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AM Online

Car manufacturers will ‘look at number of retail outlets’ amid sales decline, says SMMT’s Mike Hawes

SMMT chief executive Mike Hawes

Failing demand for new cars could trigger a more widespread reduction in the UK’s car dealership numbers following Vauxhall’s move under its PSA Group owners, according to the SMMT.

Speaking to AM at this week’s Commercial Vehicle Show at the NEC in Birmingham, Society of Motor Manufacturers and Traders chief executive Mike Hawes said that, in a declining market, OEMs would “obviously look at number of retail outlets”.

Hawes’ comments came as he was asked to comment on Vauxhall’s termination of all its UK dealer contracts – a move confirmed by the brand’s managing director Stephen Norman last week – as it bids to cut the size of its network and the potential for similar action from other manufacturers.

Suggesting that market pressures could move some OEMs towards alternative retail platforms, he said: “The UK does have a reputation of being one of the most progressive and innovative car retail markets in the world and if major manufacturers do want to test something out they will often do it here.

“The staff in the retail market also have a strong reputation of adapting to changing markets. If the market does continue to decline, manufacturers will obviously look at the number of retail outlets they have.”

The SMMT today reported a 13.3% decline in UK car manufacturing during March, less than three weeks after reporting a 15.7% decline in new car registrations during the month.

Hawes told AM that he expected a strong April result, however, with the effects of the Government’s VED road tax changes last year felt to a lesser extent and the addition of some sales forced into this month by the snowy conditions which disrupted many ‘plate change handovers.

Efforts had been made until he and other lobbyists were “blue in the face” to mitigate the negative effects of the emissions debate on diesel sales, which resulted in a 37.2% decline in new diesel car sales in March, said Hawes.

But he conceded that the pressure would remain on the industry to sell the virtues of diesel cars to customers as new WLTP test standards were rolled out.

WLTP is set to replace the EU’s NEDC test procedure to give a more accurate reflection of a vehicle’s real-world emissions and fuel consumption capabilities.

Hawes said: “The cars will be the same but the consumer will see a negative effect on the headline performance figures and that is something that we will have to continue to work hard to educate them on.

“The roll-out is set to be completed in 2019/20 and we will be working hard with the NFDA and the DfT to drip feed information to consumers between now and then.

“Ultimately, the introduction of the new test regime will be like someone submitting a GCSE paper in to an A-Level examination. The cars will be the same, but the results will be very different. Manufacturers and retailers all have a responsibility to help the public understand why that is.”

Earlier this month Jato Dynamics described the shift to the new WLTP test procedure as “a seismic change in the automotive industry”.

Revealing its preliminary findings into the changes, Jato found that the test standard would “result in higher purchase and ownership taxes” for motorists.

A report on the findings said: “We have observed that NEDC correlated CO2 figures are higher than previous NEDC tested values, and the disparity could be greater than the industry expected.

“Furthermore, our initial findings suggest that the NEDC correlated values are resulting in higher purchase and ownership taxes for the end user in some cases.

“This is something the industry needs to be aware of as the competitive landscape is changing.”

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