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Speculation on Michael Gove’s hybrid ban creates unnecessary confusion, says Colliers Automotive Viewpoint

Colliers International head of automotive, John Roberts

Speculation that Michael Gove will ban the sale of some new hybrid cars is creating unnecessary confusion in the industry and among consumers, says Colliers International’s Automotive Viewpoint report.

Colliers’ head of automotive and roadside, John Roberts (pictured), said that recent legislation from the UK government had allocated funding to support local authorities in creating the necessary electric charging infrastructure which is welcome, but warnede that the market is still "in its infancy", adding that some of these initiatives are perhaps causing "some consumer confusion".

“The Government’s plans are clearly welcomed and are extremely important for the advancement of the sector, however diesel and petrol engines are not being phased out completely until 2040, so there’s still more than 20-years before the changes come into effect," said Roberts.

“There is still a lot of work to do to prepare the infrastructure required to cater for the future of the sector.”                                                                                                                                                       

In Colliers International’s inaugural Automotive Viewpoint, Roberts explains that undersupply of charging points and apprehension over lengthy charging times contributes to a lack of buyer confidence and range anxiety for EV owners.

This is twinned with concerns over the UK energy supply and its ability to meet future demand.

The lack of guidance for landords and developers on integration of charging points in commercial premises is also causing confusion.

Roberts said: “Currently, there are over 5,000 locations in the UK that have a public charging point installed and there are over 9,000 devices at these locations, which provide 15,000 connectors.

"Although these statistics are impressive, the number of connectors and devices will need to at least quadruple in the short term to meet the demand from the increasing sales of EVs.

“Further infrastructure will need to be built and created, particularly at existing petrol filling stations and arterial route locations to serve any EV user travelling modest distances.

"Oil companies, such as Shell and BP, have already started to install and open charging points within their petrol stations to meet the growing EV demand.

“The addition of charging points at filling stations in town and city car parks, shopping centres, retail parks, supermarkets and new public ‘charging parks’ has potential implications for landlords and developers in terms of potential space required.

"Vehicles filling with petrol or diesel take a matter of minutes. Currently, EV charging, even with superchargers, can take up to 40 minutes (80% re-charge)”

Other key research highlights:

  • In 2016, new registered vehicles within the UK reached an all-time high of just under 2.7million; a 39% increase on the post Global Financial Crisis low of 1.94million in 2011.
  • 2017 saw a slight reduction in new vehicles registered, with a decrease in sales of 5.7%. However, this was still the third largest number in the last decade, with over 2.5 million new vehicles sold.
  • The Society of Motor Manufacturers & Traders (SMMT) predicts an annual decrease in new car registrations of -5.6% in 2018, to 2.39 million.
  • From January to March 2018, new car sales were down by 12.4%, perhaps influenced by government policy relating to diesel vehicles.

Roberts said: “The UK Government needs to fully support both the property and petrol retailing sectors to make the conversion to EVs a realistic and achievable goal.

“Investment in the charging infrastructure is one thing, but beyond that, ensuring that UK energy supply meets the future surge in demand is another. There is certainly a long way to go.”

Colliers head of UK research Mark Charlton has said that car sales hit a record high in 2016, but confusion has caused a decrease in figures for 2017.

He said: “The 2016 figure was not only the fifth consecutive year of growth but it was also a record high due to a wide choice of new car models and affordable finance deals available.

"There was a slight decrease in 2017, which has been accelerated by the recent legislation to ban the sale of all new petrol and diesel vehicles.

"This has caused confusion in the marketplace around the impact of conventional diesel and petrol combustion engines, which has driven down buyer confidence, despite these changes not actually taking full effect until 2040.”

On dealer vs manufacture yields, Charlton said:  “While you might expect the manufacturer covenant to generate a lower yield, 4 out of 5 of the top deals are for sites with strong dealership covenants, with the keenest yield (3.78%) being for a prime London location.

"Having said that, the yield spread for dealer transactions is much wider than for manufacturers, reflecting the potential differential in financial strength.”

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