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This week, the National Franchised Dealers Association (NFDA) met with a delegation of Chinese automotive professionals and Chinese Government representatives to discuss the issues currently affecting the UK car market and exchange views on the main trends facing the automotive industry in the UK and China.
The meeting, hosted by the NFDA, was attended by representatives from the Shangai Waigaoqiao Automobile Exchange Market Co. Ltd, a state-owned enterprise set up in 2000 to build Waigaoqiao Free Trade Zone automobile trade service platform.
Initially, Louise Wallis, NFDA Head of Business Management, gave an overview of NFDA’s main activities as the trade association representing franchised car and commercial vehicle retailers in the UK.
Louise showed how, with its 2.69 million new cars sold in 2016 and, in spite of the -5% predicted decline for 2017, the UK new car market remains the second largest new car market in the EU and one of the biggest globally. With an annual turnover of £181 billion and over 565,000 people employed in the sector, the UK automotive retail industry represents one of the pillars of the UK economy.
Following a discussion on the different realities that car retailers deal with in China and the UK, the meeting saw attendees analyse how the automotive industry has been evolving in the UK. This included the important role that mergers and acquisitions have played, with the consequent significant growth of the largest groups which now account for about 70% of the market. It was also pointed out how the average 6% turnover growth has been partly offset by significant costs such as compliance, tax and manufacturers standards, which represent the reason why dealers have recently seen fairly slim margins.
One of the main issues which attracted attendees’ attention was the relationship between manufacturers and UK dealers. As the NFDA Dealer Attitude Survey shows, following its peak in 2012, the general health of the dealer/manufacturer relationship has seen a steady decrease over the past few years. This has been caused primarily by a slight decline in dealer profits alongside the need for them to invest more. This did not seem to represent a worry for Chinese car dealers.
Discussions then moved onto wider issues such as Brexit, GDPR, consumer credit, diesel and clean air policy and, finally, alternative fuel vehicles. Louise Wallis illustrated the work that the NFDA has been doing to support its members throughout this challenging period. Attendees showed a particular interest in UK’s popular forms of car finance, PCP and PCH.
You Yongsheng, Director of the Foreign Trade Development Department of Shanghai Municipal Commission of Commerce, gave an insightful update on the Chinese new car market and the crucial role that the import/export activity plays within their economy. He said that so far this year 34,000 new vehicles have already been imported through their platform and they expect to import a total of 40,000 by the end of 2017. The most popular brands are Jaguar, Land Rover, Bentley and Aston Martin, with the first two accounting for the majority of imports from the UK.
China saw 28 million new cars sold last year and, in 2017, the market is expected to see a 10% increase. Interestingly, the Chinese market was growing by 20% four years ago, but as the economy started to weaken, also the new car market experienced some signs of stabilisation.
Overall, the meeting was an excellent opportunity to compare and examine challenges and opportunities that the automotive industry is facing in UK and China as well as to raise the profile of the UK retail motor sector internationally.