Why not all dealers are happy with their March new car targets

Dealers in the UK are under pressure to register even more new cars this March, compared with the same month last year. CAP's consumer and retail expert Philip Nothard tells Mike Hind what dealers are saying about their targets - and discusses the impact of pressure to register new cars on the rest of the market. Length: 25.41

It’s a crucial time during the year for both dealers and manufacturers; as we approach the closing days of the biggest month throughout the year and the first quarter of 2015. Raising the ‘taboo’ question around the topical subject of Pre-Registration vehicles and their wider impact upon the used car market. This taxation option opens both opportunities and risks alike, dependent on what sector you operate within – larger groups have the potential for additional bonuses if strictly managed and viewed as a short-term necessity to a desired result; whereas the smaller independents receive added pressure on financial investment and in many cases are mortgaging his future new-car sales.

  • A crucial month throughout the year and pivotal point in the first quarter to set the year – will 2.6m be a realistic result??
  • Reports of the UK 36th consecutive month of growth for registrations – does it reflect demand? 
  • Year-to-date private registrations are -2.6% down, along with a reduction of -12.8% in business – both being held up by a growth in Fleet of +19.7%  (+6.7% growth in January)
  • The sentiment from the dealer network, is that the 2015 targets are demanding – many ‘agreed to disagree’ so they could get on with the day job.
  • UK remains an attractive proposition for the manufacturers – as the euro to pound started at 1.2 in 2014, and we’ve recently hit a seven year high of 1.4.
  • Risks and concerns of creating a ‘false’ used car market – pre registering cars that are ‘sat in fields’ which may not be in consumer demand or over produced.
  • Lead times continue to stretch.
  • Incentives continue to drive consumers towards single models and through PCP funding.
  • Recent article from ASE raising the concerns regarding the impact of pre-registrations in the used car market – direct impact on profitability.
  • Dealers turning to used cars as the income line.
  • A sector of consumers who look for the pre-registered stock and believe that the deal out-ways new.
  • Dealers raising concerns that the continual rise in consumer incentives, challenges how they manage their demonstrator fleet – cheaper to buy retail than run company cars. 
  • Heavy pressure from manufacturers to run unrealistic ratios of demos vs annual targets – annual targets in some cases based on a fictitious market share – due to tactical registrations.
  • Reality is – they will all end up as used cars and generate add-on and after sales opportunities though the vehicle parc.