SMMT: Comment of April’s car production numbers

Jon Lawes, Managing Director, Hitachi Capital Vehicle Solutions: “With lockdown measures in place for the entire month of April, the largest fall in car registrations in modern times doesn’t comes as a surprise. It’s important to note however the UK automotive sector has come through tough times before, and it’s encouraging to see manufacturers returning to production, whilst prioritising the safety and wellbeing of their employees.

“SMMT figures show a decline of 97% in new vehicle orders in April, with just 871 cars registered to private motorists in the month, compared to 67,783 in April 2019. While the economic uncertainty and restrictions on movement resulting from COVID-19 are far from easy to deal with, they can also be the opportunity for invention which if nothing else, is a glimpse of good news amongst the chaos.

“Consumer confidence may be uncertain for months to come, but the way consumers and drivers research new vehicles has increased to be more digitally led and post lockdown, this could change permanently. Social distancing will be a priority for long after lockdown has lifted, meaning footfall at dealerships could take longer to recover and car sales operations will need to continue to adapt to a more flexible, distant way of selling, delivering and collecting vehicles.

“The industry has been rightly focusing on the mobility needs of essential businesses and key workers, with vehicles being delivered to front line services and companies. Hitachi Capital Vehicle Solutions has sought to ensure mission critical and essential service vehicles can remain on the road, via a dedicated Operations Incident Team that carries out essential repairs and services to front line fleets across our network, which has remained consistently above 80% throughout lockdown. The focus has been to react to any fluidity within the supplier network – be that sourcing alternative garages or recruiting new suppliers.

“After seeing the impact that lockdown measures have had on air quality there may well also be an increase in the number of drivers considering to move to EVs sooner than they had originally anticipated, particularly commuters who may move away from public transport when lockdown ends but social distancing continues. Hitachi Capital recently published a survey that stated 26% of consumers would consider buying an EV after lockdown. This suggests a growing demand for electric vehicles and supports the SMMT April figures, with hybrid and battery electric vehicles rising to a temporary market share of (30.8%), and battery electric vehicles (BEVs) reporting a far smaller decrease of -9.7% year on year when compared with petrol and diesel cars.” Hitachi Capital Vehicle Solutions

Michael Woodward, UK automotive lead, Deloitte, said: “New car sales in April declined by 97 per cent compared to the same period last year. Only 4,000 cars were registered in the month, the lowest monthly level in over 70 years. In light of ongoing lockdown measures, these figures are not unexpected.

“Whilst UK lockdown restrictions are yet to be eased, when they are this could spark a recovery in sales. Early signs from China suggest some consumers have purchased either low-cost second hand vehicles or entry-level new cars to reduce public transport usage.

“The recovery in China was likely helped by the fact that more car purchases are made online. As restrictions in the UK are lifted, some consumers may prefer to purchase online, accelerating the need for dealers and manufacturers to digitise their interactions.

“For UK consumers, as showrooms begin to reopen it could also be a good time to find a bargain. Manufacturers have significant inventory of cars ready for sale, but may be struggling with their cash flow. As a result, big discounts may reappear on the forecourt in the short-term, not only to release inventory but also get the supply chain moving again.

“When factories reopen, efficiency and productivity is unlikely to return to pre-lockdown levels immediately, as businesses accommodate the need for social distancing measures in plants, for example.

“Significantly, whilst the rest of the market saw sales fall by over 90 per cent, battery electric vehicle sales only fell by 10 per cent in April, achieving a market share of 32 per cent.”

, James Hind, CEO of carwow (www.carwow.co.uk) said: “We’ve seen a significant drop with an over 30% drop in consumers browsing for new cars on carwow but nowhere near the 97% fall in registrations, showing that there are still lots of people in-market for a new car.

Hurting the registrations figure further has been many consumers cancelling orders made before the crisis, citing uncertainty around delivery times or wanting to reduce their monthly outgoings in case they lose their jobs.

Car manufacturers have already responded, with many offering bigger discounts and stronger finance rates than were available in March. Car dealers have furloughed the vast majority of their staff, but all are still handling online and telephone enquiries, with the majority offering delivery too.

At carwow in Germany we have seen a strong bounce-back since lockdown was lifted there and dealers were allowed to open. For many consumers buying a new car is driven by their past finance agreement coming to an end, and with 80%+ of new cars being bought on finance, most consumers are now locked into a regular buying cycle.

Consumers choosing to buy now will benefit from quick delivery times, as dealers and manufacturers have lots of cars in stock, however once that stock is sold, consumers may be in for a long wait due to factories being shut or operating at reduced capacity.”

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