Vauxhall dealerships and transform those sites into used car supermarkets which will major on online as well as physical sales. All the sites will continue as Vauxhall Parts & Service locations.
Peter Vardy Jnr is a very well respected operator (and no doubt continues to benefit from sound fatherly advice). So this move may well concern some manufacturers, Vauxhall in particular of course. While like others, they are shrinking their dealer network they will need to replace 3 or 4 of the 6, and with Vardy retaining the profitable after sales work that may not be easy.
More to the point though. If a company like Vardys feel the right thing is to walk away from volume new car business to used cars and retain only the prestige franchises how many others may look at similar moves?
Kakapo Energy helps businesses save money by utilising green energy like EV cars and solar panels. Part 2 of this series on UK car sales for 2020 will be coming next week, where Darren discusses the impact on fuel and worldwide manufacturing.