AUTUMN/WINTER 2018 AUTOMOTIVE INSIGHT

Transcription

1 AUTUMN/WINTER 2018 AUTOMOTIVE INSIGHT

2 AUTOMOTIVE INSIGHT 2018 LOOKING AHEAD DEALERSHIPS & CHANGING CONSUMER 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 % AT A DEALERSHIP 1 OF CONSUMERS BOUGHT THEIR LAST VEHICLE Source: 1 Close Brothers Motor Finance

3 Given the retail element of a car dealership, it has been suggested that they could suffer a similar fate as consumer buying patterns change and the number of dealerships required is reduced. Manufacturers such as Hyundai, Peugeot and Volvo are embracing the technology and selling vehicles online, with this trend only being likely to expand. Other manufacturers are taking units in dominant shopping centers to exploit a new sales channel. These include the likes of Seat, VW and JLR. However, to date, dealerships appear to be resilient to these technological advancements. Recent studies have found that although use of the internet is becoming popular for vehicle searches, it is being used as a means to research specific brands and vehicles, rather than for actual purchase. A survey found that 57% of motorists used the internet to help inform them in their choice of vehicle 1. The study also found that 79% of consumers bought their last vehicle at a dealership, in comparison to just 2% of consumers who purchased a vehicle online 1. Clearly, there is substantial scope for growth, but given that a car purchase is such a major financial commitment, the comfort factor of a dealership still counts for a great deal. The continuing popularity of dealerships is grounded in the positive experience that customers receive, including detailed product knowledge, special pricing deals and extras that staff are able to add on. These elements are not available when purchasing a vehicle online, which gives dealerships an advantage. However, dealerships will not be able to continue unchanged. Dealers will need to make sure that they are enticing customers away from competing online platforms. This is already being seen in newly constructed dealerships that are offering a new customer experience, with extensive showrooms displaying a comprehensive product range, lavish customer waiting areas and with some even featuring nurseries, cafés, gyms and hairdressers. Aftersales are also evolving, with drive in services allowing for easy drop-offs and collection and online booking systems for MOT and servicing. 3

4 NEW & USED CAR SALES ,000 New Car Sales 2017 New Car Sales 2018 Used Car Sales 2017 Used Car Sales 2018 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 & AFV REGISTRATIONS AUGUST 2018 VS 2017 Aug 2018 Aug 2017 HYBRID Diesel-Electric Petrol-Electric +57% PLUG-IN Other Electric Pure Electric +38% +167% ,000 1,500 2,000 2,500 3,000 3,500 REGISTRATIONS YTD AUGUST YTD 2018 YTD 2017 HYBRID Diesel-Electric Petrol-Electric +25% PLUG-IN Other Electric Pure Electric -1% +47% 0 10,000 20,000 30,000 40,000 50,000 REGISTRATIONS Source: SMMT 4

5 USED CAR SALES m 7.2m 7.4m 7.6m 7.8m 8m 8.2m 8.4m Source: SMMT Note: 2018 forecasted REGISTRATIONS BY FUEL TYPE Diesel 28% Petrol 52% AFV 290% 2.4% 3.1% 5.2% 8.0% 29.7% 48.7% % 49.7% % 55.1% % % Source: SMMT 5

6 AUTOMOTIVE INSIGHT 2018 OUR PREDICTIONS HUB AND SPOKE DEALERSHIPS The future will see manufacturers continuing to embrace and progress electric and autonomous vehicles. Dealers, on the other hand, will instead be evolving to remain relevant to their customers and learning how to utilise technology to drive sales and profits. Infrastructure investment will be paramount to a dealer s success. We have already started to see the future landscape emerging, with the new state of the art bespoke hub and spoke dealerships. Examples of this can be seen at the BMW/MINI dealership in Cheltenham, operated by Cotswold, and the new LSH Mercedes-Benz development in Stockport. These bespoke flagship operations will ensure dealerships stay relevant within the changing landscape. We can anticipate successful dealers operating a multi-channel approach, incorporating dealerships (hub) / aftersales facilities (spoke), retail units in high footfall locations and a user friendly online presence. Both the customer and the manufacturer want to have an experience as part of the sales process, which is not surprising given the quality, complexity of the in-built technology and price of the end product. It is also important to understand that the sales element is only part of the function of a dealership, with service and parts being vital to profitability. While it is clear that there will be fewer dealerships moving forward, we believe that the dealership, especially in the hub and spoke format, will thrive and have many years of longevity. 6

7 TOP 5 DEALS 2018 YTD FIAT, LIVERPOOL DECIDEBLOOM T/A STONEACRE 6.25% AUDI, CARDIFF VW GROUP LIMITED 6.04% AUDI, HUDDERSFIELD & DONCASTER VW GROUP LIMITED 6.03% VOLKSWAGEN, KNARESBOROUGH VW GROUP LIMITED 5.55% VOLVO, MILTON KEYNES MARSHALLS 5.46% Source: Colliers International, Property Data 7

8 WHAT WILL YOUR NEXT CAR PURCHASE BE? BY FUEL TYPE 41% 12% 13% 1% 30% PETROL DIESEL PLUG-IN HYBRID PURE ELECTRIC UNSURE Source: NFDA - Spring 2018 PCP SALES EXPECTED TO LEVEL OUT bn Other PoS Finance (LHS) bn PCP (LHS) bn Penetration rate % (RHS) 100% 0 0% f 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. 8

9 YIELD RANGE DEALER VS MANUFACTURER YIELDS YTD % 6.85% 6.50% 6% 5.46% 5.55% 5% 4% 3% 2% HIGHEST YIELDS 1% LOWEST YIELDS 0% DEALER MANUFACTURER Source: Colliers International, Property Data +290 % TO AUGUST 2018 INCREASE IN ANNUAL AFV REGISTRATIONS FROM AUGUST

10 AUTOMOTIVE INSIGHT 2018 ELECTRIC VEHICLES CONTINUING UNCERTAINTY In our last Automotive Viewpoint, we touched on the current issues with electric vehicles, such as the lack of infrastructure, range anxiety and potential lack of energy supply. Consumers lack of commitment to electric vehicles is underlined in the NFDA Consumer Attitude Survey (Spring 2018), which revealed that 30% of respondents did not know which type of fuelled car they would buy next, with just 1% stating they would consider a pure electric vehicle as their next purchase. The Government has great ambitions to remove polluting petrol and dieselpowered vehicles from the roads, but there are major hurdles to clear. Within its control is infrastructure investment. The 2018 Autumn Budget needs to include support and investment into the national energy infrastructure platform to ensure the long term stable supply of energy and electricity meets the demands of the future, as most forms of public and private transport are planned to be electric. 10

11 1 % 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 Battery technology needs to advance rapidly. If nothing changes, demand will outstrip supply cobalt by 2030 and nickel by However, there are issues way beyond government control that might stem the growth of electric vehicle usage. The current range of lithium-ion batteries used in electric vehicles rely on cobalt and nickel as key components. Supplies are limited, as it is expensive to extract and much of it is found in the less accessible (and less stable) parts of the world, e.g. the Democratic Republic of the Congo, which supplied 56% of the world s mined cobalt in While millions of dollars are being invested, several technological breakthroughs are necessary to secure the future of affordable battery-powered transport. Encouragingly, the UK government has just annouced (September) new funding of 106m in support of low and zeroemission vehicles, and new battery and hydrogen technology. Demand has sent prices rocketing in the last two years (Cobalt has moved from $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

12 AUTOMOTIVE & ROADSIDE JOHN ROBERTS SKYE ANDREWS RESEARCH & FORECASTING MARK CHARLTON Colliers International, 50 George Street, London W1U 7GA colliers.com/ukautomotive Colliers International Group Inc. (NASDAQ:CIGI) (TSX:CIGI) is a top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 12,000 professionals. Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services platform, has more than $20 billion of assets under management from the world s most respected institutional real estate investors. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice to accelerate the success of its clients. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers is ranked the number one property manager in the world by Commercial Property Executive for two years in a row. Colliers is led by an experienced leadership team with significant equity ownership and a proven record of delivering more than 20% annualized returns for shareholders, over more than 20 years.