Rupert Pontin, director of valuations at Cazana, looks at the SMMT’s figures for September, and finds that the quick-turn sub-12-month sector’s retail values continue to strengthen, although customers are becoming harder to find.
New car registration data released by the SMMT for September 2018 saw a quantum shift from the August return that saw such an uplift in registrations.
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This was, in the majority of cases, due to the introduction of the new WLTP and the need to clear the stocks of old, less environmentally friendly cars.
Registrations this month were down by 20.5%, reflecting the impact of selling cars that were not going to be able to be sold under the new regulations.
This has taken the year-to-date registration volume to 7.5% below the figure achieved by the end of September last year, which is on track with the Cazana full-year expectation of a market decline of 6.5% over 2017.
Looking at propulsion type, registrations for diesel cars reduced by a stunning 42.5%, lowering market shares for September 2018 to just 29%, which is 10% less than the same period last year.
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By GlobalDataConversely – and unsurprisingly – petrol cars took 64.1% of the market share with registration volumes down just 6.7%.
This left AFVs with a 6.9% market share, which is an increase of 3.9%, representing the continued shift in customer demand to what is perceived to be a better fuel type.
The September registration volume has been decimated by the lack of supply of new cars rather than a significant drop in consumer demand. With manufacturers desperately trying to finish WLTP testing of their new product, there has been quite a delay in the production capacity for most cars.
This is particularly evident in the case of diesel products, which have been under so much scrutiny in recent months.
However, there are some who are citing that market demand has also been significantly affected by consumer confidence over Brexit, and although this has a part to play, an element of poor planning on testing and production must also be partly to blame.
Therefore, it would appear that the new car market has begun to balance out from the disruption experienced in recent months, and the remaining quarter of 2018 will be an interesting period of trading.
With so many changes to product supply and to the stated emissions, there is a high level of confusion in the market, particularly for business users – whether they be fleet owners or company car drivers.
While the SMMT shows that market share between private sales and fleet sales has varied by just 1% in comparison to last year, there is quite a story behind how these figures have been achieved.
However, the used market has been a different proposition, and where consumer confidence has been lower, this has resulted in buyers seeking slightly cheaper cars on the basis they would like to save money.
There is little doubt that this has been good news for the OEMs that have pre-registered so many cars, as the problem has been shifted to a lower price point; thus far, it would seem that consumer demand has just about kept up with supply.
With quieter months ahead, though, it may become a challenge for used car sites to ensure that sales meet budget aspirations.
It is possible that, to keep stock moving, there may be a reduction in retail pricing at the expense of margin as consumers begin to focus on autumn holiday time and the festive season rather than buying cars.
Although these are usual seasonal factors considered and budgeted for by most businesses, with such change in the market this year it may prove to be a period of discomfort for some as competition increases.
The chart displays an interesting view of the market. Given the increase in pre-registrations of late, the trend of improving prices of quickturn cars in recent months was surprising as volumes had increased.
However, following a month of drastically reduced new car sales, there is now an irrefutable reason for retail prices in this sector to have risen. This trend may continue during the last quarter.
Stability appears to remain in the ex-PCP sector despite volumes increasing further, but there is more to be revealed in the data on closer investigation.
The ex-fleet sector has recorded an increase in retail pricing over the same period last year, which is positive news, and it is likely to be down to the fact that WLTP has caused distress in the new fleet market – hence affecting the supply of defleeted products to the used market.
Alternatively, this could reflect better consumer retail demand as buyers seek to save money as a result of Brexit concerns.
