Fleet News

Fleet News – August Monthly Fleet Focus from Cazana

Rupert Pontin Cazana

By Rupert Pontin, director at Cazana

The current market position is somewhat difficult to say the least as the country and the economy continue to battle against the politicians trying to manage the Brexit position.

The new car registration data for the month of August reflected another difficult month with volumes down by 1.6% against the same month last year and this now takes the year to date figure to 3.4% behind 2018.

August has also seen an increase in the number of cars that were pre-registered and this helped to keep the registration gap closer but the picture is challenging to say the least.

Latest market confidence indicators have not been encouraging and as noted in our last release Business Confidence had dropped to the lowest point it has been since January 2012 excluding one month in late 2016 and the prognosis is not good as demonstrated in the chart below:-

Data courtesy of Trading Economics

New vehicle registrations for the Fleet sector in August were down 3.5% on the same month in 2018 and this is a surprise for some as there was an expectation of the same level of business as last year at worst.

This is because of the number of businesses that have been delaying change for a while and the pure need to renew cars due to age and rising extension costs coupled with some great incentives coming from the OEM’s.

However, it would seem that the Brexit debacle dampened enthusiasm.

At the point or writing the country appears to be at a standstill with a legal ban on a no deal Brexit, prorogation deemed illegal, a general election prohibited and the likelihood that a reluctant and powerless prime minister will have to seek a further extension to leaving the EU.

All the while the economy continues to falter whilst political figures jostle for position and perhaps personal gain.

The clarity and direction gained a few weeks ago may not have been what may now seem best for the country, but it was firstly delivering what democracy voted for and secondly doing it within an agreed timescale allowing commerce to get a firm plan in place.

Looking to the used market and it is clear that the consumer is less comfortable than they have been for some time and nationwide expenditure on big ticket items has been affected.

Dealers are finding that digital marketing campaigns need to be highly effective and leads followed immediately to ensure engagement with interested buyers as soon as possible.

Closing the sale has become harder and the sale process is now taking longer than it was four and even eight weeks ago.

At this point whilst days to sale have increased for many cars the actual pricing has remained fairly consistent.

The chart below highlights retail pricing performance by fuel type for the ex-fleet vehicle profile at two years old:-

Data powered by cazana.com

The data in this chart is very relevant because it immediately shows that there has not been a big downward movement in retail prices.

Both the petrol and diesel propelled vehicles have followed a similar more stable market pattern than hybrid cars.

The key piece here is that despite the huge drop in demand for new diesel cars at this age and mileage the cost-conscious retail consumer is still happy to pay good money for a diesel car.

Pricing has dropped by 2 percentage points over the course of the year whilst petrol powered cars have dropped by 3 percentage points over the same period.

The difference between petrol and diesel powered cars is now just 2 percentage points.

However, the journey for the Hybrid powered cars has been somewhat different and although the trendline on this chart is positive it is important to recognise that pricing has been dropping since April this year.

The gap between a petrol-powered car and a hybrid is now resting at 5 percentage points which is much better than last year when the difference was 1 percentage point lower.

It is likely that the downward trend is as a result of increased volumes of hybrid cars coming off fleets and heading to the used market which is something Cazana highlighted may happen in insight releases earlier this year.

Therefore, in conclusion, the retail data shows that whilst the market is more difficult and wholesale remarketing is more challenging there is still some strength in used retail pricing.

This does vary by car and sometimes by sector hence the importance of seeking more granular market insight suitable to individual stock profiles.

Where a market shifts to becoming more challenging for the vendor there is no substitute for realtime insight and it is vital to remember that to understand what a trade price is and a reserve should be.

Then the vendor needs to understand what his wholesale customer can do with that individual car when it is put on the pitch for retail sale because the consumer drives the market.

Detail and speed of data coming to the market will help businesses to be able to truly understand the position of individual vehicles and using realtime unedited data science-based insight and pricing will continue to allow companies to maximise their ROI and give a much greater chance of commercial success.

Cazana is best placed to assist with focused analysis given the relevance of live retail data-driven solutions in today’s modern auto retailing market


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