Motor Trader The award-winning and longest running UK magazine for car retailing professionals. Your first stop for News, Jobs and Reports for the motor industry.
Franchised dealers have increasingly turned to used cars as new car registrations have come under pressure. They fell -6.7% in October to 143,251 units. The decline was driven by falling demand from private consumers, with registrations down -13.2%. Year to date the market is tough with diesel sales under the cosh and falling consumer confidence.
In the used car sector it is more positive but is also tougher than it was with markedly different performances from dealer groups. Some groups are forging ahead. Arnold Clark Automobiles, which is rated four in the Motor Trader Top 200, said its used car business was pivotal in 2018 when it increased sales by 9.5% to 238,977 units.
Another dealer TG Holdcroft made it into the Motor Trader Top 25 most improved profitability table, with an 11.3% hike in used sales with margin growth, too. And Cars2, which has dealerships in Barnsley, Bradford and Wakefield, said its used car sales units had increased by 20% in 2018.
It is not just franchised dealers. Independents continue to push hard in the used market. The Motor Trader Top 50 Independent Dealers 2019 report sees top retailers working hard to drive revenues although margins are coming under pressure in a softening market. The combined turnover of the MT Top 50 has now reached £5.6bn – up 11% on last year’s report – selling an estimated 422,000 used cars, some 5.3% of the 7.95 million unit market in 2018.
Franchised and independent dealers all have to work harder to retain their profitability in a tighter used car market. Buying the right cars in the first place is critical. So what used cars are selling fastest? Data from Motors.co.uk shows the fastest selling models in October were the Land Rover Discovery Sport, Dacia Duster, Volkswagen Polo and Dacia Sandero Stepway, all shifting off forecourts in around 24 days. The Hyundai Tucson also made the top five listing. The Vauxhall Viva was the slowest used car to retail, selling on average in 77 days, followed by the Nissan Micra (59), Nissan Note (58), Range Rover (58) and Range Rover Sport (53).
This month we also looked at how sales of alternatively fueled vehicles are doing. In the new car markets, which ultimately drive the used market a few years down the line, registrations of diesel cars fell for the 31st month, down -28.3%, while petrols also declined, by -3.2%. But electrified cars continued to grow in popularity. Hybrid electric car sales increased by 28.9%, with 7,950 leaving showrooms, as battery electric vehicle registrations almost tripled, up +151.8% to 3,162 units. Plug-in hybrids, however, fell just short of their positive performance in the same month last year, down -1.7%. Combined, alternatively fuelled vehicle registrations reached 9.9% market share in the month – the highest on record, up from 6.9% last year.
The big groups are turning to electric cars as their numbers gain critical mass in the market. Cargiant for example plans to open an electric vehicle centre in Hythe Road site in west London.
Owner Geoff Warren said that Cargiant was looking to create a large dedicated electric car retail centre to meet growing demand in the city and help Londoners make the switch from fossil-fueled vehicles, which will be important following the introduction of the expanded Ultra Low Emission Zone in 2021.
For October we looked to see what hybrids and pure electric cars sold fastest. The fastest selling in the used market was the Kia Nero, which shifted off forecourts in 31 days, followed by the Toyota C-HR (33), BMW 2 Series, Renault Zoe and Hyundai Ioniq, all in 34 days. We also took a look at the most searched for electric and hybrid models in October and here Volkswagen performed strongly with the Golf variants taking first and second slot followed by Polo and the Seat Leon.
Looking back at 2019 we can see that the used car market softened and dealers – both independent and franchised – had to work harder for profits. And sales of alternatively fueled vehicles are accelerating in the new car market and steadily making their way into the used arena as consumers worry less about range anxiety and battery replacement.
Plugging into used EV and hybrid demand
Dermot Kelleher, head of marketing eBay Motors Group and Motors.co.uk
This year we have seen an exponential growth in demand for battery electric vehicles (BEVs) and hybrids in the new car market and are our data is showing increased demand in the used sector.
Until now franchised dealers have been the main source for these vehicles, primarily from early adopters attracted by their green credentials and keen to embrace new technology.
However, with greater numbers now entering the used market there are increased opportunities for both franchised and independent retailers to tap into this emergent sector. Legislative moves are starting to factor into purchasing decisions.
Buyers in the south east are increasingly aware of the ramifications of how an expansion of London’s Ultra Low Emission Zone will affect future travel.
Likewise buyers living in and around Bristol will be weighing up the alternatives as the city council moves to ban all petrol and diesel engined cars from the centre. Meanwhile, other cities around the UK are considering how they will reduce urban emissions.
Retailers making the strategic decision to source used BEVs and hybrids are being rewarded by increased consumer awareness and demand. But, to satisfy this sweet spot they need to achieve the highest possible visibility in all their online marketing activities.
This is a fledgling market that will grow at a fast rate as more stock feeds in from the new car sector, underlining the importance of optimising these vehicles online to put them in front of buyers actively searching for greener alternatives.