Higher demand in fleet helped new registrations to increase overall but private deals dropped significantly in second half of the year
Some might have been surprised by new car registrations in 2016 ending the year higher than in 2015, especially as the second half of the year brought increasing uncertainty for consumers.
The markets stabilised in the weeks after the referendum when the UK voted to leave the EU, as we realised the act of leaving was still at some yet-to-be-determined point in the years ahead. But sterling did not recover to pre-referendum values and its weakness had already made consumers’ summer holidays abroad more expensive.
This, and questions over the impact of the UK’s renegotiated relationship with the EU, would no doubt have led many consumers to defer some large financial commitments. While some private buyers stayed away from showrooms in the second half of last year, it’s also important perhaps to put it into context of the incentives available.
Private registrations were down 1.2% for the full year, but fell by 3.6% in Q3 and 4.2% in Q4. These figures are indicative of a more serious downturn in consumer demand. And some of the Personal Contract Purchase (PCP) deals around last year, with low or zero interest on finance, combined with large contributions to the deposit from the manufacturer, meant new cars would have been more attractive to private buyers than they had been for many years.
Without growth in fleet, the new car market would have ended 2016 in a far more precarious looking position. And it’s good to report that the fleet market’s growth in 2016 was seemingly through higher demand.
Both daily rental and Motability were down compared with 2015, while other fleet channels grew. True fleet grew by almost 6.6%, and intense competition between the premium brands continued until the year’s end.
BMW might have had the highest share of the daily rental market of all the premium brands in 2016, but it also had a healthy 4,000-plus-unit lead over Mercedes-Benz.
At the end of Q3, Mercedes-Benz was the true fleet leader, edging ahead of BMW, and cementing its strong performance for the year, with a 16.2% increase in this channel. But Mercedes-Benz also grew in true fleet in 2016 and posted an 18.1% increase over the 12 months.
Audi is a distant fifth in true fleet, behind Volkswagen and Vauxhall, who both posted declines in these channels last year. It put more cars into daily rental in 2016, but still a fraction of the number of rental cars supplied by Mercedes-Benz and BMW.
A revised Volkswagen Golf due soon, as well as a new ‘four-door coupé’ to replace the CC and sit above the Passat in the range, as well as a seven-seat version of the Tiguan this summer, could give Volkswagen fresh impetus in true fleet during 2017.
Perhaps the star performer in true fleet in 2016 was Kia, with a 51% increase on 2015. With a total of 31,750 units, it might not be close to the biggest players in true fleet, but in 2016 Kia overtook Hyundai and Toyota.
Hyundai’s contract hire share was stable but supply to end user fleets fell, while the introduction of a new Kia Sportage early in 2016 is evident in Kia’s substantial growth.
Hyundai appears to be heading in the opposite direction. In recent years, true fleet sales have posted healthy growth, and while it has always been a big supplier to daily rental during this time, its rental volume in 2016 was almost 18% of its total sales.
It’s also true that Hyundai has posted record sales in the UK in successive years in the same period. Perhaps a new i30 this spring will make its range more appealing to end user fleets, and make supplying daily rental in such high numbers less appealing.
A few years ago, Vauxhall stated its intention to scale back its rental volume as part of an attempt to improve the residual values of its cars. It has become clear that this is no longer a priority, with an increase of 5.3% in its rental volume in 2016, reaching almost 52,000 cars and more than 20% of the brand’s total volume in the UK.
Of course, it’s a challenge and to some extent a matter of pride to maintain the UK as the largest market for General Motors in Europe. No doubt that prize affords it a greater degree of influence in Detroit than it might otherwise have.
Both Vauxhall’s and Ford’s total registrations declined last year by a similar percentage, but Ford reduced its rental volume by more than 7,000 units, taking almost 12% of its total volume – substantially lower than the rental proportion of Vauxhall’s registrations.
With Vauxhall planning to launch two new SUVs in 2017, the compact Crossland X and larger Grandland X, it should be able to appeal more to user-choosers and boost its share of contract hire.
Captive fleet registrations increased enormously in 2016, fuelling speculation that manufacturer employee scheme incentives could have been yet another outlet for excess capacity at European factories. With more than 116,000 captive units registered, it’s an increase of more than 30% over 2015.
BMW’s captive fleet volume rose by more than two-thirds compared with 2015, while Mini’s more than doubled. A handful of manufacturer’s captive fleet numbers increased from a few hundred to a few thousand, including Honda and Hyundai, while others such as Toyota, Vauxhall, Volkswagen and more grew in this channel compared with the previous year.
The captive fleet total was up by more than 27,000 units compared with 2015 – the increase being equivalent to more than 1% of the total new car market last year, or around half the amount the market grew by.
Industry bosses expect the new car market to fall in 2017, with sterling’s weakness against other currencies pushing up the prices of imports. Manufacturers might resist the need to raise list prices for as long as possible, but transaction prices will no doubt increase for fleets, while private buyers will probably notice smaller and fewer contributions toward PCP deposits or discounts on new cars.
Uncertainty over new VED rules in April, which will raise annual road tax for an estimated 70% of consumers, could also give private buyers second thoughts over their choices in 2017.
There are also many self-registered cars around that private buyers might find more tempting and better value than ordering their preferred specification.
A few years ago, with demand for new cars in mainland Europe depressed compared with the UK, Britain became an ideal outlet for excess factory capacity elsewhere. Now demand for new cars in the rest of Europe has recovered and is growing, the tide is turning.
These new circumstances and market conditions suggest fleet registrations will dominate the numbers in 2017, but private sales will be too low for fleets and businesses to carry the new car market as they did in the second half of 2016, so a decline should be clearly visible in the total registration.
Van sales up in 2016 with substantial growth for some
If van sales are one of the earliest indicators of the health of the economy, then 2016 was a pretty good year overall.
The LCV market was up by 1% compared with 2015, but a few segments posted substantial growth – some of it lifecycle-dependent.
Although it’s 18 months since the introduction of the latest Mitsubishi L200, 2016 witnessed the introduction of single cab and ‘club cab’ variants.
The company had ordered stock in these variants of the previous L200 but had sold most of them in 2015. The addition of these more work-focused models was crucial in a year that also saw a new Nissan Navara and Toyota Hilux on the market.
A facelifted Volkswagen Amarok, equipped with a new V6 diesel engine and with improved towing capacity, added appeal to this double-cab-only truck late in 2016.
Although small in volume so far, Fiat’s pick-up truck, the Fullback, essentially a badge-engineered L200 available only as a double-cab, will no doubt add more units in 2017, while forthcoming trucks from Renault and Mercedes-Benz, both based on the Nissan Navara, will create an unprecedented choice of brands in the sector.
Vauxhall’s performance in fleet was 10% lower than in 2015, with the Combo and Vivaro both falling, with the latter also down in the retail market. This year, new variants are expected in these ranges that could help recover some of the lost ground.
Ford posted growth of 13.3% in fleet, with strong performances from its medium and large vans, and particularly the Ranger with fleet registrations of more than 10,000, making it the number one pick-up truck in fleet.