September market reveals strengths and weaknesses in motoring

The headlines may have presented a further rise in sales but when we look at the detail there are some interesting facts in the way the market is changing.

The September increase was 21%, which is almost the same as the year-to-date figure. However, the fleet market is up over 40%, whereas the private market is up less than 2% and only 5.8% in a month with a new registration plate, which normally is a big month for private buyers.

What’s going on? Firstly, the manufacturers who were restricted by parts supply during Covid chose to catch up with the private market demand build up and fleet customers were unable to change vehicles as they would have liked.

Added to this, decisions were made to change production lines to accommodate the new electric cars, which were expected to have grown at a much quicker rate but increasing energy costs meant an increase in both production and running costs.

Within the fleet numbers are also those cars, which are supplied to Motability, one of the largest fleets in Europe. These customers were asked to hang on to their current cars until supply and pricing improved, and in 2023, Motability registrations have increased by almost 70% as they took delivery of their overdue cars. This is part of the fleet growth, which has also benefitted from the tax incentives for company car drivers.

The private market has stalled. Why? A number of contributing factors with delays in production of internal combustion engine (ICE) cars, as well as the initial production of higher priced electric cars aimed as company car drivers.

Mild hybrid petrol cars have been outsold by pure electric cars but in September this position was reversed, albeit marginally. The second reason, of course, was a combination of inflation, higher interest rates, and the increased costs passed on by the manufacturers.

Although many private buyers wished to update their cars, the additional costs made it unattractive or unaffordable. The Prime Minister’s decision to reverse the decision of his predecessor and postpone the date when ICE production must end, to 2035 in line with the rest of Europe, has only caused further controversy.

With the Chinese ready to move their competitive products into Europe and the UK, there is further pressure on the manufacturers to put some attractive offers in front of private customers, as well as fleet buyers. There is still an order bank but this is reducing as new cars arrive, so new orders are needed to earn the profits to increase the supply and reduce the price of electric cars for the future.

Already there are some enticements with some 0% finance, deposit allowances, with longer term leases, to bring payments down. Where possible, avoid longer leases as you will have less equity in your car if you choose or need to change your car in the period.