AUTOMOTIVE AUTUMN/WINTER 2018 - Colliers International
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AUTUMN/WINTER 2018 AUTOMOTIVE INSIGHT
AUTOMOTIVE INSIGHT 2018
LOOKING
AHE AD
D EA LE R S H I PS & CHA N G I N G CON SUM E R HABITS
The retail sector has suffered a raft of CVAs and
administrations during 2018 and one of several
contributing factors has been the continued growth of
online shopping and the change in consumer habits.
79 % OF CON S UME RS
BOUGHT THE IR
LAST V EHI CLE
AT A DEA LERSH IP 1
Source: 1 Close Brothers Motor Finance 2018
2Given the retail element of a car Clearly, there is substantial scope for
dealership, it has been suggested growth, but given that a car purchase is
that they could suffer a similar fate as such a major financial commitment, the
consumer buying patterns change and comfort factor of a dealership still counts
the number of dealerships required for a great deal.
is reduced. Manufacturers such as
The continuing popularity of dealerships
Hyundai, Peugeot and Volvo are
is grounded in the positive experience
embracing the technology and selling
that customers receive, including
vehicles online, with this trend only being
detailed product knowledge, “special
likely to expand. Other manufacturers
pricing deals’’ and “extras” that staff are
are taking units in dominant shopping
able to add on. These elements are not
centers to exploit a new sales channel.
available when purchasing a vehicle
These include the likes of Seat, VW and
online, which gives dealerships an
JLR.
advantage.
However, to date, dealerships appear
However, dealerships will not be able
to be resilient to these technological
to continue unchanged. Dealers will
advancements. Recent studies have
need to make sure that they are enticing
found that although use of the internet is
customers away from competing online
becoming popular for vehicle searches,
platforms. This is already being seen in
it is being used as a means to research
newly constructed dealerships that are
specific brands and vehicles, rather than
offering a new customer experience,
for actual purchase.
with extensive showrooms displaying
A survey found that 57% of motorists a comprehensive product range, lavish
used the internet to help inform them customer waiting areas and with some
in their choice of vehicle1. The study also even featuring nurseries, cafés, gyms and
found that 79% of consumers bought hairdressers. Aftersales are also evolving,
their last vehicle at a dealership, in with drive in services allowing for easy
comparison to just 2% of consumers drop-offs and collection and online
who purchased a vehicle online1. booking systems for MOT and servicing.
3N EW & U SED CAR SA LE S
2017-2018
New Car Sales 2017 New Car Sales 2018 Used Car Sales 2017 Used Car Sales 2018
800,000
Y/Y
August
Sales
+23%
0
Jan Feb Mar Apr May Jun Jul Aug
Source: SMMT
Note: 23% year-on-year August uplift due to “pre-registering” to beat the new WLTP emissions regime.
EV & A FV R EG ISTRATIONS
AUGUST 2018 VS 2017
AUGUST 2018 VS 2017 Aug 2018 Aug 2017
Diesel-Electric
HYBRID
Petrol-Electric +57%
Other Electric +167%
PLUG-IN
Pure Electric +38%
0 500 1,000 1,500 2,000 2,500 3,000 3,500
REGISTRATIONS
YTD AUGUST
YTD AUGUST YTD 2018 YTD 2017
Diesel-Electric
HYBRID
Petrol-Electric +25%
Other Electric +47%
PLUG-IN
Pure Electric -1%
0 10,000 20,000 30,000 40,000 50,000
REGISTRATIONS
Source: SMMT
4U S E D CAR SALES
2014-2018
2014
2015
2016
2017
2018
7m 7.2m 7.4m 7.6m 7.8m 8m 8.2m 8.4m
Source: SMMT
Note: 2018 forecasted
R EG I STRATI O N S BY FUEL TYPE
2015-2018
Diesel Petrol AFV
28% 52% 290%
2.4% 3.1% 5.2% %
8.0
29
.7%
48.9%
39.7%
47.2%
2015 2016 2017 2018
55.1%
.7%
.7%
48
49
%
.3
62
Source: SMMT
5AUTOMOTIVE INSIGHT 2018
OUR
PREDICTIONS
‘ H U B A N D S POKE’ DEA LER S HI PS
The future will see manufacturers We can anticipate successful dealers
continuing to embrace and progress operating a multi-channel approach,
electric and autonomous vehicles. incorporating dealerships (hub) /
Dealers, on the other hand, will instead aftersales facilities (spoke), retail units in
be evolving to remain relevant to their high footfall locations and a user friendly
customers and learning how to utilise online presence. Both the customer
technology to drive sales and profits. and the manufacturer want to have an
experience as part of the sales process,
Infrastructure investment will be
which is not surprising given the quality,
paramount to a dealer’s success. We
complexity of the in-built technology
have already started to see the future
and price of the end product. It is also
landscape emerging, with the new state
important to understand that the sales
of the art bespoke ‘hub and spoke’
element is only part of the function of a
dealerships. Examples of this can be
dealership, with service and parts being
seen at the BMW/MINI dealership in
vital to profitability.
Cheltenham, operated by Cotswold,
and the new LSH Mercedes-Benz While it is clear that there will be fewer
development in Stockport. These dealerships moving forward, we believe
bespoke flagship operations will ensure that the dealership, especially in the ‘hub
dealerships stay relevant within the and spoke’ format, will thrive and have
changing landscape. many years of longevity.
6TO P 5 DEAL S
2018 YTD
FIAT,
LIVERPOOL 6.25%
DECIDEBLOOM T/A STONEACRE
AUD I,
C ARDIFF 6.04%
VW GROUP LIMITED
AUD I,
HUDDERSFIELD & DONCASTER 6.03%
VW GROUP LIMITED
VOL KSWAG E N,
K NARESBOROUGH 5.55%
VW GROUP LIMITED
VOLVO,
M ILTON KEYNES 5.46%
MARSHALLS
Source: Colliers International, Property Data
7W H AT WI L L YOUR NEX T CAR PURCHASE B E ?
BY FUEL TYPE
41% 12% 13% 1% 30%
PETROL DIESEL PLUG-IN PURE UNSURE
HYBRID ELECTRIC
Source: NFDA - Spring 2018
PCP SA LE S EXPECTED TO LEVEL OU T
2008-2018
Other PoS Finance (LHS) £bn PCP (LHS) £bn Penetration rate % (RHS)
£20bn 100%
£0 0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f
Source: FLA, Colliers International
Note: The finance penetration rate is the proportion of private new
car sales which are financed at the point of sale by FLA members.
8Y I E L D RA N G E
DEALER VS MANUFACTURER YIELDS YTD 2018
8%
7% 6.85% 6.50%
5.46% 5.55%
6%
5%
4%
3%
2% HIGHEST YIELDS
LOWEST YIELDS
1%
0%
DEALER MANUFACTURER
Source: Colliers International, Property Data
+290 % I N C RE ASE IN ANNUAL
A FV REGIST RATIO NS
F ROM AU GUST 2 015
TO AUGU ST 2 018
9AUTOMOTIVE INSIGHT 2018
ELECTRIC
VEH ICLES
CON T I N U I N G UN C ERTA I N TY
In our last Automotive Viewpoint, The Government has great ambitions
we touched on the current issues to remove polluting petrol and diesel-
with electric vehicles, such as the powered vehicles from the roads, but
lack of infrastructure, ‘range anxiety’ there are major hurdles to clear. Within
and potential lack of energy supply. its control is infrastructure investment.
Consumers’ lack of commitment to
The 2018 Autumn Budget needs to
electric vehicles is underlined in the
include support and investment into the
NFDA Consumer Attitude Survey (Spring
national energy infrastructure platform
2018), which revealed that 30% of
to ensure the long term stable supply
respondents did not know which type of
of energy and electricity meets the
fuelled car they would buy next, with just
demands of the future, as most forms of
1% stating they would consider a pure
public and private transport are planned
electric vehicle as their next purchase.
to be electric.
101 % OF R ES PON DEN TS
I N TEN D TO BUY A
P UR E ELECTR I C FOR
THEI R N EX T CA R
However, there are issues way beyond Battery technology needs to advance
government control that might stem rapidly. If nothing changes, demand will
the growth of electric vehicle usage. The outstrip supply – cobalt by 2030 and
current range of lithium-ion batteries nickel by 20372.
used in electric vehicles rely on cobalt
While millions of dollars are being
and nickel as key components. Supplies
invested, several technological
are limited, as it is expensive to extract
breakthroughs are necessary to secure
and much of it is found in the less
the future of affordable battery-powered
accessible (and less stable) parts of the
transport.
world, e.g. the Democratic Republic of
the Congo, which supplied 56% of the Encouragingly, the UK government has
world’s mined cobalt in 2015. just annouced (September) new funding
of £106m in support of low and zero-
Demand has sent prices rocketing in the
emission vehicles, and new battery and
last two years (Cobalt has moved from
hydrogen technology.
$22 to $81 per kilogram), which is having
an impact on vehicle prices. Watch this space!
Source: 2 Ten years left to redesign lithium-ion batteries – Kostiantyn Turcheniuk, Nature, Vol 559, 26th July 2018
11AUTOMOTIVE & ROADSIDE
JOHN ROBERTS
+44 121 265 7553
john.roberts@colliers.com
SKYE ANDREWS
+44 121 265 7510
skye.andrews@colliers.com
RESEARCH & FORECASTING
MARK CHARLTON
+44 20 7487 1720
mark.charlton@colliers.com
Colliers International,
50 George Street, London W1U 7GA
colliers.com/ukautomotive
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