Automotive insights

Automotive market H1 news round-up

Paul Burrows Paul Burrows

Automotive news wrap-up for H1 2017

H1 passenger car round-up

Total registrations

On the UK passenger car front, it is now old news that H1 was down on 2016 by just over 1% and heading in the direction predicted last year by the SMMT. Read our full article on UK new vehicle registrations settle to forecast levels. Some automotive manufacturers have responded to this decline by introducing their own scrapping programs (see Table 1). These kill two birds with one stone; supporting their brands, while also reducing the number of older polluting vehicles on the road. 

Table 1 UK Scrappage schemes by brand – Summary

Brand  Emissions rates  Fuel type  Support 
BMW Any Euro-4 rated car or older Diesel  £2,000 on a new vehicle 
Mini Any Euro-4 rated car or older Diesel  £2,000 on a new vehicle 
Ford  Any Euro-4 rated car registered before 1 Jan 2010  Diesel/Petrol  Between £2,000 and £4,950 on a new vehicle or £3,650 to £7,000 on new CVs
Mercedes-Benz Any Euro-4 rated car or older Diesel  Up to £2,000 on a new vehicle
Vauxhall  Any car worth less than £2,000 Diesel/Petrol  Up to £2,000 on trade in 
Hyundai  Any Euro-4 rated car or older registered before 31 Dec 2009 Diesel/Petrol  Between £1,500 and £5,000 on a new vehicle
VW  Any  Euro-4 rated car or older standard engine vehicle registered before 31 Dec 2009 Diesel  Between £1,800 and £6,000 on a new vehicle
Toyota Trade-in any car or commercial vehicle registered before 1 Jan 2010 Diesel/Petrol  Between £1,000 and £4,000 on a new vehicle
New vehicles which qualify for the above schemes may be selective to fuel type and model, and trade in vehicles are typically subject to minimum ownership periods

Source: CarWow1 and company websites2, 3 as at 7 September 2017

Registrations by fuel type

Petrol and environmentally-friendly vehicles are taking up the slack created by the 9.9% decline in diesel registrations YTD June 2017. The emissions issue and threat of city bans has seen UK diesel registrations fall from a 51% high in November 2015 to 43.8% market share in June 2017. 

Registrations by brand

In respect of H1, Mercedes stands out once again with an increase in registrations of c10,000 and a market share of over 7%. Nissan also enjoyed gains in the half year, up 8.2% in volume. Vauxhall declined by c20,000 units and has a market share now of barely 8%, with the Corsa dropping out of the top three for passenger cars, replaced by the VW Golf.

Ford dominates commercial vehicle registrations, adding over one percentage point to its market share with Transit Connect and Transit leading the way and is likely to gain market share in September with a new scrappage scheme. Vauxhall has taken a hit in this space and is in some need of a revitalising boost that the scrappage scheme may provide.

Tesla continues to make its mark 

Tesla, the electric car manufacturer founded by enigmatic inventor Elon Musk, continues to make a big impact in the market. The new Model 3 has begun its highly anticipated production run, with the company hoping that its $35,000 price point and focus on all-electric will see it hitting new heights.
The counterpoint to Tesla's rapid expansion and success can be found with Faraday Future's stalled plans to build a £1 billion factory and production line in Las Vegas4. The US-based electric start-up (backed by Chinese investment) aimed to position itself as an alternative to Tesla. Now Faraday Future is revising its strategy to create a “vehicle usage model that reimagines the way users access mobility”, and it's no secret that it’s looking for new investment.
Tesla has supported its plans of expanding its portfolio with debt raising and its IPO, where it raised US$226.1 million in 2010. The continued sales of the Model S and success of the Model 3 are critical.

Autonomous cars power on

Another hot topic is autonomous, self-driving, vehicles. The Renault Nissan Alliance is creating a range that can learn and predict individual driving habits and Chinese search engine, Baidu, is gathering data by releasing its self-driving software to download for free. A number of companies – including Google, Apple and Uber – are also entering the race to generate autonomous vehicles.
Meanwhile, the UK Government is trialing autonomous cars on the roads between London and Oxford, and has started to test partly-autonomous trucks on UK highways. Investment in this area is high and there is interest from a number of governments, automotive manufacturers – such as Ford recently indicated that it would invest US$1bn in Argo AL, a robotics and artificial intelligence software company. Despite this investment, there is concern from commentators that resistance to driverless vehicles has been under-estimated. A future with autonomous vehicles is inevitable, but the uncertainties to overcome (regulation, commercial concerns, public acceptance) still leave the question, how long will this take?

Other news roundup:

  • The EU has approved the takeover of Opel/Vauxhall by PSA, clearing competitive and anti-trust issues while leaving implications for the UK dealer networks uncertain
  • UK motor finance borrowing increased by 12 percent in 2016 from the previous year, reaching £31.6 billion5 Analysts are pointing out that UK consumers are trading-up on the back of PCP. Good lending and sensible consumer budgeting are needed to avoid negative impacts on employment and inflation in an economic downturn
  • Total auto loans outstanding in the US came to $1.17 trillion at the end of the first quarter of this year. Around 2.3% of auto debt in the US is 90 days overdue, the highest in six years as consumers take out loans which they are unable to repay6. This over-exposure of consumer auto debt is most concerning in the subprime area, where those less able to afford are being affected
  • Japan and the EU have struck a trade deal to ease the import duties on passenger cars, reducing the current ten percent import duty in return for more access for European food and dairy produce. The industry is seeking a seven-year transition period

Sources:

  1. Car wow – Car Scrappage Schemes
  2. Volkswagen – Volkswagen Diesel Scrappage Upgrade Scheme
  3. Toyota – Toyota Scrappage Scheme
  4.  Financial Times, Faraday Future scraps $1bn Las Vegas electric car factory, 11 July 2017
  5. Financial Times, Warning signs emerge in the UK car loan market, 9 July 2017
  6. Federal Reserve Bank of New York, Household Debt and Credit Report (Q2, 2017)