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February 2015 2014 ends with a bang – bring on 2015

The has had an our corporate finance colleagues to the world of motor finance and leasing exceptional year in the UK during successfully sell Bedfordia Automotive – brokerage, and motor insurance 2014 and in terms of registrations of three BMW dealerships trading as Elms providers. new passenger , ended the year at BMW – to Group 1 after a competitive Our international offering is gaining 2.476million, some 9% up over 2013. The tender process with some excellent buy momentum and we are delighted to last year has also been a momentous year side candidates. welcome Bas Hoekstra to our team – Bas for Grant Thornton’s automotive team, We are delighted to have assisted lives in Amsterdam and has recently both upstream and downstream. Endeavour Automotive with its held roles as CEO of I.N.G. Vendor In this edition, Neil Barrell, who heads acquisition of Regent Volvo in , Lease International and Sixt Rent-a- our upstream offering, discusses the issues providing due diligence services for this Romania, bringing with him a wealth of around the Supply Chain in the UK. We substantial transaction. Endeavour is a downstream expertise and a substantial are gaining significant respect within the relatively new group and now has a really contact base. mid-sized Tier 1 and Tier 2 supply chain strong footprint north of the Thames and Please enjoy this newsletter and can community, and Neil has been in high in the lower Home Counties. 2015 has we wish everyone a successful 2015. demand as component suppliers seek help also started with a flourish and we hope to with their strategy to grow and spread report more deals in future editions. their own risk. Also in downstream, we have been Contents In downstream, Tarun Mistry and Paul extremely active in the asset finance space. Burrows have been looking to expand our We provided advisory services when 02 Can volumes be sustained? sector footprint in to broader areas, and Mann Island was acquired by Investec 04 Benefits of a UK based supply chain we should have further news in our next Asset Finance Plc in 2014. Mann Island 06 Case study edition. Meanwhile, activity levels have is a leading Motor Finance brokerage been very positive and we are delighted to business in the UK operating in the 07 ‘Work the franchise model – don’t continue to support change management motor finance space. Our uniqueness is fight it’ whether driven through M&A activity or our specialisation and with a team now 08 News snippets business improvement. exceeding 30 people, we boast credentials We recently worked alongside in the whole downstream space, including 10 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)121 232 5221 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] Automotive Messenger

Can volumes be sustained to replicate the success of 2014? The year has ended with 2014 being a record 10 year high – 2015 sustain the momentum or will we see flat lining?

There can be no arguments that 2014 Premium stars and we suspect their marketing strategies has been nothing but an unqualified will have a strong Plan B if overall volumes success for new vehicle registrations. The The real stars can once again be found do cool off. final count reveals 2,476,435 new cars in the premium space, with , BMW registered, which is 9.3% ahead of 2013 and Mercedes registering over 430,000 Newish entrants take small and consolidates the UK as the second units between them or just under 20% steps largest European market by quite some of the total for the UK. This is a real It is also nice to see some of the newer, distance. With the UK sterling exchange change which we all recognise and we developing brands with small volumes, rate in a reasonable place, product is worth have commented on throughout the last moving forward. MG, yet again with a pushing in to the UK – but more of that eighteen months. You can’t tag non- Chinese connection, increased its volumes later. Firstly, let us look at the individual premium as volume anymore because by 360% and although small in real terms, performances. premium is also volume. Take Audi, they shows some encouraging signs. Infiniti Ford has retained its lofty position have registered more new vehicles than has also moved in the right direction with as number one for volume, registering and Honda added together, quite a 93% volume increase over the year. over 326,000 new cars, ahead of Vauxhall astounding when you consider that Toyota New product is due for introduction, and by 57,000 and 112,000 is the world’s biggest volume player. built in Sunderland, and with additional respectively. It is unlikely that Ford will The only real mainstream loser was network representation points, we hope ever be knocked off its perch unless it Peugeot with an overall decline in growth that volumes can start to move to the levels makes a major howler or new product of 1.77%. It is well documented that this anticipated when the brand was introduced delivery dries up. What is of more interest brand has had a challenging few years and to the UK. is momentum, and both Ford and Vauxhall has been linked with a variety of partners Brands such as and have nudged forward around 5% over the year – culminating in the Chinese arrangement. also recorded strong performances and we with Volkswagen at double that rate. It Other than Peugeot, all brands registering suspect their attraction to the bigger groups should be clear now in the market place any sort of volume have moved forward in will increase in time. Representation is what each brand aspires to in 2015, this 2014. One notable success has been Volvo, so important and getting it right in terms will drive quarterly behaviours. Again, again with a Chinese connection, who of customer service an absolute essential more of this later. have grown their volume by 25% and in so doing, have pushed up their market share. to building brand loyalty on the back of As we have previously commented, market increased volumes. This applies not just share is really important to most brands to sales but also service where it is well

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documented that independent garages still We know that margins have been eat in to the franchised dealer’s ‘lunch’. challenged in used due to the type of We were fortunate to recently attend one product being offered – a lot has been brand’s dealer conference and this was the vehicles previously registered and thus message – retention is fundamental and recorded in the SMMT statistics. We a number of tools have been developed always refer to this as remarketing rather to help achieve this. Nonetheless, and than selling, and 2015 will be a key year speaking to a colleague on the receiving in defining future trends. Used product end of some bad customer service, it is has been scarce and values have held up, still down to people with common sense but with more PCP returns kicking in, the and a willingness to go the extra mile challenges are to retain the entrepreneurial which invariably generates the right sort of aspects of used as well as meeting new customer goodwill. targets. No mean feat to achieve this, there is much good and more expensive The crystal ball of 2015 product around in the independent used So what will 2015 hold for UK car networks. registrations and the dealer network? So we remain positive and optimistic, Speaking with dealers since the new year, but also realistic. The dealers with deep there is much optimism but also a large pockets, and those who are excellent in blanket of caution that new volumes their delivery, will continue to thrive. The cannot continue to grow without eating others, well consolidation continues apace in to the used market. The interaction and we expect to see one or two more between new and used remains delicate, difficult situations as the pressure builds and with Personal Contract Purchase and options become limited. (PCP) renewals starting to make inroads in to a retailer’s annual registration target, there is a strong case, as one prominent CEO has explained, for growth to be totally at the expense of used.

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What are the benefits of a UK based supply chain?

Automotive can be seen as very The UK supply chain is currently only What are the perceived glamorous – just visit one of the awarded 36% of the global purchasing barriers? major auto shows – and this is what spend of the UK based Original Equipment Manufacturers (OEM). This • The lack of capability within the tends to receive all the press. But represents a significant opportunity for domestic supply base is an assumed what about the hard yards in getting companies within the supply chain to reason for this low level of UK based the product to market and creating expand their offering and realise their purchasing. However, the SMMT a production cycle that is efficient own growth ambitions as a result of their estimates that 80% of the components and profitable. Grant Thornton’s customers’ success. The need for a stable required for manufacturing a vehicle can Automotive offering is multi-faceted and competitive supply chain to support be made within the UK. continued growth within this sector is and totally unique. We provide • Price is another perceived barrier, but highlighted by the high performance a study by the Automotive Council in services to manufacturing and supply within the UK vehicle production. November 2014 found that a significant chain (‘upstream’) and distribution/ The key benefits of having a UK based portion of the goods imported are from selling (‘downstream’) which gives supply chain are; proximity, reducing within the EU and from countries us an unrivalled feel for the whole logistics costs, complexity and lead times. which do not tend to be viewed as industry and how it ticks on the This becomes increasingly important for low cost. This includes 27% of goods components that are difficult to transport, global platform. In this article, imported from Germany, 10% from such as wheels which are both awkwardly France and 5% from each Belgium and Neil Barrell, Head of Automotive shaped and fragile, and therefore have Italy and suggests that price is not a Upstream, considers the current state significant transportation costs associated barrier to resourcing from within the of the UK Supply Chain which has with them. A local supply chain also allows UK. In addition, exports from the UK huge potential on the world stage. for increased flexibility with a drastic automotive supply chain total £4.5bn, Neil is an operational specialist and reduction in lead times between order and indicating that there are UK suppliers delivery which when viewed correctly has assisted many blue chip Suppliers capable of competing in the global reduces the real cost of procurement. market. with their strategies. • The availability of necessary financing and skill base may be preventing suppliers from investing in their operations and workforce, therefore restricting their ability to capitalise on the opportunities available to them.

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How can you overcome these The operations of UK automotive perceived barriers? suppliers need to be optimised to ensure that the competitive advantage generated by Growing the UK supply chain, which their location and associated lower logistics already provides 82,000 jobs, is substantially costs can be maintained and reflected in supported by the UK Government, the customer offering. For example, the and there are a number of schemes and productivity of the UK labour force falls initiatives designed to assist with this. significantly below that of European Grant Thornton has carried out multiple competitors; improving this will directly projects focussed on helping suppliers to impact margins. access the support that is available to them. As many OEMs are expanding globally In recent months we have advised and moving towards simultaneous a number of businesses on the use of platform launches worldwide, the ability government support to enhance their of the supply chain to support this growth development. Some recent examples will be key to building strong customer include: relationships. In some cases, this will also provide the opportunity for a supplier • Project W, investigating the feasibility to increase their own global footprint of establishing a new manufacturing alongside customers, providing a route process in the UK for a US backed tier into new markets with reduced risk and one supplier. We worked in conjunction uncertainty. with the Department of Business, In summary, there is a major connection Innovation and Skills, Automotive between upstream and the continuing Investment Organisation and Local health of downstream, and it is so simple. Enterprise Partnerships to develop a If more jobs could be created in the detailed understanding of the most UK supply chain, that is good for the effective location for the facility to best economy, employment creates confidence deliver a viable solution to an OEM’s and confidence creates a better spending needs. This project will potentially result environment. You can guess where this is in the creation of 300+ new jobs. going – what is the single most ‘regular’ • Project Magnum was an operational purchase families make? Naturally, a car. review for new technology at an existing And the more confident they are, you can facility which had requested government expect families to invest in newer and more support. The successful introduction expensive product, especially with the of the cutting edge technology has safe proliferation of PCP deals. guarded the facility and introduced around 100 new jobs.

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Case Study: Bedfordia’s Sale to

Background to deal The transaction Our corporate finance and automotive Grant Thornton advised Bedfordia teams advised Bedfordia Group plc on the throughout the whole process, from sale of Bedfordia Automotive to Group 1 engaging with BMW as a key stakeholder Automotive. in the deal, presenting the business to an Bedfordia Automotive, trading as Elms approved list of potential buyers, leading “Steve White, Paul Burrows and the BMW, was established in 1981 and opened negotiations in a highly competitive team at Grant Thornton did a fantastic job for us as part of the team involved with the its first BMW franchise in Bedford in process and project managing the successful sale of our Automotive business. Right 1990. Since then the group has acquired transaction to completion in line with the from the outset, they understood our values as a client, and also what we were trying to achieve; franchises in Cambridge and Stansted, agreed timetable. the breadth and depth of their knowledge of the growing the business significantly. As The sale agreement between Bedfordia Automotive sector was hugely significant for us in choosing them as partners to work with, but also in part of this growth, the business opened and Group 1 Automotive will see the particular, their understanding of the major players and a flagship facility in Cambourne that has dealerships continue to operate as Elms recent transactions in the sector, coupled with their macro experience of the corporate finance market been showcased by BMW as a template for Bedford BMW/, Elms Cambridge as a whole that made them a clear favourite. It their retail model in Europe. BMW/MINI and Elms Stansted BMW/ has been a pleasure working with them and we have been delighted in Group 1 Automotive is the third largest MINI. every way with their work.” dealer group in the US with interests in Steve White, who led the transaction, Brazil and the UK. The company has 14 commented “this is an excellent outcome John Ibbett dealerships in the UK, predominantly in for all the stakeholders in Bedfordia Chairman the South East of England including five Automotive, delivering a great result for Bedfordia Group plc BMW and MINI franchises as part of the the shareholders and ensuring that the Chandlers Group and Barons Group, and business is under the stewardship of a new also owns the ‘Essex Audi’ Group and the owner that will continue to build on the ‘think Ford’ Group. success of the business to date”. Paul Burrows, who leads Automotive M&A, and was an integral part of the deal team, added “this deal reinforces the strong activity levels that we are seeing in the sector at the moment with UK motor retail continuing to perform well as the economy recovers”.

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‘Work the franchise model – don’t fight it’

Primarily in the world of retailing, The key slide in our presentation was all The challenges faced by the downstream the franchise model has created an about leveraging the franchise opportunity industry create a real opportunity to uneasy stand-off between parties – we list below, the points covered; gain a competitive advantage by thinking inside and outside of the box. The need to • attach value to the metal – it is, after all, and energy expended has been find and retain customers, with changing the lifeblood of the relationship with the channelled in the wrong direction. buying habits, continues at a pace and customer We know from recent history the savvy CEO knows he has to blend that PCP is changing the buying • revisit parts operation opportunities – his strategy alongside that of his/her some brands have this better focussed landscape in a way never previously represented Brand Partners to create a than others experienced. Product is now more winning formula. • consider synergies with corporates – We will be more than happy to discuss affordable and the renewal nature enhance B2B via contract hire and daily these points further, please contact one of of a PCP contract means that every rental – consider brokerage options the team. year, more and more business can be • look at added value services within on renewal rather than repeat – the B2B – salary sacrifice products and decision to buy is almost reaching fleet management – take a leaf from the the point where it is a Seller’s world of contract hire where mobility decision and not the Buyer’s! solutions are being introduced to counter competitive pressures At the end of last year, we ran our • the old chestnut of better and world annual seminar for banks, funders and class, IT-led but people driven, customer finance providers to the automotive sector, relationship management. and one of the topics covered was messages to facilitate a broader view of downstream opportunities and threats from a practical perspective. The industry is changing and the theme used was ‘work the franchise model – don’t fight it’.

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News snippets from the automotive industry

This does not paint an especially The US is flying Chinese dealers flex their muscles positive picture for the global automotive Paul Melville, our colleague from BMW seems to be one of the first industry as China has been a serious Grant Thornton USA, commented in our European manufacturers to feel the shining light, and whilst the US is last edition that “the USA is back on an force of Chinese dissent with an alleged compensating to a certain extent, there upward curve...” and we also noted that compromise agreement with its dealer could well be over-capacity issues the IHS placed the bounce back of the US network costing it more in annual dealer surfacing again. Indeed, and in support of market at the top of their list of reasons rebates than originally offered. There have this argument, we found a comment from for the overall improvement in global been some incredibly delicately crafted JL Warren Capital that claimed “BMW’s automotive. In a recent press conference, words to explain the situation, the best wholesale deliveries to its (Chinese) dealers Mary Barra CEO of General Motors stated being a statement from BMW that it outpaced dealers’ own retail sales in all but that US sales for 2014 could hit the 2001 has “reached consensus on…optimised two of the first eleven months of 2014”. level of 17.1million, or if not quite as high, business measures and financial allocation If you ask UK dealers how their target only slightly down. The economic situation for the dealers”. There are some key negotiations are going, I suspect some will in the US is playing a huge role in increasing messages buried in these careful words. say challenging, which to us is a direct registrations with a stronger labour market, The rate of growth in Chinese registrations reflection of pressure on performing better job security and recovery in house is expected to have halved in 2014 over the markets to continue to absorb product prices creating confidence and a real ‘feel previous year – previously enjoyed double- scheduled to be built – such is the volume good’ factor. Barra spoke around the same digit increases were in danger of creating game in manufacturing there can be no time Ford announced a second increase in a false impression. Also, in October question of production being cancelled to its quarterly dividend to stockholders – how the Chinese government reported the balance the books, it all has to find a way the mighty fell and then picked themselves country’s lowest rate of growth in gross out of the delivery channel. We continue to watch and observe with interest but would up! domestic product for five years, suggesting the economy is settling down to more again identify that trust and relationship normal patterns. between parties is of paramount importance to deliver profit for all parties. Running aground and a bumper BMW is not alone in facing issues year! and much is being reported around the 2015 sales targets, a very common issue Various journalists were poised to wax for debate here in the UK. A prominent Technology, cyber-attacks and the lyrically about premium and luxury brands automotive analyst in China has suggested brave new world built in the UK when all of a sudden a that “Car makers have too much power We are all mindful that the world of the ship containing a variety of said products and dealers are in a very weak position” – car is changing with technology pushing ran aground in the Solent – could there be now where have we heard these types of the boundaries and more buyers being an ironic headline? No, just the opposite comments before? The deputy secretary- persuaded by the inside of the cabin rather because premium and luxury have had general of the Chinese Automobile Dealers than the exterior shape and style – subject a great 2014. Both and Rolls Association noted that “some of BMW’s to the right badge! This aspect of the Royce posted record sales and if you bend dealers suffered big losses last year (2014)” automotive industry continues to deliver definitions to include BMW’s Mini brand, and added “it’s a common situation in the new stories. Take for instance the recent that too hit the spot. UK production has premium brand market. It’s happening not decision by Toyota to share, for free, its overall taken a slight downturn in 2014 just to one or two premium manufacturers, staggering 5,680 patents relating to fuel- but there is optimism that 2015 will see but to all of them”. cell cars in an effort to promote further continued overseas demand. hydrogen-powered vehicle technology.

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We have heard more than once that you can start to influence the access and against the US dollar) creating an impossible hydrogen is the way to go, and not electric buying habits in lots of areas – a massive environment to set car prices. Such events – it will be interesting to see if others take financial prize. One Tech CEO said rather go a long way to explain why solid markets up the opportunity to use the patents for succinctly “the car is part of the mobile like the UK are controlled so tightly. the advancement of this type phone ecosystem, not the other of propulsion? way around”. Technology is again being discussed And to round off this long snippet, Trucks under the microscope around the impending change of CEO what about the self-drive car? Mercedes The EU has apparently identified a at BMW to the 49 year old Harald revealed its F015 concept car at the major cartel arrangement between Kruger, the youngest CEO of a major Consumer Electronics Show. The Daimler truck manufacturers from 1997 to 2011, car manufacturer. BMW has already CEO said “We see cars widening their including the alleged holding back of launched the i-brand, making extensive use functionality to become a third place to progress of emissions-reducing technology of lightweight carbon fibre, and will see relax, work and play”. The new buzz around Euro3. It has been reported that massive changes in technology taking hold phrase appears to be the “autonomous truck manufacturers have set aside funds to over the coming years. Interestingly, the car”, which means we drivers do very little pay large fines which could be up to 10% i-brand does not cut the carbon emissions – think parking aids, traffic speed control, of annual sales. Anti-trust regulations are of the BMW fleet enough to meet tough lane management at the very minimum. very severe and there will likely be more new EU targets – it needs more. The smart You have to admire the cleverness of it all. events and near misses as manufacturer money is for Kruger to oversee the power- BUT there is the sting in the tail. The technologies accelerate in time and train portfolio moving to almost 100% recent Sony cyber-attack suggests there the payback period is shortened as has hybrid and/or perhaps electric technology is fragility around IT security. There has happened in the mobile phone and – quite a thought and a challenge given the to be a more robust wall of protection tablet arena. customers desire for the ‘wrong’ type (for vehicles), so let’s hope protection and of products! innovation develop in harmony. So where is technology going? A year ago we commented on the manufacturers Look at ! attendance at the Las Vegas Consumer Russia hits the buffers After recent pictures hit the press of Electronics Show in January, and already the new Lookers facility in The world of automotive can be a fickle this year’s show is generating the headlines. Battersea, there were many collective gasps place, and no more so than major economies Technology companies are showing off at how big the facility looks, with space to where political actions can change the their wares in the context of the car domain display 24 models at any one time and new course of events at the stroke of a pen. – chipmakers etc who have been proliferate lounge areas. Despite raised eyebrows, it Russia has been up, down, up and back in mobile phone technologies and are now makes total sense for a brand to work with down again in the recent past, making the seeking a wider remit. This must be of a trusted partner to make a real statement automotive manufacturers’ lives difficult in concern for the motor manufacturer CEOs in the UK’s capital city, much like Sytner terms of forecasting overall vehicle volumes. as they seek to understand how to retain and Audi on the M4 corridor and others In the middle of December, the Central control over the process and change. As are planning to do much the same. Lookers Bank in Russia raised its main interest rate examples, Apple CarPlay and Android know what they are doing, so do Land from 10.5% to 17% literally overnight, with Auto link cars to phones in the vehicle Rover and the move to these brand centres the rouble heading downhill fast. It is well cabin. What everyone craves is control for major metropolitan areas continues to documented that several manufacturers of the data around driver habits – if you gain momentum. A combination of brand stopped selling product at the end of 2014 know what they do in the driver’s , statements and pop up style stores has with the currency slide (losing half its value an appeal.

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Registration data

UK new car registrations for twelve months to December 2014 (YTD)

FY2014 FY2013 2014/2013 FY2012 FY2011 FY2010

Brand Units Share (%) Units Share (%) % Change Units Share (%) Units Share (%) Units Share (%)

Ford 326,643 13.2% 310,865 13.7% 5.1% 281,917 13.8% 265,894 13.7% 280,364 13.8%

Vauxhall 269,177 10.9% 259,444 11.5% 3.8% 232,255 11.4% 234,710 12.1% 247,265 12.2%

Volkswagen 214,828 8.7% 194,085 8.6% 10.7% 183,098 9.0% 179,290 9.2% 174,655 8.6%

Audi 158,987 6.4% 142,040 6.3% 11.9% 123,622 6.0% 113,797 5.9% 99,828 4.9%

BMW 148,878 6.0% 135,583 6.0% 9.8% 127,530 6.2% 116,642 6.0% 109,418 5.4%

Nissan 138,338 5.6% 117,967 5.2% 17.3% 105,835 5.2% 96,269 5.0% 89,681 4.4%

Mercedes-Benz 124,419 5.0% 109,456 4.8% 13.7% 91,855 4.5% 81,873 4.2% 74,977 3.7%

Peugeot 103,566 4.2% 105,435 4.7% (1.8)% 99,486 4.9% 94,989 4.9% 109,324 5.4%

Toyota 94,012 3.8% 88,648 3.9% 6.1% 84,563 4.1% 73,589 3.8% 87,396 4.3%

Citroen 83,397 3.4% 78,358 3.5% 6.4% 73,656 3.6% 68,464 3.5% 73,317 3.6%

Hyundai 81,986 3.3% 76,918 3.4% 6.6% 74,285 3.6% 62,900 3.2% 61,752 3.0%

Kia 77,525 3.1% 72,090 3.2% 7.5% 66,629 3.3% 53,615 2.8% 56,114 2.8%

Skoda 75,488 3.0% 66,081 2.9% 14.2% 53,602 2.6% 45,061 2.3% 41,240 2.0%

Fiat 67,162 2.7% 60,198 2.7% 11.6% 49,907 2.4% 41,612 2.1% 53,092 2.6%

Renault 66,334 2.7% 46,173 2.0% 43.7% 40,760 2.0% 68,449 3.5% 95,608 4.7%

Land Rover 56,200 2.3% 54,699 2.4% 2.7% 48,626 2.4% 37,637 1.9% 37,272 1.8%

MINI 53,661 2.2% 51,933 2.3% 3.3% 51,324 2.5% 50,138 2.6% 43,894 2.2%

Honda 53,544 2.2% 55,660 2.5% (3.8)% 54,208 2.7% 50,577 2.6% 63,652 3.1%

SEAT 53,512 2.2% 45,312 2.0% 18.1% 38,798 1.9% 36,089 1.9% 32,935 1.6%

Volvo 41,066 1.7% 32,666 1.4% 25.7% 31,790 1.6% 32,657 1.7% 37,435 1.8%

Mazda 37,784 1.5% 31,228 1.4% 21.0% 26,183 1.3% 31,219 1.6% 45,449 2.2%

Suzuki 37,395 1.5% 33,088 1.5% 13.0% 24,893 1.2% 20,295 1.0% 21,484 1.1%

Dacia 23,862 1.0% 17,146 0.8% 39.2% ------

Jaguar 18,401 0.7% 16,210 0.7% 13.5% 14,109 0.7% 13,787 0.7% 16,417 0.8%

Other 70,270 2.8% 63,454 2.8% 10.7% 65,678 3.2% 71,700 3.7% 78,277 3.9%

Total 2,476,435 2,264,737 9.3% 2,044,609 1,941,253 2,030,846

Source: SMMT

• Year on year registrations have increased by 9.35% which is • The overall registration total represents the best since 2004, an excellent result. However, we have identified, in line with and in fact the fourth largest of all time! Every month in SMMT comments, that the rate of growth is slowing. During 2014 saw an increase, and December 2014’s rise was the 34th 2014 the quarterly growth has been Q1 – 13.7%, cumulative consecutive month of growth. This statistic is beginning to Q2 – 10.6%, cumulative Q3 – 9.1% and full year 9.3%. The look and feel like the length of the 0.5% interest base rate, and SMMT’s early prediction is for “a more stable 2015 as demand in support of that, the private buyer share held firm at 47.6% levels off”. We think that just under 2.5million feels about of registrations for the year. right to keep the market positive but still under control – as • Corsa came out top in the month of December for the leading the year progresses, more PCP repeat business should kick in models, but was unable to disturb the usual Fiesta, Focus, to add some stability to the overall registration levels. Corsa one-two-three for the twelve months. There is so much

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familiarity in those leading brands as Golf comes in at fourth New car registrations place and the Audi A3 remains the leading premium brand model. All cars 2015 forecast • In terms of movers and shakers, no great surprises. Audi maintained its superiority in terms of registrations ahead of BMW by some 10,000 units and can now add that trophy to its achievement last year. Volvo has done wonders with new product and has seen registrations grow by over 25%. Dacia, with its low cost image, has grown 39% following its entry in 2013. Not a bad introduction at all, but when you think Audi is now at 159,000 units, having been transformed from a dusty corner of a VW showroom not that long ago, who knows what a future (new?) determined brand

could achieve? (millions) New car registrations • Finally, whilst politically incorrect to add together, the Korean stable has produced over 159,000 units and hearing what is coming down the pipe, there must be a real threat to a level of 200,000 before the end of the decade. With Skoda and Seat, plus Mazda, all pushing ‘volume niche’ ever higher, and if the market remains static, you have to focus on who will be the losers of 2015? Only time will tell – and Source: SMMT customer preference!

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Registration data (continued)

EU and EFTA passenger car registrations 31 December 2014

FY2014 FY2013 2014/2013 FY2012 FY2011 FY2010

Country Units Units % change Units Units Units

Germany 3,036,773 2,952,431 2.9% 3,082,504 3,173,634 2,916,259

United Kingdom 2,476,435 2,264,737 9.3% 2,044,609 1,941,253 2,030,846

France 1,795,885 1,790,456 0.3% 1,898,760 2,204,229 2,251,669

Italy 1,359,616 1,304,648 4.2% 1,403,010 1,749,074 1,961,579

Spain 855,308 722,689 18.4% 699,589 808,051 982,015

Belgium 482,939 486,065 (0.6)% 486,737 572,211 547,340

Netherlands 387,835 416,730 (6.9)% 502,479 555,798 482,545

Others 2,155,980 1,941,817 11.0% 1,936,369 2,142,520 2,200,644

Total EU 12,550,771 11,879,573 5.7% 12,054,057 13,146,770 13,372,897

EFTA 455,680 457,310 (0.4)% 474,036 460,229 423,313

Total EU28+EFTA 13,006,451 12,336,883 5.4% 12,528,093 13,606,999 13,796,210

Source: ACEA

• The good news for Europe and Scandinavia is that • As we have commented in previous editions, Eastern registrations have risen cumulatively by 5.4% over the Europe has shown some signs of better growth and Poland twelve months when compared to 2013. This data from is becoming a notable market for motor manufacturers. ACEA relates to the EU28 countries plus EFTA. The bad However, the issue still remains of Poland’s closeness to news is that the month of November only achieved 1.2% Russia and the political and economic issues that country is and December 4.9%, potentially pointing to a slowdown enduring. In addition, in some Eastern European areas, the in recovery. The two largest EFTA countries (Norway and relative small scale of markets often requires representation Switzerland) had a particularly poor November but pulled by the manufacturers to be combined across countries, never it back in December, with Switzerland posting a 9.1% rise an easy challenge. in the month, nearly enough (but not quite) to avoid a • Ireland continues to recover and has posted a 29% increase cumulative 12 month decline. The well documented plight of cumulatively for the twelve months. The UK and Ireland anaemic growth in Europe is still having an impact on new car share a lot of brand resources, making its performance of real registrations, but there is fight! interest, but it is clear that the month of December is not a • Europe is clearly massively impacted by the five largest registration hotspot, with less than 0.5% of the year’s volume markets – Germany, UK, France, Italy and Spain. The UK being recorded in that month in both 2013 and 2014! is still doing well and Germany had a good December to reach a 2.9% cumulative increase. Italy is showing a little more resilience than France with a creditable 4.2% increase in registrations for the year. France had a poor month of December. Spain has achieved close to 20% growth which is excellent but off a substantially lower base, caused by that country’s well documented economic crisis.

12 Automotive Messenger

Registrations of new commercial vehicles in the United Kingdom Commercial vehicles < 3.5t

FY2014 FY2013 2014/2013 FY2012 FY2011 FY2010

Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share %

Ford 82,519 25.7% 68,054 25.1% 21.3% 62,372 26.0% 70,226 27.0% 59,488 26.7%

Volkswagen 40,238 12.5% 36,925 13.6% 9.0% 30,956 12.9% 31,716 12.2% 25,710 11.5%

Vauxhall 32,619 10.1% 29,736 11.0% 9.7% 26,524 11.1% 33,514 12.9% 27,417 12.3%

Peugeot 31,867 9.9% 21,230 7.8% 50.1% 21,272 8.9% 19,328 7.4% 16,384 7.3%

Mercedes 30,464 9.5% 25,667 9.5% 18.7% 21,055 8.8% 19,495 7.5% 20,173 9.0%

Citroen 27,228 8.5% 22,989 8.5% 18.4% 18,379 7.7% 17,275 6.6% 18,074 8.1%

Renault 18,170 5.6% 12,978 4.8% 40.0% 14,710 6.1% 19,382 7.5% 17,248 7.7%

Fiat 12,629 3.9% 12,019 4.4% 5.1% 7,060 2.9% 8,130 3.1% 6,977 3.1%

Nissan 10,270 3.2% 10,619 3.9% (3.3)% 10,136 4.2% 10,854 4.2% 6,223 2.8%

Toyota 9,611 3.0% 8,063 3.0% 19.2% 7,747 3.2% 8,391 3.2% 6,617 3.0%

Land Rover 8,344 2.6% 6,644 2.5% 25.6% 5,917 2.5% 6,209 2.4% 4,874 2.2%

Mitsubishi 6,946 2.2% 5,927 2.2% 17.2% 4,853 2.0% 7,341 2.8% 6,821 3.1%

Isuzu 5,502 1.7% 4,112 1.5% 33.8% 2,762 1.2% 2,431 0.9% 2,190 1.0%

Iveco 2,769 0.9% 3,275 1.2% (15.5)% 3,593 1.5% 3,628 1.4% 2,616 1.2%

Other 2,510 0.8% 2,835 1.0% (11.5)% 2,305 1.0% 2,233 0.9% 2,103 0.9%

Total light CV 321,686 271,073 18.7% 239,641 260,153 222,915

Source: SMMT

Commercial vehicles > 3.5t and < 6.0t

FY2014 FY2013 2014/2013 FY2012 FY2011 FY2010

Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share %

Mercedes 1,889 27.8% 1,485 21.9% 27.2% 1,367 19.2% 1,458 26.3% 1,632 23.8%

Ford 1,852 27.2% 2,767 40.8% (33.1)% 2,879 40.4% 1,381 25.0% 2,820 41.0%

Fiat 1,313 19.3% 1,231 18.1% 6.7% 1,416 19.9% 1,171 21.2% 1,180 17.2%

Iveco 402 5.9% 420 6.2% (4.3)% 444 6.2% 567 10.2% 526 7.7%

Peugeot 401 5.9% 200 2.9% 100.5% 359 5.0% 354 6.4% 209 3.0%

Volkswagen 386 5.7% 342 5.0% 12.9% 251 3.5% 221 4.0% 204 3.0%

Renault 74 1.1% 117 1.7% (36.8)% 215 3.0% 113 2.0% 41 0.6%

Other 480 7.1% 226 3.3% 112.4% 195 2.7% 269 4.9% 258 3.8%

Total heavy CV 6,797 6,788 0.1% 7,126 5,534 6,870

Source: SMMT

Automotive Messenger February 2015 13 Automotive Messenger

Registration data (continued)

Commercial vehicles > = 6.0t

FY2014 FY2013 2014/2013 FY2012 FY2011 FY2010

Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share %

Daf Trucks 8,616 24.9% 14,046 28.4% (38.7)% 11,153 28.9% 9,863 26.4% 6,553 23.8%

Mercedes 6,485 18.7% 8,793 17.8% (26.2)% 6,422 16.6% 6,326 16.9% 4,988 18.1%

Scania 4,752 13.7% 6,846 13.8% (30.6)% 4,652 12.1% 4,071 10.9% 3,576 13.0%

Volvo Trucks 4,074 11.8% 5,524 11.2% (26.2)% 3,976 10.3% 4,624 12.4% 3,163 11.5%

Man 3,381 9.8% 4,934 10.0% (31.5)% 4,324 11.2% 4,772 12.8% 2,753 10.0%

Iveco 2,876 8.3% 3,773 7.6% (23.8)% 2,908 7.5% 2,834 7.6% 2,523 9.1%

Renault Trucks 2,050 5.9% 2,534 5.1% (19.1)% 2,555 6.6% 2,763 7.4% 1,934 7.0%

Other 2,438 7.0% 2,980 6.0% (18.2)% 2,586 6.7% 2,157 5.8% 2,098 7.6%

Total heavy CV 34,672 49,430 (29.9)% 38,576 37,410 27,588

Source: SMMT

• Across 2014, registrations of under 3.5 tonne vehicles have improved by 18.7% (over 2013) and have now, in the words of the SMMT CEO, “returned to pre-recession levels, reflecting the growing confidence of many businesses in the UK”. We have regularly commented in 2014 on this good news trend, and the month of December 2014 recorded a near 27% improvement, well over the cumulative average and double the month of September 2014. • Peugeot and Renault have ended the year with 40% plus growth returns and they have managed to nibble away at Volkswagen’s market share, albeit the German brand has registered 3,300 more units in 2014 over 2013. It should also be noted when tieing back to the passenger car numbers, that Land Rover have registered over 8,000 units in the under 3.5 tonne category in 2014, some potentially for non- commercial use? • The real poor performer has once again been the over 6.0 tonne category – heavy trucks to you and me. Major vehicle ‘type approval’ issues have arisen at the year end, however all the comments coming from the representative bodies are very positive for 2015, and our recent experience in the truck sector corroborates that, with a strong order book and good prospects. In view of this technical ‘hiatus’, we have postponed our more detailed look at the truck market until a future issue.

14 Contact us

Automotive contacts

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