CAP MARKET SURVEY – Industry on track for a record September. But what lies beyond?Back
A recent SMMT statement indicated a ‘steady’ increase in the new car market, and the same could be said for the used retail sector, as all seems reasonably calm – but what’s on the horizon?
With both footfall activity and consumer demand showing signs of improvement, and more importantly, the continued pressure on retained margins seeing its first month of easing since April this year – I’m sure we all hope this will prove to be a familiar trend.
With a ‘record month’ expected for September, we have a number of factors to consider in the mix. Potential ‘secret’ pre-registrations are seeing substantial activity, along with an increase in volumes of used cars generated from both the fleet renewals, and the expected proliferation in part-exchange stock from the ceaseless support on offer to new-car buyers from the manufacturers.
What impact will this have on margins? Much of this activity will be dependent on both the supply of new cars arriving in time and at what point in September the bulk of this happens – as we know, most months have an element of the ‘funnel effect’, as the last minute deliveries and registration action occurs.
Overall, the sentiment illustrated in this month surveys support a ‘stable’ market and much of the feedback throughout has been positive but with most keeping a watchful and wary eye on what’s round the corner for the remainder of 2015.
Dealer Survey Summary:
August shows just short of 60% of those surveyed indicating that PhysicalFootfall has remained as good as, or even better than they experienced throughout July. Those respondents indicating a decline, dropped from 48% in July to 41% this month; whereas those reporting an increase, has continued to rise since the lowest point in May.
Dissimilar to the physical footfall, the On–lineActivity is slightly more erratic month-on-month, with just below half experiencing very little or no change since July’s activity. However, contrary to the physical, on-line has seen a steady decline since June of those respondents reporting an increase, as it drops again, from 23% to 16%.
The Retained Margin’s compression that’s been reported over recent months, is showing signs of easing slightly; however, this would need to be trended for longer – with just under half (46%) indicating little or no change since July and those reporting they’ve squeezed has dropped from 56% in July to 44% this month. The positive sign is that those respondents indicating an improvement, has risen marginally from 7% last month to 10%.
From the dealers’ perspective, the StockAvailability has been reported as steady – with in excess of half of those responding indicating no change since July. What’s clear from this month’s analysis of the survey, is that those reporting availability has deteriorated rose from 21% to 31% and those reporting an improvement dropped significantly from 35% down to 12%? It will certainly be interesting to observe the impact of September on this.
This month we have replaced the quality of stock with something more topical currently – FinancePenetration. As we continue to monitor this trend, we will observe any impact from changes within this sector, in terms of PCP on New and Used and adjustments to both rate and consumer borrowing. This month indicates that the majority of those responding have experienced little or no change since July.
Those reporting that current TradeValues are reflective of the market has seen a slight change this month, with those stating that they reflect the market increasing from 40% in June to 52%; whereas, those who indicating they were too high last month has dropped by the same percentage.
As with the on-line activity, the Retail&ConsumerDemand has been reasonably erratic throughout the year; however, those indicating an improvement or no change since July has risen slightly.
This month we asked Should ‘Tactical/Self-registrations’ be made legally transparent? It certainly created some very useful and topical debates around this sensitive subject; with just below half agreeing the answer should be ‘yes’. Those who commented on this subject, made some very interesting points – these are just a couple, ‘’The market is skewed by these pre-registered cars suggesting that the overall market is performing better than it really is’’ and ‘’Should be so that we really know actual sales compared to actual registrations’’. In reality, the transparency may not change the exercise, which many feel is positive for the industry; however, it could highlight the ‘truth’ behind the numbers and market opportunity.