UK Car Sales October - bleeding cash

[LINGsCARS]

Here are the disasterous results for new car sales in the UK for October.

Question: Where are all the new MG sales? - figments of imagination?

I started to list out firms that were suffering, then realised they were ALL of them. Surprisingly, Volvo have performed magic and Kia are holding... the rest (even Audi) massive drops. Some are totally unsustainable.

Remember, these are registrations, not sales. They include dealer purchases, demos, and manufacturer reg's for their own use. Dealer groups like Chrysler must have one car sold per dealer. Suicide city.

for info, my own sales up by 45% month on month Oct 07 to Oct 08.

 

[FE]

October is always a slow month but to get the whole picture on a manufacturer you need to include their full range e.g. LCV's

It is important to realise who owns who in the manufacturer stakes and include the full registrations for their full range.

If you review the LCV range then it can tell a different story (yes all down) but to judge a manufacturer / franchise dealership strength in the market place all the picture has to be viewed.

The car market will be down as sub prime has dropped, In October the second hand market is flooded (just ook at Manheims figures for the same month), banks ar cautious with asset lending to the personal buyer and fleets are having credit lines reduced.

In my opinion we will see a sway back to contract hire rather than companies / people obtaining cheap finance and purchasing vehicles with that funding and then taking their own risk on RV

FE

 

[Speedymail]

Wow cheers for the info Ling, as expected the gas guzzlers and luxury have had a real hammering.

 

[An Oasis]

Thanks Ling makes for spectacular if frightening reading. Was surprised by the Jag results and would love to know what cars come into the "other Brit" category.

 

[Ian J]

for info, my own sales up by 45% month on month Oct 07 to Oct 08.

That's a bit of an unfair comparison as you aren't a car manufacturer

 

[Tom McClelland]

October is always a slow month...

That's why the comparison is October this year with October last year. To eliminate factors like that.

Nows the time to go off and get a new 4x4, if you actually need one. I do heavy towing and I bought one last year. I bet I'd pay about 30% less now.

 

[FE]

That's why the comparison is October this year with October last year. To eliminate factors like that.

Nows the time to go off and get a new 4x4, if you actually need one. I do heavy towing and I bought one last year. I bet I'd pay about 30% less now.

Yes i understand but the point being these are registrations not sales and dealers are no regsitering for stock as much as they did. Oct 07 nd Oct 08 there is a massive difference in credit issued by the manufacturer in terms of gate release as their is with cheap finance. So October being a slow month dealers are NOT taking stock and registering unlesssold.

There is a down turn ganted but as Ling is a car broker then the 45% upturn for her is included in those registrations. I have no idea wht 45% means i.e. if that is 100 registrations gone up to 145 or if it is 2 going to 4 but the fact is that the relevant comparison here is actual sales not registrations.

If you go to Bedford in the old air ballon hangers you will find in excess of 2000 cars all been registered and stored last year!

FE

 

[LINGsCARS]

That's a bit of an unfair comparison as you aren't a car manufacturer

I would hate to be unfair to the car manufacturers.

All I was pointing out was that in a new car market depressed by 23% in October, I was not affected (as far as I know, not knowing what I WOULD have sold had there not been the recession).

 

I would hate to be unfair to the car manufacturers.

All I was pointing out was that in a new car market depressed by 23% in October, I was not affected (as far as I know, not knowing what I WOULD have sold had there not been the recession).

Might have been less as people probably don't want to tie up there cash.?:|

Earl

 

[LINGsCARS]

Might have been less as people probably don't want to tie up there cash.?:|

Earl

Possibly. Who knows?

 

[FE]

Ling to be clear - registrations were 23% depressed in October year on year but that does not reflect sales. You need to compare ''apples with apples'' as you are quoting a sales increase for your business against what cars were registered which as you will know is completely different.

Also you are a broker and many have seen an increase in contract hire / finance lease on vehicles due to the removal of cheap money and a wllingness for business to again put these assets off balance sheet certainly with the new tax incentives.

It will take at least 18 months to see the real decline of the vehicle market (if at all) as rgistrations measurements have so many influences they can not be used as an accurate measure of erformance

FE

 

[Jeff-Smith]

It will take at least 18 months to see the real decline of the vehicle market (if at all) as rgistrations measurements have so many influences they can not be used as an accurate measure of erformance

FE, we don't need to wait for the next 18 month's worth of stats, because we can look back at the last 18 month's of stats, which confirm that new vehicle registrations are in decline. In addition to that, we're now seeing that manufacturers, the world over, have slowed down production and have reduced new vehicle output - this is unprecedented.

When a manufacturer reduces track speed, the unit cost of each vehicle increases and they have to consider how they will replace the profit lost from the volume. We all await what strategies are to come in the future.

Dealers are going bust all over the country because sales volume is not there and bonus levels are not being achieved.

Ling is on the outside of all of this, LingsCars.com is a finance broker, not a car dealer and is not directly involved with any manufacturers. What she is doing is taking advantage of a paradigm shift in the industry. More people are buying cars (and everything else) from the Internet, not showrooms and many dealers refuse to change their business model. As long as this continues, Ling will get more business, that's how new paradigms work. In addition to this, we're in the midst of the Credit Crunch and recession which means that people are looking at price rather than brand and this is where Ling does well on both counts. Great Internet strategy and cheap cars, end of!

2009 will need to bring with it a host of changes for the franchised dealerships if they are to survive... an awakening to the Internet, lower overheads and much less reliance on dealer bonus to mention just three massive problems that currently exist.

The problem is not black and white as some are making out here, the problem is not just with new cars, it's used cars too...and houses, and fuel, and I could go on for ages... the truth is that we're in a global market that's had the guts kicked out of it and as with all big downturns, there are always winners and losers.

One thing is for sure, almost everyone requires a car and the Motor Industry is one of the biggest industries in the world and it will be back with a vengeance, but probably not as we know it. The only constant is change.

 

[UKSBD]

... the truth is that we're in a global market...

You are Gordon Brown and I claim my £10.00

 

[Cornish Steve]

The US car manufacturers are bleeding hundreds of millions of dollars a quarter in losses. Most stupidly, the US government is handing out massive amounts to them in the form of subsidies, which is a disincentive for these companies to improve their product lines, cut costs, and make the tough management decisions.

I heard an interesting comparison on the radio the other day. How long does it take Ford to change a production line from one type of vehicle to another (from a small truck to a mid-size car, for example)? Over 12 months and over $70 million. How long does it take Honda to do the same thing? 5 minutes at virtually no cost.

This reveals immediately the difference between the two companies. One is bloated, slow to change, and hindered by union rules; the other is efficient, has built change into its processes, and has more flexibility in the use of its manpower.

I have little sympathy with car manufacturers that are losing money. Just like us, they must innovate, cut costs, deliver what customers want - or go out of business.

 

[FE]

FE, we don't need to wait for the next 18 month's worth of stats, because we can look back at the last 18 month's of stats, which confirm that new vehicle registrations are in decline. In addition to that, we're now seeing that manufacturers, the world over, have slowed down production and have reduced new vehicle output - this is unprecedented.

When a manufacturer reduces track speed, the unit cost of each vehicle increases and they have to consider how they will replace the profit lost from the volume. We all await what strategies are to come in the future.

Dealers are going bust all over the country because sales volume is not there and bonus levels are not being achieved.

Ling is on the outside of all of this, LingsCars.com is a finance broker, not a car dealer and is not directly involved with any manufacturers. What she is doing is taking advantage of a paradigm shift in the industry. More people are buying cars (and everything else) from the Internet, not showrooms and many dealers refuse to change their business model. As long as this continues, Ling will get more business, that's how new paradigms work. In addition to this, we're in the midst of the Credit Crunch and recession which means that people are looking at price rather than brand and this is where Ling does well on both counts. Great Internet strategy and cheap cars, end of!

2009 will need to bring with it a host of changes for the franchised dealerships if they are to survive... an awakening to the Internet, lower overheads and much less reliance on dealer bonus to mention just three massive problems that currently exist.

The problem is not black and white as some are making out here, the problem is not just with new cars, it's used cars too...and houses, and fuel, and I could go on for ages... the truth is that we're in a global market that's had the guts kicked out of it and as with all big downturns, there are always winners and losers.

One thing is for sure, almost everyone requires a car and the Motor Industry is one of the biggest industries in the world and it will be back with a vengeance, but probably not as we know it. The only constant is change.

Jeff i agree and that was my point. Registrations are down but that is not true reflection of the market as it simply means many of the ''rogue registrations'' are not being implemented.

You will also note i also said that Lings Cars is outside this she is one of thousands of ''brokers'' i.e. people who pay the banks a monthly fee to have access to their broker vehicle quoting systems offering contract hire and finance lease against the vehicles (the banks retain owbership of that asset and pay commsion on the deal + any upsell). That is not a new business model and the market is and remains saturated. The banks still manage it as it is they who set the RV's and hold the credit line not the broker. The broker can therefore not influence what manufacturers to push as it comes from he bank systems. Bigger leasing companies that take their own RV risk can.

The business model for a broker is usually very low overheads as its a straight sales businss where you quote on the banks system, client signs and the car is delivered / collected from any dealership. The dealership however does have big overheads due to stock premises etc so as you say a completely different model.

Also there are different types of dealrships e.g. the small independant and the larger Pandragons etc some will survive and some won't as any business but the level of registrations is not a true reflection of wakness on the industry in my opinion as it relates to sales and in this case how strong the business was or is.

Brokers should do well in the current climate as many want to get these assets off balance sheet this in turn will assist the dealerships as the vehciles still need to come through them. The larger ones will still get the registrations and the VRB's (which manufacturers have actually increased as their is more bonuses available now than there was).

Now where the 18 months come from is what the banks want to do with their asset lending arms. For example in the broker market you had

LVL
BoS
Autolease
Lombard
Leaseplan

Now the top 3 have just all become 1 with Hbos and Lloyds merger. LLoyds stopped their broker market, LVL have a partner scheme but any volume they take back and BoS is now directed to LVL.

What happens if the strategy of the broker market is disbanded i.e. all brought back in house? That means Ling and brokers are out of business unless they can get an undisclosed agreements which means they need to be able to withstand the credit line for all they sell and have expensive management systems to operate invoice.

That will have the biggest effect on the market not a few dealers going out of business and in my opinion it will take 18 months before the real picture is known and that will come from the banks.

FE

 

[Jeff-Smith]

What happens if the strategy of the broker market is disbanded i.e. all brought back in house?

Why might this be a consideration?