AM Online

Dealers more cautious over 2011 sales

Dealers’ views on the size of the new car market in 2011 have been shown to be at odds to manufacturers’ registration forecasts in an AM online poll.

Ford and Volkswagen have said the total could reach 2.2 million and Vauxhall forecasts 2.1m as each vies for a greater market share.

But when asked what they believe the 2011 figure will be, most dealers (35.9%) say 1.8m. Only six out of 103 respondents thought registrations would exceed 2m. 

This month, the Society of Motor Manufacturers and Traders revised its forecast, believing new car registrations will fall 5% compared to its 2010 estimate of 2.03m units to 1.93m. Its reasoning is the impact of government austerity measures and resulting squeeze on consumer spending. The SMMT had forecast a 2011 market of around 2m. 

A number of dealers in the anonymous poll warned of manufacturers setting unrealistic targets based on an over-optimistic forecast leading to high volumes of pre-registrations.

“Manufacturers are using their bullish forecast to protect their own internal budgets,” said one dealer. 

“As usual, they have no idea of the reality in dealer showrooms. 

“No doubt they will attempt to reach their target with a lot of spurious tactical registrations. 

“Only when the figures are changed to represent real sales rather than just registrations will we get a genuine indication of the strength of the new car market.”

The SMMT countered the claims. “The market will remain fairly flat. Private and business registrations will decrease because of the lack of scrappage business we saw at the beginning of this year, “ a spokesman said.

“Fleet will remain largely unchanged, but we suspect that what dealers will not have taken into account is the volume of this business that will go through manufacturers rather than them. Manufacturers will also base their estimates on the confidence they have in new products coming to market next year, which dealers will not be as informed on.”

He said the latest 2011 estimate was based on the forecasts of 16 manufacturers, representing 80% of the new car market. And in the last five years the SMMT forecasts had been within 1.3% of final year-end figures. 

The Retail Motor Industry Federation is forecasting a 1.9m 2011. 

“There will be an increase in fleet business in the first six months of the year, but private sales will be challenging because of the cumulative effect of an increase in VAT and other austerity measures impacting on all household spending,” said director Sue Robinson. “A positive factor will be the tightening of supply of used cars boosting new car demand.” 

The second half of 2011 will be strong across the board.

Dealer comments:

  •  It depends on whether manufacturers wish to manipulate the true figures by pre-registering. Pre-registering of cars should be banned.
  • The total will totally depend on the volume of forced self-registrations.
  • Retail sales are currently very difficult so next year will be tougher after VAT and personal tax changes.
  • Manufacturers have always over-estimated the market, and this year they will have the currency situation and the demand from China to consider as well as the general market conditions in the UK. Forecasts of more than 2 million are madness.
  • If the manufacturers produce cars for a 2.2m market and it ends up at
  • 1.8m then we could have some interesting times ahead of us in 2011.
  • With retail business down 20% in recent post-scrappage months, it’s difficult to see how we could possibly achieve 2.2m in 2011.
  • Due to the shortage of used vehicles in the market place registrations could exceed the 2m mark.
  • After a likely slow start to the year with VAT up to 20% I see 2011 follow-ing along the lines of 2010 if we are lucky!
  • The market seems to be all over the place: VAT going up, spending cuts etc so who really knows?
  • As cutbacks and redundancies start next year, volumes will reduce.
  • Some VAT pull forward will reduce volumes marginally. Scrappage will still have a marginal effect as well.
  • Fleets and local authorities are stalling on renewals.
  • Our volumes will be similar to 2010, but the market will continue to come back as scrappage washes out during the first half of the year together with stagnant economic conditions.
  • Given the lack of scrappage and an expected economic slowdown, the market will fall unless sterling increases in value against the Euro.
  • Manufacturers are using their bullish forecast to protect their own internal budgets. As usual they have no idea of the reality in dealer showrooms. No doubt they will attempt to reach their target with a lot of spurious tactical registrations. Only when the figures are changed to represent real sales rather than just registrations will we get a genuine indication of the strength of the new car market.
  • It will start off slow and pick up by September.
  • The manufacturers are being bullish as always, but aren’t taking into account the way the British traditionally entrench and stop spending when the media keeps talking about about job losses.
  • Let’s face it, it is in the interests of the manufacturers to talk up a bullish market. The majority, if not all, are stating that they are going to improve their market share and increase their sales year-on-year. The knock-on effect will be lower margins for dealers who will not be able to service the overheads involved in operating a franchised business. With the revised BER regulations around the corner it is time for a rethink on the outmoded UK business model. The new model may just be a ‘high street shop’ with an aftersales facility in low-overhead premises – the current gin palaces we are used to seeing are doomed.
  • As usual manufacturers will push the market if they want to with pre-registrations so it’s more their market than the consumers. Indeed, cust-omers don’t have any idea what each manufacturers share is – they either like and want the product or not. It’s vanity via the manufacturers which does not always mean profit for the dealers.
  • The manufacturers set these excessive forecasts, only to give us bigger targets.
  • The manufacturers are not in touch with reality.
  • I don’t know what the manufacturers making these forecasts are on, but it’s probably illegal.
  • 2011 is judgment/payment year. Even the ‘haves’ will stop spending.
  • We all need to be very careful in signing high targets in 2011. Recent AM articles say some manufacturers believe the market will be as high as 2.2m registrations. How can this be with no scrappage and a 2.5% increase in VAT? It is in the manufacturers’ interest to talk the market up as they make money by wholesaling cars to dealers. If we sign up to big targets we are in for pressure to target which will use our cash. Have we learned nothing from the number of dealers who went bust in 2008?

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