Currently reading: Inside the industry: Incentive schemes alone won't save car makers
Incentive schemes look good on paper, but at the moment both buyers and manufacturers can lose out

While the world is collapsing around it, the European automotive industry marches on, with registrations down just 2.2% year on year across the region in July – and up year on year in Denmark, France, the Netherlands, Norway, Spain and, of course, the UK. So all is fine and dandy, then? Well, of course not.

Even if the fair wind keeps blowing, the market is still predicted to be down 24% over the course of the year, putting the backs of some car makers and many retailers against the wall. Who’s in trouble? It’s hard to ignore the paralysis at Jaguar Land Rover right now, and Fiat, Renault and Nissan have been hit hard.

But this unexpected turn of good sales news delivers some respite from the catastrophic results of March to June, when even doing nothing was draining reserves. Volkswagen CEO Herbert Diess estimated that idling most of the firm’s 61 global production plants cost it close to £10 million per hour, while the average UK car dealer site – a decent barometer for counterparts in mainland Europe – was estimated to have lost £125,000 in April to June. With roughly 4000 new car retailers in the UK, that equates to £500m going down the pan here alone.

Most crucially, it gives car makers and car sellers a chance to turn stock into much-needed cash, and to turn their new and used inventories into hard sales. As regards new cars, most insiders reckon the positive news will need to keep fllowing until the end of September for the European market to have reset its stock levels and balanced supply and demand to where they had expected ending March pre-pandemic. Used car sellers, in contrast, are desperate for stock, supply having been strangled by lockdown as lease returns and auction sales dried up.

Within this data, there are mixed messages from the incentive schemes announced so far. France and Germany have had generous, EV-focused plans in place for a couple of months, with headline-grabbing savings, for example, making a Peugeot e-208 a €99-per-month reality over 48 months. That’s a ludicrous price, yet France’s registrations were up just 3.9% and Germany’s were down 5.4% in July.

Italy, meanwhile, showed why UK automotive officials are walking on eggshells whenever incentives are mentioned. There, a scheme was well publicised as launching on 1 August. Consequently, July’s figures were down 11% as everyone waited for a better deal. The evidence in the UK is that many are doing the same.

The irony is they might not get one. Right now, where there’s stock, there are great discounts. But as sales flow, stock is running down. Buyers might find that car makers simply use incentives to prop up profits rather than doubling down on consumer savings.


UK new car registrations rise for the first time in 2020 

Insight: what we've learned from June car sales 

Jaguar Land Rover reports "significant impact" of Covid-19 as losses mount

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scotty5 1 September 2020

The end of large discounts?

Well one thing I agree with is used dealers desperate for stock. I sold my car last month for the same price I was being quoted last year - guess it was better to do it before part-ex from today's new registrations appear.

But again we have talk of new cars sales and problems and incentives will not be enough. Several months ago Autocar said that those incentives would disappear, that it was the end of large discounts?

At this very moment, the difference between the used price on the forecourt ( that's the selling price remember, not the trade or part-ex price ) and the discounted new price is pretty narrow. The amount of cars I've seen where a one year old example with under 10k on the clock being several thousand more expensive than buying brand new is unbelievable. Joe Public obviously not doing their homework. And whilst magazines say the industry is struggling, in my experience since lockdown ended, all the dealers I visited say business is way beyond their expectations. Two dealers now say they already met their sales targets FOR NEXT QUARTER let alone this quarter.

Somebody's making money!