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Automotive Messenger

October/November 2015

We have taken the opportunity to update this edition of Automotive Messenger with three “hot-off-the-press” news items which we believe warrant adding to our publication for their relevance to current issues in the industry.

New vehicle market stabilises It concerns us that tactical campaigns one day this amounted to €3bn, quite a – registrations fall in October can often overlook cashflow and we sum! But more worryingly with finance compared to 2014 generally see this biting more at the end in mind is the tax structure in markets Following over three and a half years of of the calendar year than even the peak where CO2 levels play a huge role in continuous monthly growth, the October months where more leeway can often be the end cost. Mention extra cost and 2015 new vehicle registration data reveals available as an expected event. The fear of everyone takes notice. the first monthly decline at 1.14% down missing targets can lead to behaviours in Financials aside, we still see the on the same month in 2014. Alarm bells direct conflict with available cashflow and environmental issue as the primary should not automatically be ringing as the it is this anomaly that should be prioritised concern and this remains a global word “stabilise” (used by the SMMT in and addressed in a structured manner. problem. Yet again politics and their press release 5 November) has been automotive will be mixing as they did carefully chosen and was used by them Diesel issues remain post the 2008 global economic crash – around the turn of the calendar year to a global problem we believe what is needed is a full and describe 2015 – it was always anticipated. At the time of going to press with this frank, independent, appraisal of not only However, with such a run in 2015 edition of Automotive Messenger, two VW product but diesel engines as the taking everyone by surprise, the adverse additional issues emerged from the favoured power train for passenger cars change will undoubtedly start to influence VW camp around the diesel emission in certain parts of the world. It will be tactics around the end of 2015 with saga. We have covered off inside the very positive to know that the current registered units, market share by story as reported in October, but now revelation is just that and no more than a and support monies made available all at the brand have had to reveal that CO2 blip in existing strategies. stake. As this is our last publication until levels and fuel consumption may both the New Year, we flag the need for all be understated on up to 800,000 vehicles involved to plan for the registration tactics across Europe – Audi, Seat, Skoda and at the earliest opportunity and provide VW models are all impacted. clarity not only on profit opportunity in This has serious financial the context of annual registration targets consequences for a number of parties but also cash requirement for funding and caused another fall in the VW vehicles and payment of support monies. Group share value – we understand in Automotive Messenger

Are we at the defining moment for the ?

Welcome to the October/November cover this off later in this edition. how the pendulum swings! edition of Automotive Messenger and The cumulative growth in UK We have slightly amended the format what a time to be involved in the sector! registrations for the year to date now of this edition to focus more on news Unless anyone has been holidaying on stands at 7.08% which is on top of 9.1% stories rather than commentary on the Mars, the revelation to top a number for the calendar year 2014 and 10.8% for hard data which we explain later. Finally over the last decade has been the 2013. If the 2015 full year registrations we welcome a new team member to diesel emission story that has rocked grow at the 7.08% rate, then the last Automotive – Owen Edwards – who until Group and the industry at twenty four months will have seen over recently was a part of the senior team at large. This issue warrants its own entire 375,000 additional vehicles registered, an and comes from an Analysts magazine but to try and bring perspective, enormous growth. Explains all the traffic background working in the City. Owen we have devoted a few column inches on jams we encounter daily! is already taking responsibility for some the facts as we understand them and the In addition to the UK, mainland content in Automotive Messenger and we challenges that lay ahead. Reactions have Europe is seeing some rebound and is hope you enjoy his contributions. at best been mixed! now posting growth month by month – Contents Whilst the headline writers have had there is still so much more to be achieved a field day with the VW issue, the UK in Europe to bring registrations back 03 There is mad and then there is a Hatter! has slipped out remarkable registration to previous levels and with the BRIC 05 Environmental issues come to the fore growth for Q3 which not only defies logic countries perhaps struggling to counter too early but makes a mockery of our last edition balance, volume production targets for 07 An upbeat reporting season for Motor where we headlined ‘How far can reality 2016 must still be looking very tasty Retail Plc stretch?’. This piece of elastic knows no indeed. The US is having a ball with the 09 Who will “own” the customer? bounds and still pulls everyone along magical 18 million (seasonally, annually 11 A time for M&A to gain more in its wake at a relentless pace. Most are adjusted) almost being attained reflecting momentum? benefitting but some are now feeling the the economic security being afforded 13 News snippets choppy waves crashing around them – we currently by the advanced economies – 17 Registration data

Tarun Mistry Neil Barrell Bill Parfitt CBE Paul Burrows T +44 (0)20 7728 2404 T +44 (0)20 7865 2700 T +44 (0)20 7385 5100 T +44 (0)1908 359 554 M +44 (0)7966 432 299 M +44 (0)7976 550 312 M +44 (0)7528 870 341 M +44 (0)7850 538 309 E [email protected] E [email protected] E [email protected] E [email protected]

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There is mad and then there is a Hatter!

The nine months to September 2015 have shown no sign of waning growth – can Lewis Carroll make any sense of it all?

It takes a number of years for people progress. For coordinates read ‘Targets 12.8% (albeit down on 2014 by over to appreciate the Alice in Wonderland and Campaign monies’ and with the 0.6%) stories of the downright weird and Volkswagen issue blowing around and • Volkswagen achieved nine months mad, but perhaps we can re-write the 2016 on the horizon, is it little wonder growth of 8.17% but pre the books in the context of the UK motor that smaller ships seek bigger ships to emissions issue distribution market as it currently transfer to – and for this read smaller • has become the hot operates. Over 2 million vehicles have retailers selling up to bigger ones, an premium brand with 17.6% growth been registered in the nine months area of buoyant (excuse the pun) activity up to 116,509 vehicles which suggests all is well, but the levels and more to come. • accelerated by 20.9% to reality is not quite as comfortable. (Our third hot-off-the-press update is 37,923 vehicles Registrations represent the point at the acquisition of SG Smith by Marshalls • and have continued which a vehicle becomes a legal entity – - more premium added to the portfolio their double-digit growth rates, MINI it is on the road, or is it? and war chest spent). at 29% growth Space is too limited in this edition to Top down pressure is now a reality • has grown by 16.7% to repeat the comments we made in the last and factories are gearing up for growth 59,221 vehicles but still short of levels Messenger, but the situation is getting around the globe with each country pre model cuts even further away from reality. If we needing to take its share of the extra • Quietly Ssangyong has grown by were to plot the daily registrations during vehicles. Those in the know ‘know’ it 120% to 2,681 vehicles which helps September, or the end of any month/ can be achieved in a variety of ways, the economics! quarter, there would be more clarity but not by equating proper third party on the data and what it really means. sales to customers to the registration The message is clearly know your This is not a steady flow of private and data. The value of the published SMMT brand and have plenty of cash – fleet customers passing through vehicle statistics has to be lessening as the top profitability is not around registrations showrooms with an amount of cash to down forces hold sway and eventually alone, it is margin driven and that can spend – it is more about ensuring vehicles the used market will reach saturation relate directly to the manufacturer produced find a home in one form or and then..? What will be the average support to achieve volume targets. Get it another and the retailers meet ever- size of a motor retailer – 50+, 100+ sites right and profits roll in, get it wrong and increasing targets which show no sign of and multi-brand with significant cash suffer the consequences. abating year on year. reserves located in densely populated You could use the analogy that the areas? Quite feasible but not before the ship is sailing but the seas have gone rough seas take their victims. from calm to very choppy and the job So of the tables themselves, what do of keeping everything afloat is more we see: perilous as the seas get more choppy – • nine month registrations at 2,096,886 not a pleasant experience at all. However, showing a 7.08% increase over 2014 if the ship has the correct coordinates, • Ford still number 1 for volume it can find some shelter and make (268,328 vehicles) and market share

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Commercial vehicles (CV) shine We reported in our last edition of Messenger that CV and Truck were both going great guns – and the nine month point in the year sees no change in that. Whilst the cumulative growth has come down from the half year levels, CV still show a nine month growth of 17.4% over 2014 and Truck 37.3%. For all the reasons previously explained, this is a real pointer to the state of the economy and bodes well for the big confidence factor. In the detail itself, Ford retains its number 1 slot for volume in under 3.5 tonnes at 75,601 vehicles, an increase of 21% over 2014. Vauxhall shows the largest gain at 38% but Volkswagen retains overall number two slot at virtually 35,000 vehicles registered. The message is clearly In line with the performance of its know your brand and have passenger car growth, Renault has lifted plenty of cash – profitability registrations over 2014 by 30.6% which alongside its erstwhile partner, Vauxhall, is not around registrations alone, makes for pleasant reading. it is margin driven and that can Trucks continue to do well and the top four manufacturers have achieved relate directly to the manufacturer growth in excess of 30%, in the case of support to achieve volume targets. Scania 67%. Whether this purple patch Get it right and profits roll in, continues will depend a lot on haulage which already seems to be at saturation get it wrong and suffer the point on our roads – or are we being too consequences. negative here, newer more fuel efficient and emission-friendly trucks all positive factors that have to be good news.

Paul Burrows Director Downstream Automotive Grant Thornton UK LLP

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Environmental issues come to the fore too early

Throughout the last forty years in the life of the automotive industry, there has been an uneasy tension between manufacturers, environmentalists and governments over emissions and just how, or not, polluting and harmful vehicle emissions really are, and the long term issues to health and the planet.

The Volkswagen fix for emissions tests this is now going to backfire with some commentators note, help reduce has brought the whole environmental force, especially in the litigious US. greenhouse gases but what else do diesels subject to a much quicker final battle We are aware that ambulance- emit? All-in-all, the issue can be fixed than any side expected – it simply chasing lawyers are already corralling by VW but it is going to cost a fortune cannot now be ignored. Set aside the customers for the inevitable plethora of and residual values of vehicles may be US Regulator saying it had been taken class actions. In the UK it has not taken impacted. Environmentalists will be aback and that VW Group ‘went above long for websites to appear with the lobbying government to resolve the and beyond in its efforts to game the same objective. We have already been bigger issue – our planet! system and deceive consumers’ and set discussing with one pre-eminent law This is where we started – one aside the initial 37% decline over two firm what claims might cover – how commentator described the VW days of the Volkswagen share price. about contract law for a starter when scandal as worse than Enron which Much more is at stake. consumers get their promised ‘fix’ and was obviously ‘fatal’. All parties have On a very simple front, VW has potentially find performance reduced convinced themselves that the diesel created a software cheat to enable (although there are reports of a brand engine is the solution to follow and a diesel engine to pass a stringent commitment to retain set levels so this that may now be completely wrong emissions test, recognising the rolling may not happen at all). with huge implications. The same road style environment and enabling But back to the environment – the commentator described ‘clean diesel’ as the engine to pass when at its optimum gas at issue is nitrogen oxide and it having the same meaning as ‘clean coal’ – output it should have failed. That means is harmful. Believe it if you will, but not a happy thought unless this situation every VW effected has potentially certain systems in use have a separate gets resolved with absolute actions and been emitting ‘harmful’ gases in tank of a chemical called ‘urea’ which clarity for the consumers across the excess of agreed tolerances and that breaks down NOx, the process called world who will be wanting to do their is an environmental issue of major ‘selective catalytic reduction’ – but not bit for the environment. proportions. But the situation is even the VW diesel engine apparently, it On the positive side, a once and for more complex. uses a ‘lean NOx trap’ which is cheaper all resolution will be very helpful for According to technical boffins, to install but does have the negative all concerned. the software was a cost effective way performance consequences when in to turn off diesel emissions controls normal driving conditions. except during official tests and in this The UK government has a structure way retain fuel efficiency under normal in play to tax emissions – but that driving conditions. The opinion is relates to CO2 and not NOx, confusing that VW engineers were trying to find a and now likely to come under intense happy medium for their customers but scrutiny. Diesel fuel efficiency can,

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Case Study – Another successful disposal led by Grant Thornton

Grant Thornton recently advised on the sale of a premium motor retail business under the JLR banner, guiding our client through the “The team at completion process, liaising closely with the Grant Thornton did a fantastic acquirer and the brand at all stages to create job for us driving the best value the right environment to maximise value. on the successful sale of our dealership. Our direct knowledge and relationship with From the start they understood our values, all parties involved proved highly advantageous took account of our goals and objectives and to the process and ultimately our client. We dealt professionally and diligently with all were able to agree a range of potential buyers aspects of the sales process. Their experience with the brand, create competitive and knowledge of the automotive sector tension and lead negotiations was hugely significant for us in selecting to ultimate conclusion. We them as a partner, and their existing also provided tax advisory “We have been services. delighted with their relationships with all the major (Grant Thornton’s) work players in the market made them and I would thoroughly a clear favourite.” Our client was very happy recommend them to anyone to provide the following looking for high quality feedback: a very positive advisory services.” endorsement indeed.

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An upbeat reporting season for Motor Retail Plc

A robust contribution from new and Inchcape UK Performance in Inchcape’s UK business used vehicles fuelled a strong reporting was robust, with an 11.2% increase in revenues and a 2.9% rise in trading profits. season for the UK’s listed motor retailers. Trading margins declined in both the retail and the distribution businesses, due The new vehicle market grew at an in part to strong growth in new vehicle sales impacting mix, weaker used vehicle annualised rate of 7.1% (September year- margins, and IT amortisation charges. to-date 2015), underpinned by attractive PCP packages, strengthening economic First-half like for like revenue at Pendragon rose at an annualised rate growth, improving consumer confidence, of 10.7%, while gross profit increased by 5.7% and operating profits rose and persistently low interest rates. by 17%. Both Stratstone and Evans Halshaw performed well with improved revenue growth in most departments. However, the group’s new and used car All reporting, downstream businesses gross margins showed signs of a more reported a strong performance during the challenging environment. period. Inchcape was the first to report Plc Lookers reported a strong trading its results, followed by Pendragon, performance for the first half of the year, attributable to both the motors and Lookers, Marshall and Vertu. parts businesses. Revenue increased to £1.75 billion and profit before tax rose at an annualised rate of 6% to reach £39.9m. The independent parts operation continued to grow, underpinned by investment in the core business of FPS.

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Marshall Motors Plc Table comparison Marshall Motors’ first set of results The following tables provides an ‘interactive’ comparison of like-for-like revenue as a listed company reflected a strong growth rates and also absolute gross profit margins for each division of four of the contribution from its retail and leasing quoted Plc companies. These summary tables are intended to enable a motor retail divisions. Revenues increased by 16% business to calculate a direct comparison: during the first half of 2015 and profit Plc Like-for-Like (“L4L”) Comparable Table before tax grew by 9.8% to £10.5m. The L4L Growth Pendragon Plc Lookers Plc Marshall Motors Plc Vertu Motors Plc AN Other Limited retail division performed well, aided Group Revenue 10.70% 8.90% 6.70% 5.20% by acquisitions and by organic growth Volumes where PCP was a major contributor. New Vehicle Sales (Units) N/A 4.00% 5.90% 2.70% Used Vehicle Sales (Units) N/A 8.00% 2.70% 4.20% Aftersales (Revenue) 6.70% 5.00% 1.70% 6.20% Vertu Motors Plc Plc Gross Profit Margin (%) Comparable Table The sector’s reporting season was Gross Margins (%) Pendragon Plc Lookers Plc Marshall Motors Plc Vertu Motors Plc AN Other Limited wound up by Vertu Motors Plc, which New Vehicles Sales 7.50% N/A 7.30% 7.30%* reported a 14% year-on-year increase Used Vehicle Sales 8.30% 7.00% 7.10% 9.80% in group revenue, and a like-for-like Aftersales 64.80% 43.30% 44.80% 44.40% increase of 5.2%. A solid set of first- *New vehicle Retail and Motability only Source: Companies. N/A data has not been provided in the published H1 unaudited accounts half results was generated by recent acquisitions and growth in high margin aftersales activity, improvements in the Share price analysis underlying businesses, and the disposal As can be seen from the following share chart, our new Motor Retail Index (Average of underperforming assets. weighted share price performance, Inchcape Plc., Pendragon Plc., Lookers Plc., Vertu Motors Plc. and Cambria Motors Plc – Marshall Motors Plc currently excluded due to its short period of trading as a Plc) has outperformed the FTSE All Share Index. The sector’s performance can be attributed to continued good news from the monthly SMMT car registration data, a solid set of first-half results from all the motor retailers, and ongoing acquisition activity in the sector.

Motor Retail Index vs FTSE All Share (rebased) 125

120

115

110 Motor Retail Index 105 FTSE All Share (Rebased) 100

95

90 Price index (1 Jan 2015 = 100)

85 Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 Source: Thompson DataStream

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Who will “own” the customer?

In September, Grant Thornton Automotive and the University of Buckingham utilised their fledgling business-meets-academia relationship and invited MDs and senior directors from a number of captive and independent finance companies, contract hire/leasing companies and motor dealerships to the first in a series of innovative debate forums.

The title of this first forum was ‘Shaping own the customer. Bill is the former Powerful data as argued by Bill. the change and profit opportunity in CEO of Vauxhall UK and Vice President I was the third speaker, arguing that downstream automotive – Who will GM Europe, and has been a consultant leasing and fleet management companies own the customer?’, a title that was with Grant Thornton Automotive for will own the customer. Customers want deliberately framed to be forward- the past two years. services and that’s what these companies looking and controversial and to get Bill argued that customer data is the deliver. They already do a great deal the attendees engaged in debating this new global currency and that whoever for their clients and have plenty of potentially key issue vital to the future owns the data owns the customer. He opportunities to interact with them. In winners in the industry. sees manufacturers being positioned to many cases they are an essential part Clearly a forum of this magnitude take advantage of online systems and of their clients’ businesses. The quality with guests taking time out of their busy getting better connected directly with the and frequency of contact and the vast schedules warrants complete anonymity customer. The ‘connected car’ is a real amounts of essential client data they hold, and confidentiality around individual data feast and Bill noted new systems gives them pre-eminent status in the eyes views. We respect that in this summary, which will allow direct in-vehicle contact of the client and a perfect position from but nonetheless, we can pick out the with the customer with the vehicle which to sell more services. highlights in their broadest sense and transmitting mileage, engine oil life, The fourth and final speaker was report them within this edition. brake pad wear, tyre pressure etc. data to Owen Edwards, who recently joined The fundamental premise was that manufacturers in real time. the Grant Thornton downstream ‘ownership of the customer’ is not only The second speaker was Peter Landers, automotive team. Owen has worked in a desirable objective but an absolute Head of Grant Thornton’s Vehicle & the automotive sector for many years and necessity because it gives the ‘owner’ Consumer Finance Advisory practice. until recently was responsible for business the right to re-canvas the client for Peter took the position that the finance development at Inchcape Plc involved future business and thus enjoy profit companies will own the customer through in international distribution and retail opportunities. The overall conclusion was the primary medium of Personal Contract affairs. He argued that motor retailers will the customer cannot be owned, their Purchase (PCP) products which have own the customer. business has to be ‘earned’. become a key driver of new vehicle sales. The event was structured as a formal PCP product gives the finance debate, with speakers arguing in turn company plenty of reasons to contact that motor manufacturers, motor dealers, the customer, and, in addition, finance motor finance companies and fleet leasing companies already have lots of data at the customer companies will own the customer. Each their disposal that they can marshal when cannot be owned, speaker had six minutes to put over their recanvassing the client for more business; their business has respective case. data such as the customer’s credit profile, Bill Parfitt CBE opened the debate, how much they can afford and the to be ‘earned’ arguing that motor manufacturers will likelihood the customer will change car.

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He described the changes occurring selling ability. “We can teach product in the market and the risks these involve knowledge and skills, we cannot teach for retailers: increased competition, emotional intelligence”. changing customer habits (buying online, In closing the debate, Dr Sarah hunting for value), regulatory issues, Evans-Howe of the University of manufacturers and finance companies Buckingham’s business school gave having more interaction with the customer, a brief presentation on changing consolidation etc. customer behaviour in other sectors He posed the question to the invited of the economy. She pointed out that audience “Will retailers be redundant businesses nowadays aren’t looking in the future?” but then explained why for satisfied customers, they want they will still be an essential part of raving fans who will promote the the downstream delivery of services. business’s interests to their friends Customers want to touch cars, have test and in social media. This latter drives and obtain expert advice. Most revolution needs completely different customers continue to value the personal attitudes and perspectives. aspect of the sales process, which generates Businesses can no longer control better brand representation, customer their own message. Once they make retention, service offering and value for a move, a million people will pick up money. “Retailers actually talk to the that message, interpret it as they wish customer and know their true needs. They and go onto social media to give their just have to adapt their approach”. opinions (‘word of mouse’). And if That premise of adapting to change they have bad service they can easily get was picked up by the audience and even. (Look at ‘United Breaks Guitars’ over a lively debate of contrasting on YouTube). Customers are savvy – views and opinions, it stood firm as a they know where else they can get your principle. Whatever the future throws product and for how much. at the industry, there was a strong and Tarun Mistry, Head of Downstream unanimous view that service providers Automotive at Grant Thornton, closed from all sides of the delivery can and will the event by summarising the debate adapt to the changing needs and create a and confirming that the second Forum place for themselves as the industry enters in Spring 2016 will build on the topics its next phase of evolution. covered and take them a stage further, The CEO of one captive finance clearly identifying that it was highly company explained how his group was appropriate for key players in the altering the customer’s experience in the downstream industry to come together dealership, making it far more digital and have their say for the good of the and moving from traditional salespeople industry. The real focus will be on Colin Tourick to having ‘Apple-like’ sales consultants identifying where change will come, Grant Thornton Professor of who were being recruited for their how to influence it and where the Automotive Management emotional intelligence rather than their opportunities lie. University of Buckingham

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A time for M&A to gain even more momentum?

Grant Thornton’s Owen Edwards, explores the deal market and what changes we might see in 2016.

The UK all sectors M&A market is All UK Acquistions 2010/2014 clearly in a growth phase, boosted by an 4000 improving economic backdrop and pent- up investment demand from private 3500 equity and venture capital companies. 3000 Total M&A activity increased from 2,767 deals in 2010 to 3,431 in 2014 – 2500 a Compound Annual Growth Rate 2000 (CAGR) of 5.5%. No of Deals 1500

1000

500

0 2008 2009 2010 2011 2012 2013 2014 Source: Zephyr

The UK downstream automotive market Wholesale and Retail Trade and Repair Motor Vehicles and Motorcycles Acquisitions has followed a similar trend with a 80 CAGR of 13.2% over the same period, although this strong growth rate is 70 flattered by the relatively low starting 60 position of the data (Source Zephyr). The line chart illustrates growth since 50 2008 in the wholesale and retail, trade 40 repair motor vehicles, and motorcycle No of Deals markets (Source Zephyr). 30

20

10

0 2008 2009 2010 2011 2012 2013 2014 Source: Zephyr

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The automotive retail market remains • Exit strategies – manufacturers are relatively quick succession. A lot of the very fragmented. The largest player restructuring their networks and Plc activity has been focussed within the in the market has only 7.4% (source some smaller operators are taking the premium space especially JLR where AM-online, Revenue Top 200) of the opportunity to exit while the market there are structural changes aplenty. total market and the top-ten operators is buoyant, either through the owner’s The M&A market continues to account for approximately 41.1% retirement or the desire to crystallise grow across all sectors and industries. (source AM-online Revenue Top 200). a capital gain as operating and Grant Thornton’s specialist knowledge, At Grant Thornton, we believe that investment terms become ever-more experience and connections in the acquisition activity will continue during tough and push boundaries where downstream areas of the automotive the next 12 months, underpinned by businesses may feel uncomfortable industry offers our clients an invaluable several factors: in going. advantage, whether they are seeking • Market share creep – the larger the best price for their business or have operators in the market are slowly Grant Thornton has a strong history other objectives to fulfil when buying or becoming more dominant. Many of of successful transactions in the motor selling businesses. the Plcs are achieving growth in a retailing market. Over the last 12 mature market via acquisition. months, we have seen a significant • Rising interest from overseas increase in interest from potential buyers investors – interest from overseas and sellers of motor retailing assets. This is the first in a series of investors in UK automotive retail This is all very good news for Sellers but articles that Grant Thornton assets has intensified, born out by one of the problems being faced is the is writing on the Downstream Group 1 and Super Group recent very reason owners are keen to sell – the M&A market. In the next issue acquisition activity. Stock Market. We have six high profile of Automotive Messenger, we • Private equity and venture capital Stock Market members who are hungry will be reviewing how value – the investment companies are on for deals and are keen to find the best drivers are created and what the hunt. They are looking for value opportunities, which is exactly what makes a difference? If you and strong cash flow, and the scope they are doing. But this does not always would like a brief summary to combine businesses to turn them help because there are other deals that of the next instalment before around, gain economies of scale and they don’t do and these are much more Automotive Messenger is then sell but over a much more flexible difficult to rekindle. published, or would like timescale than the now infamous What we have seen missing are the ‘three years and go’ cycle. The last six private company deals buying other to know more about the months has seen a flurry of activity private companies and building slowly automotive services that in the US, with veteran investor to expand their portfolios. But perhaps Grant Thornton provides, Warren Buffet’s company Berkshire that is now changing and the momentum please get in touch with Hathaway looking to invest $1 billion set – last year Endevaour run by John Owen Edwards at in the automotive retail space. We Caney (and FD Andy Shackleton [email protected] or believe that more private equity and formerly of Grant Thornton) acquired by calling 07811 991128. venture capital companies will become Regent Automotive, seven interested in this retail space, attracted dealerships in . Then this year by strong cash flows and the potential we have seen Perrys acquire GK Group for large property asset plays. and Stoneacre acquire Autoworld in

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News snippets from the automotive industry

is beginning to take over the key Volkswagen issues could promote engineering selling points of product – An Apple a day is not what the alternative fuels unless it all goes horribly wrong. (One doctor ordered We have covered the Volkswagen issue note of caution applies – Tesla shares Apple CEO Tim Cook has again been in some detail within this edition but fell in late October because the brand waxing lyrically to the press about whilst all the focus has been around has ‘lost its recommendation from the ‘massive’ tech-led upheaval in the that brand’s current (and future?) Consumer Reports’. Evidently growing auto industry. We have referred to troubles, there have been two alternative pains and higher profile are leading to this frequently in previous issues of developments, one high publicity more complaints). Messenger and observed that we are not and the other that has been quietly Back to the future almost is ’s too far away from the generation who see developing over at least a decade. recent announcement that it is launching connectivity as way more important than Tesla makes electric passenger cars a hydrogen fuel-cell vehicle called a badge sat on some metal – harsh, and is familiar to most of us as the most ‘Mirai’. Hydrogen options have always but plausible. high profile concept of its kind. Now been a possibility and over ten years “What I see is software becomes Tesla have released ‘Autopilot’ which ago we viewed another brand’s product an increasingly important component does what it says on the tin, within the packed with hydrogen fuel cells on long of the car in future” Cook claimed. bounds of safety. This software, which term test with the late Sir Jack . “Autonomous driving becomes very is actually downloaded to customers as Miria is Japanese for ‘future’ and will much more important in a huge way a software update rather than a physical help the brand meet its long term carbon in future”. Not quite the comments of visit to a dealership, will allow a Tesla dioxide emissions target. a CEO looking to build cars, but then vehicle to automatically steer within Hydrogen fuel cells have a major again why would he? Software is the highway lane markers (US), change range advantage over electric and are also name of the game and Apple star in that lanes and parallel park. quicker to re-fuel. Infrastructure is still a field beyond doubt – their brand and We understand that up to 60,000 Tesla problem but this form of fuel should not trust is second to none. Model S vehicles have the hardware yet be dismissed as it has the attraction For now the company is focussing required to run the software but it of only water as a true by-product. on getting its CarPlay system in the will cost an extra $2,500 to enable the Depending on what Governments think forefront of drivers minds – Cook software in the US. of the diesel issue, this could be hugely wants to see people have an iPhone This is not full driver control but goes attractive as a vote winner in the ecology experience whenever they get into a car. some way towards it. Both Mercedes stakes. By plugging in to a car’s systems the and Volvo have such technology in some iPhone acts as entertainment, information of their products of their products and and communications gateway provider other manufacturers are developing – a very powerful proposition. How similar technologies. Tesla claim to be manufacturers are reacting to this varies the only ones using wireless to connect but it can only have a negative impact if and have also recently said that their that part of the consumer need exceeds ultimate objective is a car which behaves everything else, including that badge. like a ‘really good chauffeur’. With Google and Apple marching down this route we again flag that technology

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at least 124 deaths. The whole system is More US finger-wagging to becoming hardened to the point where More disruption from the disruptors! create concern testing is likely to jump off the Richter Whilst Uber shakes up the whole taxi We are all very familiar with the issues scale – so the Tesla concept above of self- industry, another European start up that have beset , Toyota drive cars must be way off! is creating the new model of ride- and now VW Group in the USA where sharing where motorists are paired with standards appear more stringent and the passengers needing a lift between cities. punishments definitely more severe. Yet Whilst BlaBlaCar is Paris based, it has another motor manufacturer has fallen More Uber versus Taxi battles – joined an elite club called ‘unicorns’ foul of errors in reporting and will now the war that won’t end by being valued at over $1 billion as a pay the high price for this misdemeanour. A couple of my colleagues were private tech start up, recently raising Fiat has admitted under- overheard debating the rights and $200 million in its latest funding round reporting notices and claims of deaths, wrongs of the new Uber approach including two US Venture Capital firms. injuries and other information as part of to hailing a ride – the knowledge, Ordinarily this would not warrant a their early warning system. regulation and investment were all under mention, but its success could result in In a real twist of events, it appears the microscope. Ironically the debate fewer vehicles sold and have an impact that the US body the National arose because a late night taxi could not on such operations as railways and Highway Traffic Safety Administration locate an address in London and our long distance coaches. Infrastructure ‘NHTSA’, had warned Fiat Chrysler in colleague was left mightily unimpressed! deficiencies create opportunities for July that there were problems with its Uber is not making many friends BlaBlaCar which is almost exactly where early warning systems and when said wherever it trades – it has fallen foul auto manufacturers seek to develop their manufacturer looked in to the issue, bam, of Authorities in France and the offerings and create volume, examples there were issues! The brilliantly titled Netherlands, the latter housing Uber’s being South America and . ‘Tread Act’ requires that manufacturers European Headquarters. The whole BlaBlaCar does tread a very fine line report to NHTSA within five days of the argument is the disrupter technology with regulations but seems to meet the relevant month end any claims that their angle and the impact that has on correct criteria. Motorists receive enough vehicles have been responsible for crashes convenience and cost. Black Cab drivers revenue to cover cost of fuel and other resulting in deaths or injuries of any rightly point to a legislation work running costs, but do not make a profit severity. This may sound very onerous around and level playing fields. Uber which would apparently invalidate their but with US legislation skewed very customers love the technology and insurance. In addition, BlaBlaCar avoids much towards ‘ambulance chasing’ legal flexibility. The war continues. ‘for-hire’ service regulations which, claims, it is very much ‘ball in the court’ as Uber very well know, is fraught of the manufacturer to own up to almost with danger, controversy and lots of any situation or face dire consequences. opposition! In fairness, the NHTSA has also been the subject of pressure to raise its detection standards. It apparently missed issues with ignition switches in a series of General Motors compact cars over a number of years, which was linked to

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News snippets continued...

is very positive and the perfect alignment Spectre – could this be the most of low interest rates, low fuel prices roars ahead poignant Bond movie yet? and ageing vehicles that need replacing This iconic brand executed what appears The new Bond movie is upon us and the makes a big difference with increasing to be a very successful IPO in October, DB10 car produced by consumer confidence. So the US appears raising $893 million by placing 17.2 will feature heavily and is on tour with to be a ‘proper’ market again, something million shares at $52 each in the US as dealers to showcase this very British to contrast with our earlier comments part of the off from Fiat Chrysler. of products. The problem is, however, around the UK. Things cannot be bad We understand this represents only a 9% that things are not too good at home for the manufacturers when you see stake in the Ferrari business, yet demand and the brand has recently announced statistics such as the top three models in was allegedly strong. Analysts suggest an a restructuring programme impacting the US have sold over 1.3 million units Enterprise value for the group of around around 300 of its 2,100 employees, in the nine month period! £12 billion and the plan/success impetus mainly non-production workers. will come from lifting production to The new CEO who is working to over 10,000 vehicles per annum, a rise of streamline the business quoted that the around 30% on current levels. brand currently ‘spends significantly UK production is going great guns more than it earns’ and the changes will We often focus so much on the be needed to keep investment viable in distribution and retail sides of design, development and engineering, the automotive we forget that the UK has Japan needs to be shaken up absolute lifeblood for success. Let’s hope a (currently) thriving production base Not the whole country, of course! But the ‘spectre’ of failure goes away, the film with exports leading the way. Only a the newly appointed head of one of is a box office success and the product few of the manufacturers are British the Japanese government investment races off the shelves – we will see. , nonetheless, the UK is benefiting funds is looking to trigger a shake-up from the improved European market in the country’s auto industry to avoid and you only have to look at examples it suffering the same fate as its once- like the new Q30 being built resilient electronics brands. A storming US market creates here in Sunderland to understand that He is clearly thinking big, citing supply issues – what a fickle continued growth will take the UK even concerns around technological advances industry further onwards. The big problem is the and vehicles being commoditised which Dealers who are looking for stock, what supply chain and where that sits – we consumer electronics experienced – he a novel concept, yet the reality in the are aware that components are arriving prefers to encourage consolidation inside US is evidenced by the remarkable sales in the UK in crates only to leave again as and out of Japan and openly stated growth. September as a month showed whole cars, and that is not great for the that “there are too many players in one a 16% rise over 2014 to 1.4 million units economy. industry”. leading to a seasonally adjusted and He has definitely not ruled out annualised sales rate of 18.17 million, the mergers with foreign companies and best for a decade. US consumer demand points to the success of the

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Nissan-Renault Alliance. The message Dennis. The objective is to produce is similar to the long held view of Fiat On the buses – Chinese style! zero-emission fleets for the UK over the Chrysler’s Sergio Marchionne around You may not remember the TV next ten years – there is a plan to build too many manufacturers in Auto and comedy series featuring the eponymous 2,000, single-deckers in Falkirk in a deal his more recent unsuccessful (to date) and bespectacled Olive, married in generating £660 million in revenue. courting of GM. to a family featuring a London bus If you live on London Bus route Time will tell but we do sense that driver and a bus conductor. Times number 98, be prepared to be amazed at last the industry sees a future in a have changed a lot and now electric – the double-decker is coming your changed world and recognises nothing propulsion has reached the red double- way and when you hop out in the rain, can stay the same. Balancing short to decker with the recent announcement there could be a , hybrid electric medium term profit whilst effecting that BYD, the Chinese battery maker, London Taxi just waiting to mop you change is a massive skill, we can only backed by Warren Buffett, will show off up! As you may gather, that is due out wonder who will come off best? The the world’s first electric double-decker very shortly and given Nissan’s all- Japanese head was astute enough to (and red) bus. electric delayed entry in to the market, refer to the supply chain as well, it is not Sino-British relationships appear it could be a real winner. immune from change. to be on a high at the moment, think nuclear power stations, and the latest innovation is a joint venture with Scottish manufacturer Alexander

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Registration data

UK new car registrations September 2015

YTD2015 YTD2014 2015/2014 FY2014 FY2013 FY2012 FY2011 Brand Units Share (%) Units Share (%) % Change Units Share (%) Units Share (%) Units Share (%) Units Share (%) Ford 268,328 12.8% 262,754 13.4% 2.1% 326,643 13.2% 310,865 13.7% 281,917 13.8% 265,894 13.7% Vauxhall 212,100 10.1% 210,357 10.7% 0.8% 269,177 10.9% 259,444 11.5% 232,255 11.4% 234,710 12.1% Volkswagen 182,441 8.7% 168,662 8.6% 8.2% 214,828 8.7% 194,085 8.6% 183,098 9.0% 179,290 9.2% Audi 133,300 6.4% 126,487 6.5% 5.4% 158,987 6.4% 142,040 6.3% 123,622 6.0% 113,797 5.9% Nissan 124,967 6.0% 106,890 5.5% 16.9% 138,338 5.6% 117,967 5.2% 105,835 5.2% 96,269 5.0% BMW 124,309 5.9% 113,520 5.8% 9.5% 148,878 6.0% 135,583 6.0% 127,530 6.2% 116,642 6.0% Mercedes-Benz 116,509 5.6% 99,096 5.1% 17.6% 124,419 5.0% 109,456 4.8% 91,855 4.5% 81,873 4.2% 84,593 4.0% 85,418 4.4% (1.0)% 103,566 4.2% 105,435 4.7% 99,486 4.9% 94,989 4.9% Toyota 81,604 3.9% 76,055 3.9% 7.3% 94,012 3.8% 88,648 3.9% 84,563 4.1% 73,589 3.8% Hyundai 70,623 3.4% 65,564 3.3% 7.7% 81,986 3.3% 76,918 3.4% 74,285 3.6% 62,900 3.2% Citroen 66,338 3.2% 66,542 3.4% (0.3)% 83,397 3.4% 78,358 3.5% 73,656 3.6% 68,464 3.5% 64,208 3.1% 62,538 3.2% 2.7% 77,525 3.1% 72,090 3.2% 66,629 3.3% 53,615 2.8% Skoda 60,144 2.9% 60,386 3.1% (0.4)% 75,488 3.0% 66,081 2.9% 53,602 2.6% 45,061 2.3% Renault 59,221 2.8% 50,732 2.6% 16.7% 66,334 2.7% 46,173 2.0% 40,760 2.0% 68,449 3.5% Fiat 51,867 2.5% 53,781 2.7% (3.6)% 67,162 2.7% 60,198 2.7% 49,907 2.4% 41,612 2.1% Land 49,881 2.4% 45,483 2.3% 9.7% 56,200 2.3% 54,699 2.4% 48,626 2.4% 37,637 1.9% MINI 47,182 2.3% 36,584 1.9% 29.0% 53,661 2.2% 51,933 2.3% 51,324 2.5% 50,138 2.6% 43,563 2.1% 44,102 2.3% (1.2)% 53,544 2.2% 55,660 2.5% 54,208 2.7% 50,577 2.6% SEAT 40,520 1.9% 42,611 2.2% (4.9)% 53,512 2.2% 45,312 2.0% 38,798 1.9% 36,089 1.9% Mazda 37,923 1.8% 31,373 1.6% 20.9% 37,784 1.5% 31,228 1.4% 26,183 1.3% 31,219 1.6% Volvo 32,391 1.5% 30,784 1.6% 5.2% 41,066 1.7% 32,666 1.4% 31,790 1.6% 32,657 1.7% 28,706 1.4% 31,431 1.6% (8.7)% 37,395 1.5% 33,088 1.5% 24,893 1.2% 20,295 1.0% Dacia 20,386 1.0% 18,583 0.9% 9.7% 23,862 1.0% 17,146 0.8% – – – – Jaguar 17,966 0.9% 14,627 0.7% 22.8% 18,401 0.7% 16,210 0.7% 14,109 0.7% 13,787 0.7% Other 77,816 3.7% 53,836 2.7% 44.5% 70,270 2.8% 63,454 2.8% 65,678 3.2% 71,700 3.7% Total 2,096,886 1,958,196 2,476,435 2,264,737 2,044,609 1,941,253 Source: SMMT

• New car registrations in the UK reached their highest-ever diesels cumulatively from 49.8% in September 2014 to 47.9% in September, 462,517 cars were registered, a rise of 8.6% in September 2015. It remains unclear whether the recent on the previous year, as buyers took advantage of a range of news from VW has negatively affected demand for diesels in competitive deals on both vehicle and finance packages. This the UK market. September was the 43rd consecutive month of growth in the • There are no prizes for the best selling vehicles, although UK market. once again the Vauxhall Corsa splits the two Fords, Fiesta • Total registrations this year 2015, have reach 2,096,886 – 7.1% and Focus. The Ford Fiesta remains well ahead in cumulative higher than at the same point last year. It is the first time in registrations with over 100,000 to date. Golf and Qashqai the month of September that the two million mark has been occupy positions 4 and 5 and whilst the latter is just under passed since September 2004. 10,000 vehicles behind, who can say what the VW emissions • There were gains across market sectors in both private and issue might do for the final quarter? fleet. The fleet segment in 2015 year to date increased its • The Audi A3 rules the premium brand roost at the nine share to 49%, versus year to date 2014 of 46.5%. This puts it month stage but only by a mere 2,750 vehicles over the ahead of private and could be an indication that production Mercedes C Class. BMW managed to catapult its MINI is beginning to reach saturation point and manufacturers brand ahead of the latter with 35,879 vehicles helped by an are turning to short and medium cycle markets to maintain enormous 8,754 registrations – or nearly 25% – in the month momentum. This will inevitably come at the cost of margin. of September. There must be some exhausted MINI salesmen • Demand for diesel vehicles remained high across all out there, look out for the product on the roads! categories, retail, fleet and business, but market share fell for

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EU and EFTA passenger car registrations September 2015

YTD2015 YTD2014 2015/2014 FY2014 FY2013 FY2012 FY2011 Country Units Units % Change Units Units Units Units Germany 2,407,938 2,281,671 5.5% 3,036,773 2,952,431 3,082,504 3,173,634 2,096,886 1,958,196 7.1% 2,476,435 2,264,737 2,044,609 1,941,253 France 1,421,435 1,337,315 6.3% 1,795,885 1,790,456 1,898,760 2,204,229 Italy 1,196,270 1,037,388 15.3% 1,359,616 1,304,648 1,403,010 1,749,074 Spain 783,892 640,673 22.4% 855,308 722,689 699,589 808,051 Belgium 392,522 388,095 1.1% 482,939 486,065 486,737 572,211 Netherlands 301,826 284,047 6.3% 387,835 416,730 502,479 555,798 Others 1,812,906 1,644,070 10.3% 2,155,916 1,941,817 1,936,369 2,142,520 Total EU 10,413,675 9,571,455 8.8% 12,550,707 11,879,573 12,054,057 13,146,770 EFTA 362,991 334,410 8.5% 455,680 457,310 474,036 460,229 Total EU + EFTA 10,776,666 9,905,865 8.8% 13,006,387 12,336,883 12,528,093 13,606,999 Source: ACEA

• Europe and EFTA really seem to be back on track • Outside the big seven countries, performances have again and having recorded growth at the half year of 8.2% been very positive. has posted 30% cumulative cumulative, the result for the nine months cumulative growth and Poland has improved from its half year increased to 8.8% on the back of some solid months. position of 1.1% to 5.4%, but is now being hunted down September 2015 is now the 25th consecutive month of by Sweden where registrations are now cumulatively less growth, clearly inclusive of the UK’s continuing success. than 10,000 units behind having started the year with This is notably being achieved with below average growth double that gap. The largest of the three EFTA countries, in Germany, the biggest European market. Switzerland, has recorded above average growth of 9.3% • Indeed it is very noticeable that the three big powerhouse but it will be interesting to see what happens to October markets of Germany, France and the UK have recorded when there was an imposed ban for a period on the sale of cumulative growth in 2015 over 2014 of below the 8.8% VW diesel product? average with the UK being the closest to that number. Italy is making a useful contribution being the fourth largest market with a growth rate of 15.3% including a Our expectation is for European consolidation to be very good month of September. more prevalent over the next few years. We already have • ACEA do point out in their press release that despite two projects in the region and expect there to be further passing ten million units for the nine months to 30 opportunities as owners take advantage of the improving September 2015, this is well short of the pre-recession market conditions to cash in their chips, and with cross- 2007 number of almost twelve million units. The natural border very much an easier proposition, especially within assumption is that there is a lot more to come which will the Euro-zone, more and bigger pan-European groups may be music to the ears of the European manufacturers – early emerge. There are still a number of independent distributors suggestions we have seen suggest that the Germans are still across Europe where the manufacturer has no National buying VWs despite the testing issue. VW Group still has Sales Company – this creates a different dynamic which the biggest market share at 25% and it will be interesting contributes to the country-by-country retail structures. to see if others take advantage of their challenges and start to bring that market share down? • Nissan has again claimed a substantial increase in market share and posted a growth of over 21%. Mercedes, , Mini, JLR and Mazda have all posted growth in excess of 10% which is very creditable and there are plenty of others around the ten percent mark. Nissan will be hoping that their Infiniti premium brand takes off in a major way in 2016 when the Q30, built in Sunderland for the European market, is finally launched. The only loser of note has been Honda with a fall of 3.6% but there is new products on the horizon and a famously loyal customer base to keep up spirits!

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Registrations of new commercial vehicles in the United Kingdom

Commercial vehicles < 3.5t YTD September 2015 YTD September 2014 2015/2014 FY2014 FY2013 FY2012 FY2011 Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share % Units Share % Ford 75,601 26.6% 62,439 25.8% 21.1% 82,519 25.7% 68,054 25.1% 62,372 26.0% 70,226 27.0% Volkswagen 34,963 12.3% 30,821 12.7% 13.4% 40,238 12.5% 36,925 13.6% 30,956 12.9% 31,716 12.2% Vauxhall 31,038 10.9% 22,494 9.3% 38.0% 32,619 10.1% 29,736 11.0% 26,524 11.1% 33,514 12.9% Peugeot 26,390 9.3% 24,149 10.0% 9.3% 31,867 9.9% 21,230 7.8% 21,272 8.9% 19,328 7.4% Citroen 23,996 8.4% 21,486 8.9% 11.7% 30,464 9.5% 22,989 8.5% 18,379 7.7% 17,275 6.6% Mercedes 22,689 8.0% 21,344 8.8% 6.3% 27,228 8.5% 25,667 9.5% 21,055 8.8% 19,495 7.5% Renault 17,577 6.2% 13,453 5.6% 30.7% 18,170 5.6% 12,978 4.8% 14,710 6.1% 19,382 7.5% Nissan 9,708 3.4% 8,609 3.6% 12.8% 10,270 3.2% 10,619 3.9% 10,136 4.2% 10,854 4.2% Fiat 9,456 3.3% 10,043 4.1% -5.8% 12,629 3.9% 12,019 4.4% 7,060 2.9% 8,130 3.1% Toyota 8,118 2.9% 7,615 3.1% 6.6% 9,611 3.0% 8,063 3.0% 7,747 3.2% 8,391 3.2% 8,019 2.8% 6,226 2.6% 28.8% 8,344 2.6% 6,644 2.5% 5,917 2.5% 6,209 2.4% Mitsubishi 6,992 2.5% 5,374 2.2% 30.1% 6,946 2.2% 5,927 2.2% 4,853 2.0% 7,341 2.8% Isuzu 4,649 1.6% 4,047 1.7% 14.9% 5,502 1.7% 4,112 1.5% 2,762 1.2% 2,431 0.9% Iveco 3,097 1.1% 1,947 0.8% 59.1% 2,769 0.9% 3,275 1.2% 3,593 1.5% 3,628 1.4% Other 1,868 0.7% 2,024 0.8% -7.7% 2,510 0.8% 2,835 1.0% 2,305 1.0% 2,233 0.9% Total light CV 284,161 242,071 17.4% 321,686 271,073 239,641 260,153

Commercial vehicles > 3.5t and < 6.0t YTD September 2015 YTD September 2014 2015/2014 FY2014 FY2013 FY2012 FY2011 Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share % Units Share % Ford 2,196 34.5% 1,302 26.2% 68.7% 1,852 27.2% 2,767 40.8% 2,879 40.4% 1,381 25.0% Fiat 1,580 24.8% 795 16.0% 98.7% 1,313 19.3% 1,231 18.1% 1,416 19.9% 1,171 21.2% Mercedes 1,461 23.0% 1,458 29.3% 0.2% 1,889 27.8% 1,485 21.9% 1,367 19.2% 1,458 26.3% Peugeot 531 8.3% 303 6.1% 75.2% 386 5.7% 200 2.9% 359 5.0% 354 6.4% Iveco 230 3.6% 326 6.6% -29.4% 402 5.9% 420 6.2% 444 6.2% 567 10.2% Volkswagen 160 2.5% 302 6.1% -47.0% 401 5.9% 342 5.0% 251 3.5% 221 4.0% Vauxhall 104 1.6% 105 2.1% -1.0% – – – – – – – – Renault 59 0.9% 61 1.2% -3.3% 74 1.1% 117 1.7% 215 3.0% 113 2.0% Other 43 0.7% 322 6.5% -86.6% 480 7.1% 226 3.3% 195 2.7% 269 4.9% Total heavy CV 6,364 4,974 27.9% 6,797 6,788 7,126 5,534

Commercial vehicles > = 6.0t YTD September 2015 YTD September 2014 2015/2014 FY2014 FY2013 FY2012 FY2011 Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share % Units Share % Daf Trucks 8,037 26.1% 5,426 24.2% 48.1% 8,616 24.9% 14,046 28.4% 11,153 28.9% 9,863 26.4% Mercedes 5,390 17.5% 3,996 17.8% 34.9% 6,485 18.7% 8,793 17.8% 6,422 16.6% 6,326 16.9% Scania 4,984 16.2% 2,981 13.3% 67.2% 4,752 13.7% 6,846 13.8% 4,652 12.1% 4,071 10.9% Volvo Trucks 4,075 13.2% 2,603 11.6% 56.6% 4,074 11.8% 5,524 11.2% 3,976 10.3% 4,624 12.4% Man 2,611 8.5% 2,316 10.3% 12.7% 3,381 9.8% 4,934 10.0% 4,324 11.2% 4,772 12.8% Iveco 2,277 7.4% 1,945 8.7% 17.1% 2,876 8.3% 3,773 7.6% 2,908 7.5% 2,834 7.6% Renault Trucks 1,690 5.5% 1,420 6.3% 19.0% 2,050 5.9% 2,534 5.1% 2,555 6.6% 2,763 7.4% Other 1,713 5.6% 1,724 7.7% -0.6% 2,438 7.0% 2,980 6.0% 2,586 6.7% 2,157 5.8% Total heavy CV 30,777 22,411 37.3% 34,672 49,430 38,576 37,410

Sources : SMMT

• Truck demand was especially strong in the month of falls in the 2.5 to 3.5 tonne bracket and that segment September posting a 24.8% increase over 2014 with Mercedes represents one of the largest increases cumulative for 2015 leading the way and doing exceptionally well. at 21.4%, so above the average. What brings the percentage • We commented earlier about the factors prevalent within the down overall is the second largest segment, 2.0 to 2.5 tonne white van market and the total rise of some 17% sits atop where the growth has been a miserly 4.5%. This suggests an almost continuous growth since January 2010 when CV to us the result of rapid growth in home delivery of food registrations were less than 200,000. The rolling year trend is produce and online purchases, likely to continue for some now double five years ago which goes a long way to explain time yet. why Ford Transit franchises are so popular and equally the historic contribution to VW dealer performance where van and passenger car sit in the same portfolio. • Within the under 3.5 tonne category of CV registrations, there are some interesting statistics which we have not previously documented. The biggest share of registrations

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Eddie Williams Alistair Wardell Chris Petts Richard Lewis Cardiff Leeds/Newcastle Reading T +44 (0) 121 232 5268 T +44 (0)29 2034 7520 T +44 (0)1912 037 787 T +44 (0)118 983 9651 M +44 (0)7808 574 841 M +44 (0)7815 062 698 M +44 (0)7973 714 191 M +44 (0)7538 551 468 E [email protected] E [email protected] E [email protected] E [email protected]

Nigel Morrison Hazel Platt Malcolm Gomersall Rob Caven Bristol Corporation Tax Partner Milton Keynes T +44 (0)117 305 7811 T +44 (0)1908 359 519 T +44 (0)1908 359 563 T +44 (0)141 223 0629 M +44 (0)7976 854 440 M +44 (0)7827 876 468 M +44 (0)7815 143 361 M +44 (0)7774 191 272 E [email protected] E [email protected] E [email protected] E [email protected]

Darren Bear Joe McLean Steve White Cambridge Leeds/Newcastle Milton Keynes T +44 (0)122 322 5673 T +44 (0)113 200 1506 T +44 (0)1908 359 667 M +44 (0)7977 147 108 M +44 (0)7970 471 894 M +44 (0)7710 748 532 E [email protected] E [email protected] E [email protected]

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