Cars Analysis: Are car sales bouncing back?

03:07  06 july  2020
03:07  06 july  2020 Source:   autocar.co.uk

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Sales of cars in China eventually reached a peak of 28,879,000 in 2017 – a figure that represented more than a quarter of all cars sold globally that year. At first, many were quick to dismiss the 6% reduction in annual sales as a mere blip. Since then, however, the drop in car sales in China has

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It’s now just over a month since car dealerships in England were allowed to reopen, and while it’s too early to draw definitive conclusions, sales patterns are starting to appear. Here we investigate the most pertinent trends emerging in the car industry’s new normal.

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New car sales have been slumping in many of the world’s major auto markets. In China, sales were down more than 12 percent in the first six months of The company has been limiting orders to top-selling models and cutting back on vehicles that tend to languish for weeks or months and often need

An immediate “ bounce back ” to business as normal in China or any other country will face limitations. Action by OEMs and retailers was aimed at turning interest into a pipeline of future sales , and some would- be buyers were keen to push on with making transactions.

Are dealers selling cars?

Emphatically, yes – although the used and nearly new car market is in far ruder health than the new car market, boosted by stock being immediately available rather than at the end of an indeterminable waiting list, subject to factories reopening and the speed at which they can build cars while observing social distancing protocols.

Already, though, it’s fair to say that opening dealerships was a catalyst in shifting fortunes for the car industry from rock bottom, with many of the big retail groups reporting sales activity that was up, year on year, throughout the month.

However, there are ongoing concerns regarding the pace at which new car registrations are picking up – a process that inevitably takes time due to stock limitations and lead times – and over how long the pent-up demand will last.

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www.investing.com/ analysis /existinghome- sales - bounce - back -in-february-200299850. Lawrence Yun, NAR chief economist, says sales were uneven across the country in February but did increase nicely overall. “A big jump in existing sales in the South and West last month helped the housing

Auto Sales Slowly Recovering. On Apr 22, J.D. Power said that for the week ending Apr 19, retail sales were down 48% from the pre-virus forecast, reflecting The recovery is also expected to extend to the used vehicle market, which is expected to bounce back in the second half of the year when demand

At present, data from our sibling website whatcar.com – which is polling more than 6000 would-be buyers every week – suggests there is a pipeline of interest that stretches well beyond this autumn.

a car parked in a kitchen © Provided by Autocar

Are new car discounts rising?

There is still no consistent picture of what is happening to new car discounting post-lockdown – largely because the aforementioned pent-up demand is ongoing, and we will only see the whites of the eyes of manufacturers and retailers when demand slumps.

What Car?’s Target Price data – which reflects the price its mystery shoppers can achieve as a fair price across the country – has highlighted some manufacturers that have increased discounts since the end of lockdown, but few by much.

The top 12, in descending order, are Volvo, Volkswagen, Mercedes, Skoda, Mazda, Jaguar, Renault, Vauxhall, Hyundai, Peugeot, Citroën and Mitsubishi, with percentage increases ranging from double digits to less than 1% across the range of that list. Others, in contrast, are standing firm, largely looking to maximise profits from what stock they can get their hands on.

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Sales of new cars and light commercial vehicles contracted 38.5 percent from a year earlier after a 29 percent drop in September, the Association of European Business in Russia said in a statement on Tuesday. Will the country’s auto market bounce back or are the days of insane sales numbers over?

Our analysis suggests that this trend will continue, with sales likely to end the year 4% to 5% lower GDP, unemployment, and consumer prices should all bounce back without the reaching extremes of the Meanwhile, car sales across the EU have also been robust. Over the past five years, new car

a chair sitting in front of a building © Provided by Autocar

What about used car prices?

High demand and low supply – with auctions and trade-ins, as well as the cycle of lease returns, all having ceased in lockdown – has given some comfort to dealers who have had to sit on what would normally have been depreciating stock during lockdown.

The biggest risers are cars at the older, cheaper end of the market, boosted by buyers’ eagerness to avoid public transport. Cap HPI data suggests that some models have enjoyed price boosts of more than 20% from March until now.

At the newer, high end of the market, prices are more dependent on the desirability of the car, but there is still strong evidence of values holding firm for now, with Car Dealer Magazine even reporting Big Motoring World dealership boss Peter Waddell as saying that he could be in line for his “best-ever June”.

Are people buying different types of car?

What’s clear is that consumer intent has shifted – although it’s too early to say if this is being realised in retailers. As head of the Volkswagen Group in the UK, Alex Smith has a better overview of the market than most, but he’s cautious about being drawn on predicting trends based on four weeks of sales during the most turbulent period of his career. “We take it day by day,” he says when quizzed on changing tastes.

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ANALYSIS . INTERVIEW. Indonesia’s automotive manufacturers have expressed optimism that national car sales will soon bottom out and show The association blamed sluggish sales on political uncertainties from the 2019 general election that held people back from buying big-ticket items, such

Bentley sales bounced back to levels last seen before the credit crunch. Rolls-Royce saw sales soar to record levels. Jaguar Land Rover announced plans to build a a £700,000 supercar with Williams F1, invest hundreds of millions of pounds in new manufacturing facilities, and create hundreds of jobs.

However, What Car?’s polling of buyers reveals that at its peak, during lockdown 49% of respondents said they intended to buy a more environmentally friendly car than they had previously considered, with 26% saying they were more inclined to consider a hybrid or electric car, and 9% saying they were more inclined to consider an electric car.

There is also evidence of a growing shift between those confident in their financial position and those less so: around a fifth of buyers are telling What Car? they now intend to spend more on their car than they did pre-lockdown and a similar number saying they intend to spend less. For those confident of employment, with low living costs and looking at low interest rates, the upside to the pandemic could well be a flashier new car.

a car parked in a parking lot © Provided by Autocar

Will there be a scrappage scheme?

A month ago, it seemed near certain that some sort of stimulus package would be introduced, with details being leaked to the press to test the waters, but the rhetoric coming out of the government has shifted dramatically over that period.

In a statement to Autocar, the Department for Business, Energy & Industrial Strategy highlighted its existing environmental incentives and said: “We have no current plans to change the existing incentives or to introduce a scrappage scheme.”

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Contrary though it may seem, even that statement may provide some boost for car sales: What Car?’s polling suggests 29% of buyers were holding off in anticipation of a scrappage scheme. Knowing it is unlikely may push them to purchase anyway, rather than delaying in the hope of a better deal.

Of course, that statement also leaves wriggle room to change tack again, and there are alternatives to scrappage, including proposals for cars to be among purchases considered for a VAT cut.

However, with the aviation, hospitality and other retail industries in deeper trouble, and car retailers having already been given a head start in getting back to work, it seems more likely that decision makers will keep a watching brief. They will have a particularly close eye on France’s £7 billion automotive plan, including a near £12,000 EV incentive for buyers, which has pushed car sales there back within normal levels less than a month after being introduced.

a police car parked in a parking lot © Provided by Autocar

What’s next?

Most predict the full impact of the coronavirus won’t start to unfold until September, but the truth is that nobody knows. Until then, the industry remains on tenterhooks, largely assuming that at some point a crash will become a reality as furlough unwinds and mass redundancies become necessary.

Optimists point to the fact that those in employment will continue to be well insulated, while pessimists say the scale of the predicted job losses will be too great not to drag the economy down. For now, Society of Motor Manufacturers and Traders data, based on manufacturer predictions, suggests a 25% year-on-year fall in the market – disastrous if not catastrophic figures ahead of potential disruptions from Brexit.

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