We delve into the stories that are causing eyebrow-raising car stats for the UK in 2018
17 August 2018

One statistic jumped out of the UK automotive manufacturing figures for June. The number of cars built in the country for sale here, rather than for export, fell by 47%. Have we really fallen out of love with UK-built cars that much?

The answer is tied up in a rollercoaster half year for car sales in this country.

“I’ve been in the industry 26-27 years and I can’t recall a year with so much distortion,” said Daksh Gupta, chief executive of the Marshall Motor Group, which has 99 dealers in the UK. On the surface, UK car sales are holding up pretty well considering the disruptive forces of Brexit, a weak pound and the flight from diesel. The numbers for January-June this year were down 6.3% to 1.3 million, according to the Society of Motor Manufacturers and Traders (SMMT).

But behind the relative calm of the sales figures is turmoil. Diesel sales are tanking. In the first six months, the UK public bought nearly 200,000 fewer new diesel cars than in the same period last year, giving new diesel cars a market share of just 33%.

Some car makers are suffering more than others and the key ones have British manufacturing plants. Jaguar Land Rover’s first-half UK sales were down 9%, for which it largely blames the diesel decline; 85% of its UK sales are diesel.

Nissan’s sales were down 30%, with demand for the Qashqai SUV — the car with the highest manufacturing volume in the UK — falling 25%. Nothing mysterious about that; the Qashqai is getting too old to really compete in a red-hot segment, as is the Juke (also built in Sunderland) and the Range Rover Evoque.

The number of cars approaching the end of their model cycle is a big reason for the June manufacturing decline. “They’re facing tougher competition and the impact is big enough to offset the gains posted by newer UK-built cars such as the Range Rover Velar and Land Rover Discovery,” said Felipe Munoz, global analyst for market researcher JATO Dynamics.

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The fall in diesel sales is affecting all premium brands. “Every year I’ve been in the industry, the premium brands are always up. This is the first year they’ve underperformed,” said Gupta. While sales to private customers fell 4.9% overall in the first half, premium sales dropped 7.9%.

Sales of used diesels rise despite overall decline in second-hand car market

Prior to the Brexit vote, one analyst coined the phrase 'treasure island' to describe the richness of the UK to car manufacturers. A strong pound and buoyant economy meant the UK was targeted by car makers; Ford said in July that “most” of the $1.2 billion (£992 million) profit made in Europe in 2016 came from the UK.

The pound fell after the vote, so buyers’ money didn’t stretch quite as far at the dealers. “Now they’re not buying another top-of-the-range model. They’re buying middle of the range, coming down a model or migrating across brands,” Gupta said. Ford has said this “weaker channel mix”, along with the limp pound, will drag it to a loss across the whole of Europe in 2018.

The UK market hasn’t had the big crash in sales that has been predicted — something Gupta attributed to the number of cars bought on finance packages.

“If PCP wasn’t here in the UK, you’d see a much bigger decline in the marketplace,” he said. “Consumers are now used to renting their cars. It’s in their [household] budget.”

The final factor is the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) economy and emissions tests. Firms have until 31 August to sell off any cars measured under the old NEDC test, so car makers are reducing stocks of cars as they switch over. Nissan, for example, said output at Sunderland was down 7.3% in June as they “transition to a new range of engines” to meet the new regulations. Look out for deals this month as all brands scramble to sell off old stock.

Industry insiders expect the car market to remain in upheaval for a while yet. Asked when the UK market might return to normality, Gupta said: “It won’t be this year or the next. Probably not until 2020.” 

Nick Gibbs

Read more

New car registrations: first half of 2018 down 6.3%

UK car market hits record high in March

Sales of used diesels rise despite overall decline in second-hand car market

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Comments
17

jer

17 August 2018

Then you need to renew given high % sales would  expect that would drive volume. A fall rivate cash buyers i can relate to. I'm not sure what to replace my diesel with by it will do 25mpg instead of 37mpg so will cost a grand or so more to run per year  and I'm happy with it so I'll stick.

17 August 2018
Again not journalism, just a load of quotes from external sources, almost all of them one character called Gupta. That is not delving.

'Treasure Island' is a phrase that has been used since at least the mid 90s, not just before the Brexit vote.

And how silly to say the decline in sales would be so much bigger if it weren't for PCP. It wouldn't have grown in the first place without PCP.

And the endless and simplistic 'before the vote the pound was strong, after it weak' line is intellectually complacent. The Japanese have always had to deal with a currency that swings wildly in both directions.

17 August 2018

...how little the world's oldest car magazine knows about the UK car market.

"demand for the Qashqai... falling 25%".  Nope nope nope.

'Demand' is pretty much unchanged. Maybe it's dropped in line with the market, although actually the B and C SUV segments are the only ones up year-on-year, despite diesel. 

'Registrations' are down 25% as Nissan back out of the horrendously costly self-registered/discount fleet market.

Nissan didn't 'sell' 25% more Qashqais in past years. 25% more Qashqais were forced into the market, as Nissan chased a number at any cost. And Nissan are far from the only ones. Vauxhall, Ford, BMW... the list goes on and on and on.

In fact the only manufacturers who sell (register) more cars to the Retail channel (i.e. to an actual customer buying a car) than they do through the other channels are Lexus and Toyota. Every other manufacturer in the UK market is below half.

This is clearly not sustainable, and the bubble could be about to pop. Car makers may blame Brexit, the £, diesel, interest rate rises (which will come), but it's mostly down to them inflating their numbers for years by forcing registrations into the market.

17 August 2018
Ape Fight wrote:

'Registrations' are down 25% as Nissan back out of the horrendously costly self-registered/discount fleet market.

Nissan didn't 'sell' 25% more Qashqais in past years. 25% more Qashqais were forced into the market, as Nissan chased a number at any cost. And Nissan are far from the only ones. Vauxhall, Ford, BMW... the list goes on and on and on.

If what you say is true, where's the evidence that Nissan has 'backed out' of the fleet market? Otherwise it's simply your opinion, against a fact of falling registrations. 

17 August 2018

The SMMT data shows that the drop in registrations is in the self-registered/high cost fleet channel, which indicates that the actual demand is relatively level, and 'sales' have been inflated by self-reg activity previously.

289

17 August 2018

Absolutey agree Ape Fight.

Autocar repeatedly listens to so called Industry experts (actually individuals with a private agenda - ususlly to derail Brexit), and then faithfully prints the garbage without any research on their part. Lazy and worse- inaccurate reporting  Fake News?

Ford/Vauxhall are being hammered because PCP's allow buyers to afford premium brand product.

The pre-registration issue has been out of control for two decades, and it has taken this long to realise that this is neither sustainable, nor in the interests of the manufacturers. Lately almost all brands have been guilty of this and primarily this is because ther are almost a third of cars built which have no demand for them.  After all, who cares if the Focus is the top selling car this month (bouyed up by pre-reg), surely this is a turn-off rather than a good thing? unless you wish to be seen as following the herd?

Manufacturers resemble a drowning man flailing around to blame anyone  or thing (Brexit/Diesel/low pound/uncertainty), rather than themselves chasing market share which as it happens has absolutely no positive effect on desirability.

Finally, how can a weak pound effect sales of cars.....over 90% of new cars purchased today are through a PCP. PCP's havent increased in cost, you can still have a BMW/Audi/Mercedes-Benz for £299p.m. so there is actually no effect on the buyer. I havent heard a single friend/acquaintance who has been in the process of changing their car actually state " the value of the pound has put me off changing my car" 

Absolute tosh!

17 August 2018

It amazes me how little pride the Britsh have in their local car manufacturers.  The generation which won the war would be aghast that the largest seller of cars in the UK is the Volkswagen group.  Even frothing Brexit voters - who purport to be nationalists - will happily drive around in Mercedes or BMWs.  Personally I'm all for free trade, but still so many cars are assembled in the UK from Jaguar, Land Rover, Honda, Vauxhall, Nissan, Toyota and the luxuries - and this seems to mean nohing to the car buying population.  Ford and VW, neither of which assembles a single car in the UK, are the top 2 best selling brands.

17 August 2018
Come on, the generation that won the war is the one that fell for Japanese cars.

The reason why the remainers lost is that they think Brexiteers don't like foreign things or people. If you don't understand your opponent, you lose.

17 August 2018
eseaton wrote:

Come on, the generation that won the war is the one that fell for Japanese cars. The reason why the remainers lost is that they think Brexiteers don't like foreign things or people. If you don't understand your opponent, you lose.

The reason Remain lost was that Leave lied through its teeth, spread rumours, myths and half truths about the EU and then cheated by overspending.

XXXX just went POP.

17 August 2018
paddyb wrote:

It amazes me how little pride the Britsh have in their local car manufacturers.  The generation which won the war would be aghast that the largest seller of cars in the UK is the Volkswagen group.  Even frothing Brexit voters - who purport to be nationalists - will happily drive around in Mercedes or BMWs.  Personally I'm all for free trade, but still so many cars are assembled in the UK from Jaguar, Land Rover, Honda, Vauxhall, Nissan, Toyota and the luxuries - and this seems to mean nohing to the car buying population.  Ford and VW, neither of which assembles a single car in the UK, are the top 2 best selling brands.

Thats the way it should be - people should buy the cars they want, not buy them just cos theyre British or made in Britain.

XXXX just went POP.

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