Friday, 18 January 2019 GMT
Author: Staveley Head
Many motor traders will have been happy to see the back of 2018. With the worst September for new car sales since the financial crisis, Brexit uncertainty, Worldwide Harmonised Light Vehicle Testing (WLTP) and the heavy scrutiny surrounding diesel vehicles, it’s fair to say the industry has faced many challenges. But it’s not all doom and gloom. As the new year is in full force, we’ve taken a look at what 2019 has in store for the industry.
The motor trade in 2018: In summary
2018 in review
This time last year we reported on forecasts that predicted 2018 as becoming the year of the second-hand car. And with brits purchasing four used cars for every one new car bought, the second-hand car market is certainly one to keep an eye on. 2018 certainly was the year of the used car, as even with the first quarter experiencing a fall of almost 5% in used car sales, it still remained the third highest first quarter on record for used car sales. The furore surrounding diesel engines resulted in a 29.6% fall in sales of models with this fuel type in 2018, culminating in a total of 21 consecutive months of decline. Whilst petrol and alternatively fuelled vehicles (hybrid, electric etc) made gains of 8.7% and 20.9% respectively, it still wasn’t enough to make up for the decline in diesel sales.
World Wide Harmonised Light Vehicle Testing Procedure (WLTP)
This year also saw the introduction of WLTP which is thought to have contributed to the unfavourable fall in new car sales during September. WLTP looked to replace the previous New European Driving Cycle (NEDC) lab test to make it easier for consumers by providing results that were more realistic and comparable and up to date with modern driving but gave many manufacturers a real headache. Victims of WLTP included Audi, BMW, SEAT, Peugeot, Jaguar and you guessed it, Volkswagen.
Best selling used cars of 2018
Data from the Society of Motor Manufacturers and Traders (SMMT) revealed that the Ford Fiesta was the highest sold used car of 2018, so it’s certainly one you want to be looking out for at the auctions. Here are some of the others that made the top spots that you might also want to consider:
- Ford Fiesta
- Ford Focus
- Vauxhall Corsa
- Volkswagen Golf
- Vauxhall Astra
- BMW 3 Series
- Volkswagen Polo
- Renault Clio
- Audi A3
Plug in Grant
October continued the theme of a motor trade horror show as the government removed the plug-in grant for hybrid vehicles and reduced the grant for electric vehicles too. Introduced in 2011, the plug-in grant was a government initiative that provided up to £4,500 for consumers to pay towards a new UltraLow Emission Vehicle (ULEV). Whilst hybrid vehicles are still classed as a ULEV, the government removed them from the list and reduced the amount from £4,500 to £3,500 for ULEV’s that are still eligible for the plug-in grant in the 2018 budget. Although there was a silver lining for traders who stock vans, as the government confirmed that they would be extending the plug-in grant to vans and taxis.
What's in store for the motor trade in 2019
You’re probably sick of hearing about it (aren’t we all) but yes, Brexit is on its way…or so we think. There is still uncertainty on what will happen and if the UK leaves the European Union on the 29th of March or not. Without more information, it’s hard to say how it will affect the motor trade industry.
According to SMMT analysis, post Brexit EU import tariffs could cost manufacturers £2.7 billion per annum, which if not absorbed by the manufacturer, could be passed on to the consumer averaging £1,500 per vehicle, under World Trade Organisation (WTO) rules. SMMT also found that export tariffs would amount to £1.8 billion per annum under WTO rules as well. Whilst this could materialise, it’s important to note that the UK government would be able to set its own tariffs, allowing them to eradicate the default tariffs set by the WTO which would maintain the current costings and prevent tariffs of this nature.
WLTP part two
This spring the government will be reviewing the impact of WLTP on company car tax and Vehicle Excise Duty (VED). The treasury will look to ensure it strikes the balance between protecting consumers and meeting climate change commitments through considering whether VED and Company Car Tax (CCT) changes are required once WLTP is in full force from April 2020. This is closed for response on February 17th 2019.
The new budget
The UK governments budget plans for 2019 will be implemented in the new tax year, so here’s a few things that could affect your business:
Insurance Premium Tax
This has been frozen for another year, so for those worrying about their motor trade insurance premiums rising, the freeze on insurance premium tax won’t affect that.
The government revealed during the budget that smaller firms would have to contribute less towards the training and assessment of apprentices. It will be halved from 10% to 5%
Small businesses will also benefit from the cut in business rates. If your motor trade business has a rateable value of £51,000 your business rates will be cut by a third with the new business rates relief scheme.
Annual Investment Allowance
If your motor trade garage could do with sprucing up with some new equipment, you may benefit from the annual investment allowance rise. The government revealed in the latest budget that they would be raising this from £200,000 to £1m.
Structures and Buildings Allowance
If your garage could do with sprucing up, you may benefit from the annual investment allowance rise. The government revealed in the latest budget that they would be raising this from £200,000 to £1m
Motor trade trends to look out for in 2019
Happenings in 2018 were a big indicator of what you might want to look out for this year. The scrutinisation of Diesel, Government plug in grants and WLTP could all be set to affect the market in 2019.
Warranty, warranty, warranty
During the third quarter of 2018 it was reported that the warranty sales by unit increased by 11% across the RAC Dealer Network. Higher sales and penetration of warranties, higher consumer interest in longer and more comprehensive cover combined with the growth in the amount of dealers are said to have influenced this. Brexit uncertainty is also said to have influenced this with many consumers opting for longer warranties.
More used cars
The used car market remained strong during 2018 even with an almost 5% dip in sales for the first quarter. The new car market has made losses whereas the used car market remains particularly strong. In fact, since 2011 used car values have raised 42% since 2011 compared to new cars that are up just 19%.
Growth in the purchase of electric vehicles has continued in 2018 and forecasts indicate that growth in this sector is going to be substantial from 2019 and beyond. 2019 see’s the release of new vehicles on sale such as the Jaguar XJ, Tesla Model 3, Audi e-tron, Porsche Taycan and the Mini EV which is the electric version of 2018’s third highest selling used vehicle, the Mini. Although, with the cap on the plug-in grant by £1000 it may dip sales on these vehicles. Investing in electric vans may be the answer, as the government has extended the plug-in grant across vans and taxi’s too although currently the LEVC TX is the only taxicab that’s eligible for the taxi plug in grant. Vans that are eligible for the government plug-in grant:
- BD Otomotiv eTraffic
- BD Otomotiv eDucato
- Citroen Berlingo
- Mitsubishi Outlander Commercial
- Nissan e-NV200 (cargo van)
- Peugeot ePartner
- Renault Kangoo ZE
- Renault Master ZE
- LDV Ev80 van
- LDV EV80 chassis cab
Like last year, 2019 looks set to be the year of the used car with alternatively fuelled vehicles making a surge of growth. What are your 2019 predictions? Let us know on our Facebook and Twitter pages.