Cox Automotive and Grant Thornton have delivered analysis of diesel car sales, vehicle ownership trends and continued retailer consolidation ahead of Brexit after teaming-up to produce an automotive sector Insight Report.
The report, which is the first of its kind from the partnership, can be downloaded for free from the Cox Automotive website and highlights the continuing move towards consolidation in the franchised dealer sector, the increasing consumer appetite for premium brands among consumers and the way mobility options are evolving.
Mapping the number of acquisitive transaction, largely led by PLCs, the report said that foreign investment may fuel large-scale consolidation in the near-future, despite the uncertainties posed by Brexit.
Owen Edwards, associate director, Corporate Finance, Grant Thornton UK LLP, said: “Consolidation has characterised the franchised dealer sector for over a decade with the continuing decline in the number of showrooms across the UK, with fewer groups running them but achieving higher sales from bigger premises.
“Although the rate of consolidation has slowed this year we expect it to increase as PLCs and a growing number of overseas investors move to achieve even greater critical mass through strategic acquisitions aimed at strengthening geographical and brand representation.
“Meanwhile, overseas investors, wary of the risks presented by Brexit, are now starting to view acquisitions here as long-term investments, so we anticipate more activity on this front over the coming months.”
The sector report compiled by Cox and Grant Thornton also explores the effects of a rising awareness of Mobility as a Service (MaaS) transport solutions and consumer attitudes to diesel-powered vehicles and AFVs.
Analysis of wholesale vehicle purchases at auction by franchised retailers, car supermarkets and independent retailers gave a particular insight into the stocking habits of various sector players.
And while franchised retailers exhibited caution in their approach to buying diesel vehicles in 2018 showed a significant decline, the car supermarkets’ demand for stock appeared to drive growth in its investment in diesel-powered vehicles.
Philip Nothard, customer insight and strategy director at Cox Automotive UK, said that diesel continues to appeal to used car buyers especially those looking at the best options for larger cars, especially SUVs, where fuel economy, performance and the lower emissions of EU6 engines in many cases outweigh the counter arguments.
Commenting on the market’s anticipated performance for the remainder of 2018, Nothard said: “The new and used car sectors continue to be dynamic, as shown by our forecasts suggesting a new car market of 2.36 million new registrations and 8.07 million used car transactions by the end of 2018 if current buying trends continue in the lead up to Brexit.
“Although both new and used sales will be lower this year than the peaks achieved in 2016 and 2017, our forecasting still suggests a sizeable market with up to 10.4 million cars traded by the end of the year.
“This is an encouraging outlook for franchised retailers, independent dealers and car supermarkets, as well as suppliers, finance providers, OEMs and, of course, customers as our industry enters a new phase.”