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Friday, January 27, 2023

Cox Automotive reveals market forecast for Q1

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Philip Nothard

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REGISTRATIONS for new vehicles could reach 506,804 by the end of Q1, the most-likely scenario forecast by Cox Automotive upon the launch of its latest quarterly AutoFocus publication – but the LCV market could be its strongest ever.

This represents a 19.1% increase year-on-year, but 23.7% down compared to the 2000-2019 average and 27.7% down compared with the most recent pre-pandemic 2019 performance.

Cox Automotive’s most likely scenario forecasts that the year will end on 1,878,806 registrations. This is a +14.1% increase year-on-year, but -18.7% down compared to the 2000-2019 average and the most recent 2019 pre-pandemic performance.

A sense of déjà vu

Philip Nothard, Insight and Strategy Director at Cox Automotive, believes a sense of déjà vu is setting in as the industry approaches the end of the first full month of trading.

Nothard said: “The start of a new year is often seen as an opportunity to start anew, to move on from the trials and tribulations of the previous year and set our sights on a better future.

“This is undoubtedly the case in the automotive industry after more than a year, dogged by new car production issues, increased lead times and skyrocketing used car values. However, while retailers have remained resilient and adapted to today’s trading environment, there’s still no sign of an immediate return to normal.”

Nothard warned that the hopes of material shortages improving in early 2022 have rapidly fallen away and that we are unlikely to see much improvement until at least early 2023. Although the industry has responded well to being remarkably adaptable throughout the pandemic, it must continue to do so while this volatile and uncertain trading climate continues.

He added: “While the microchip and material shortages continue to affect the production of new cars and vans worldwide, some manufacturers such as Citroen and Polestar managed to increase production to the extent that sales targets were hit. However, recoveries are very manufacturer-specific, and we cannot expect normal volumes to return until 2023.

“Microchip shortages are causing a major headache but transitioning to Electric Vehicles (EVs) also impacts supply chains. Factories must be reconfigured to accommodate EV production and other alternatively fuelled vehicles. These changes don’t happen overnight, but they are necessary to move towards cleaner and greener personal transportation.”

Consumers are becoming more understanding

While the new car market struggles, the new LCV market in 2022 could be one of the strongest ever on record in the UK. According to Matthew Davock, Director of Commercial Vehicles at Manheim UK.

Due to peak demand and thousands of orders of new LCVs from the major fleet, rental, and leasing sector, as many as 405,000 new vans are due to arrive ready for work in the UK if manufacturers find the perfect solutions to accelerate these production volumes.

Nothard said: “Despite all this, the good news for the industry is that consumers are now aware of the factors stalling new vehicle production, a factor that led to the rise in used car prices as buyers turn towards nearly new models. Retailers can use this to their advantage in their profitability and margin retention strategies since there are still ways to make a profit from new vehicle registrations when targets and volumes aren’t being chased.”

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