Automotive Messenger

May 2016

Since the last issue of Automotive Messenger, the UK new car market continues to go from strength to strength and looking ahead, if registrations continue to grow at March 2016’s rates, it is well placed to achieve another annual record of 2.7 million plus vehicles.

Nevertheless, discussion is new vehicle registrations for Ford 2016. Grant Thornton’s Automotive intensifying over the levels of pre- declined by 4.91% in March 2016 and team commissioned a survey to assess registered vehicles in the UK, Europe market share fell year-on-year from the views of our clients and contacts and US. In the US, the practice of 12.88% to 11.63%, which we believe is concerning Brexit, which indicates that self-registering (known there as due to the change in their strategy. Is 60% wanted to remain in the EU. (See 'punching') is widely and openly Ford’s strategy a brave and sensible one, page 10 for more detail.) acknowledged in the media among or is Ford swimming against a tidal wave In this issue of Automotive both manufacturers and dealers. of pre-registration? Only time will tell. Messenger we also discuss other topical At the recent Geneva Motor Joe Eberhardt from Jaguar Land news and current issues in the market Show, Jim Farley – Rover – CEO, North America – including: the March 2016 registrations; President – said the automaker had suggests that generous discounting customer mobility; the changing tried to minimise two unprofitable sales and pre-registering have changed the influence of the smartphone and mobile channels: dealer self-registered vehicles way customers purchase vehicles. devices; and the full-year trading results and sales to rental fleets. "It's growing He commented: “Customers have issued by the automotive retail PLCs. [self-registering] in the US, but it is a been conditioned to expect generous perfect art in Europe," Farley recently discounts at the end of the sales period… Contents observed during an interview. "In some We have to change the customer’s 02 Passenger car registrations months in , 20 to 30 percent of behaviour". However, is it too late to 05 Is your business truly mobile? the industry is product sold to your own change customers' behaviour? Have 08 PLC full year results dealers that they register for you as a customers' expectations changed for 10 An automotive view of the demo unit and sell as used cars." good or will it be a slow process to wean EU referendum Ford of Europe has decided to change customers off these discounts? 12 News snippets its strategy by cutting its share of Another hot topic is the UK’s future 18 UK new vehicle registrations dealers’ self-registered sales in Europe. membership of the EU, which will be 20 New commercial vehicle registrations In the most recent UK March statistics determined by a referendum on 23 June 21 EU and EFTA passenger car registrations

Tarun Mistry Neil Barrell Bill Parfitt CBE Paul Burrows Owen Edwards T +44 (0)20 7728 2404 T +44 (0)20 7865 2700 T +44 (0)20 7385 5100 T +44 (0)1908 359 554 T +44 (0)20 7865 2291 M +44 (0)7966 432 299 M +44 (0)7976 550 312 M +44 (0)7528 870 341 M +44 (0)7850 538 309 M +44 (0)7811 991 128 E [email protected] E [email protected] E [email protected] E [email protected] E [email protected] Automotive Messenger

Passenger car registrations – continued growth as registrations 'punch above' Q1 2015

Registrations increased by 5.1% during the first quarter of 2016, with March delivering another record month for the sector growing by 5.3% and registering 518,707 new units.

However, registrations are not of 6.0% and accounting for 44.9% registrations fell by 4.91% in March matching sales and May will face much of total UK registrations. March and by 0.96% in the first quarter legacy activity. tends to be the peak of private sales of 2016, with market share dipping If this growth rate continues as illustrated in previous editions considerably by 0.74% points. As throughout the year, 2.7 million units of Automotive Messenger. There is we highlighted on the cover, Ford will have been registered in the UK probably some blurring of allocation of Europe's decision to reduce the by December 2016 making it another between the two categories with number of its self-registered vehicles exceptional year. different routes to market so that across Europe may have been a driver assertion has to be treated with to the decline. It will be interesting New vehicle registration caution. to see whether other manufacturers analysis Although Ford remained the follow suit or whether Ford can swim 771,780 units were registered in Q1 biggest-selling in the UK, its against the tide of self-registered 2016. The UK plate change drives a market share dropped. Ford vehicle vehicles. very spikey pattern, so could we see over 2.7 million being reached? Private registrations were up 3.8% in March and by 6.3% over the year to date. Fleet registrations grew strongly in March, posting annualised growth

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New vehicle registrations for both Commercial vehicles and declined by over The SMMT is now proposing to 5% year-on-year for the first three provide heavy truck registration data months to March 2016. Consequently only quarterly and at the time of going both suffered a 0.5% point decrease in to press, Q1 2016 is not yet available. market share. The VW brand, despite We have therefore focussed our the issues surrounding its emissions comments on the commercial vehicle testing scandal, achieved a small market. annualised increase in registrations in Registrations for the commercial March 2016, although unit registration vehicle market were mixed. Demand declined by 4.88% over the first for light commercial vehicles rose quarter as a whole and market share by 3.3% in March 2016. In Q1 was lost. 2016, 98,906 were registered, So, who has benefited? The three representing an increase of 1.2% over German premium (, the same period last year. Growth BMW and Mercedes-Benz) increased was driven by larger vans (2.5T to registrations by 12.6%, both in 3.5T), with a 14.2% rise in March and March and over the year to date. This offsetting a decline in demand for strong growth is likely to have been smaller vehicles. underpinned by consumer accessibility Among commercial vehicles and demand for premium brands, below 3.5 tonnes, Ford continues to the OEMs’ corporate strategies to lead the market, stretching its share increase market share by providing from 26.07% in the month of March buyer incentives and a continued 2015 to 31.87% in March 2016. This increase in personal contract purchase increase was achieved at the expense (PCP) demand focused on the pound of Vauxhall (down by 9.25%) and VW per month metric rather than the (down 10%); the latter suffering from headline price. The German premium the emissions scandal. brands now account for around 18% In the mid-size market (3.5 to of all vehicles registered in the UK. 6.0 tonne vehicles), Ford has become Put into context, Ford and Vauxhall the dominant player, achieving market combined accounted for around 22% share of almost 35% and posting an of UK market share. If the three main annualised increase of 1.3% in March German premium brands continue to 2016. Nevertheless, the number sustain their current level of growth, of units in this market is modest they could well achieve 19-20% compared with that of the smaller market share by the end of the year, van market, with only 1,889 vehicles a level of market share that says a lot registered in the first quarter of 2016. about the new world.

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FLA statistics slower than that for new vehicles. to February 2016, up from 81.7% Financing is one of the primary drivers Growth volumes between 2009 and in the twelve months to January. of growth in the market so we recently 2015 for new vehicles and used vehicles The point-of-sale consumer used introduced the subject when reviewing were 190% and 150% respectively (see car finance market also saw strong market registrations. In the last edition charts below). growth in February, with new of Automotive Messenger we reviewed The percentage of private new business up 23% by value and 18% by the history of the PCP market, vehicle sales financed by FLA volume year-on-year. focusing on the FLA's (Finance members through point-of-sale Leasing Association's) new and used reached 81.9% in the twelve months financing of vehicles by volume since 2009. In this edition, we review the Average price per car – Consumer new cars trend in average prices of vehicles 20,000 since 2009.

According to the FLA statistics, 15,000 the average price of new cars financed for consumers increased by 37.8% 10,000 between February 2009 and February 2016, rising from £11,418 to a peak of £15,740. Growth has been consistent 5,000 across this area of the market and Average price per car (£) anecdotal evidence suggests that, in 0 Jan '09 Jan '10 Jan '11 Jan '12 Jan '13 Jan '14 Jan '15 Jan '16 the premium segment of the market, the increase in the average value of Average price per car – Consumer used cars financing per vehicle has been driven 12,000 by higher real prices for vehicles and a greater willingness among consumers 10,000 to use financing to purchase a vehicle. 8,000 Growth in average price per vehicle financed in the consumer used market 6,000 also increased strongly between 4,000 February 2009 and February 2016, 2,000 rising by 25.4%. This rise was lower Average price per car (£) than that of new vehicles as take-up 0 of financing for used vehicles has been Jan '09 Jan '10 Jan '11 Jan '12 Jan '13 Jan '14 Jan '15 Jan '16

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Is your business truly mobile? Is the swipe mightier than the keyboard?

Previous issues of Automotive Messenger have examined mobility in the market for manufacturers, fleets and motor retailers. Now we turn to the customer.

In this edition, we look at consumer When researching the purchase of How do mobile devices affect mobility and how the use of mobile their next new vehicle, an increasing our lives? devices is influencing the vehicle proportion of customers are moving Mobiles have become an intrinsic buying process. Technological towards the convenience of mobile- part of life. Google found that 87% advances have affected how people phone research. Although we believe of people keep their smartphone at buy vehicles and over the last five that fully purchasing vehicles via a their side day and night (US Source: years manufacturers have made initial mobile remains some way off, it is Mitek and Zogby Analytics 2014). attempts to sell vehicles online – for surely only a matter of time. Meanwhile, in the US, more consumer example, Myway, although Developing trends in customers’ searches are undertaken on a mobile transacted via their retail networks. purchasing habits mean that motor device than on computers. The mobile There have also been partnerships retailers must move with the times has quickly become our 'go-to' device. between automotive manufacturers, and also remain one step ahead. We check our phones an average of 150 eBay and Amazon in the US. Technological advances mean that, for times a day (Source: Kleinet Perkins Whether online selling has been example marketing to the customer Caufield & Byers 2013). successful remains a matter for debate. can take place at the gym, on the train, As yet, sales rates have been lacklustre on the school run – during almost any and motor retail dealerships remain the everyday activity. The customer is now principal route to purchasing a vehicle. truly mobile. Furthermore, Nevertheless, changes in consumers’ In a recent 'Think' article, Google recent analysis suggests that purchasing habits show that they are surveyed the changing purchasing we spend an average of moving further towards purchasing mobility of customers, which applies 177 minutes on our phones vehicles online, although at a slower to vehicles as well as everyday items. every day; however, each rate than that of other retail products, (https://www.thinkwithgoogle.com/ session lasts an average of one minute and 10 seconds. books, DVDs etc. research-studies/micromoments- (Flurry Analytics 2014) guide-pdf-download.html)

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So what is the level of How can the sector help the the product – for example, consumer usage? consumer? understanding the financing and When we are on our mobiles, we are According to Google, three essential cost on a vehicle. This is about not necessarily looking to purchase strategies can help to win those micro- educating the customer, but something; much of the time we moments: without the hard sell. Do you are undertaking research – perhaps have blogs, tweets or videos that looking for more information on a 1 Be there – anticipate the provide information to help the product’s details or pricing. In fact, micro-moments for the users in customer with their decision- 82% of smartphone users say that they your industry making process? consult their phones on purchases that they are about to make in-store and The aim is to know and grow your 4 “I want to buy” moment – the 91% of consumers turn their phones share of intent, that is the customer’s customer is ready to make on for ideas in the middle of a task commitment to purchase your a purchase and needs help (Source: Google Micro-Moments product. Unfortunately many brands implementing their decision. US, 2015). According to Google, are still falling short of 'being there' They need the right information these moments are known as "micro- for their customers; for example, when without the hard sell. 82% of moments". Paradoxically, potential searching for your website on your smartphone users consult their customers are using mobile devices mobile, is yours the first company phones while in the store. Can more, but consumers are spending less you see – or is it a competitor? The they find the right information time on websites. In the US, the mobile customer needs to be guided through quickly and easily? share of online sessions has increased each stage of the purchase process. by 20%, but time spent per visit has The retailers who join them at the very 2 Be useful – be relevant to your declined by 18% (Source: Google beginning of the process and support consumers, address their needs and Analytics 2014 - 2015). them through it, stand a good chance connect them to the answer they In summary, we are moving away of completing the journey with the require from our keyboards and moving to customer. mobile devices. However, we are also To be there for your customer Mobile devices come into a market impatient: if the website or a search entails four stages of the customer of their own as they deliver those takes too long, the consumer will move journey: all-important need-to-know moments on. We use those valuable micro- while on the move – maybe even moments between tasks to research or 1 “I want to know” moment – at a critical point in the customer's make a purchase and it is at that point a customer who is exploring purchasing journey. motor retailers need to capture their or researching does not want potential consumers. the hard sell. Is there sufficient • 51% of phone users have information to enable the purchased from a different customer to make the decision? Is company or brand than the one it quickly and easily accessible? they originally intended, because We are moving they provided useful information away from our 2 “I want to go” moment – (Source: Customer in the Micro keyboards and consumers who want to purchase Moment, Google 2015) moving to mobile the product near them will use devices their mobile device to find the • 73% of consumers say that regularly nearest dealership or retailer. receiving useful information from Can they easily find the correct an advertiser is the most important location and directions and are factor when selecting a brand they easily understandable? (Source: When Path to Purchase Becomes Path to Purpose, Google 3 “I want to do” moments – 2014) this could be how to do something or how to understand

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• Only 9% of users will remain on • Eliminate steps – what are you a mobile site if it does not meet aiming to do with your website? In summary, it is clear their needs quickly. Even more What is the end goal and how can that mobile devices importantly, 40% of consumers will the customer get there quickly? are becoming more not return to the site if they cannot You might consider one-click important in consumers' find what they want, and 29% functionality or drop-down menus, go immediately to another site to which tend to work better on small lives – not only for emails purchase (Source: Consumer in the mobile devices. An increasing and texts, but also for Micro-Moment, Google 2015) number of motor retail businesses deciding whether to are providing a “click to call” make a purchase. It is Being useful does not mean a hard button. critical that the motor sell; instead, it means providing bite- retail industry – from size educational content. Consumers • Anticipate needs – put the big become more interested as each step stuff first. Check what your the large dealer groups adds more information that is clear and customers are doing on your site to small dealerships – is easy to understand. and what they are looking for. proactive in keeping up Are their needs being addressed with consumers' evolving 3. Be quick – micro-moments or do they have to work through purchasing habits. This are very short and therefore a mountain of clicks? When the has to be tied into the mobile users want an easy, fast customer is in the dealership, ask flexibility allowed by the mobile experience them for feedback on your mobile website. brand generated site Customers are becoming quicker in structures but looks to making their decisions. However, this • Load fast – 40% of shoppers wait be an important factor also means that they want to receive for no more than three seconds in success. The same the product or service immediately. before abandoning a retail site. principles apply to 60% of online users recently surveyed The technical backend needs to financing websites and agreed that they make decisions more be up-to-date (Source: Micro- quickly now that they did a year ago Moments Your Guide to Winning will increasingly impact (Source: Consumer in the Micro- the Shift to Mobile, 2016). It is also contract hire and leasing Moment, Google 2015). The retailer’s recommended as wise to review outside of the corporate mobile site has to be quick and the page speed insight tool for both selection process. You frictionless, providing all the required mobile devices and desktop. may argue this is based information without a significant on US research and number of click-throughs. somewhat biased, but the Interested customers tend to switch very quickly: 70% of customers will Being useful does truth is likely to be ignore leave a website if it takes too long to not mean a hard sell; it at your cost. Mobile is load and 67% will switch if there are instead, it means here to stay. too many steps to purchase or find providing bite-size information (Source: Consumer in educational the Micro-Moment, Google 2015). content. Therefore, in order to deliver the speed and efficiency required by customers, Google suggests the following:

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PLC full year results – Another good performance

Once again, the PLC reporting season was characterised by mixed earnings growth and broadly in line with consensus expectations. The greatest level of revenue growth came from vehicle sales or acquisitions.

Some industry The sector’s share price good performance, increasing trading experts believe What will performance over the last 12 profits by 9.6%; however, trading the market could happen when months has beaten that of the margins declined by 2.0 percentage the acquisitions achieve 3.0 million FTSE All Share Index and points. stop? new units in in the FTSE 100 Index (see index the coming years. price charts opposite). Should this transpire, Underlying revenue for 2015 increased it is likely that pre- Inchcape UK by 11.3%, driven by growth in the new registered or short cycle vehicles will The introduction of a number of new and used vehicle departments. New play a significant role (as discussed models from Jaguar , revenues grew by 18.4% and aftersales on pages 1 and 2). However, for most alongside a number of face lifts, drove rose by 5.9% on a like-for-like basis. motor retailers, such an increase in up like-for-like sales at Inchcape Retail Underlying gross profit margin vehicle unit registration is likely to UK by 10.2% in 2015. In comparison, increased by 5% over the period, but be accompanied by a drop in gross the total market grew by 6.3%. gross profit margins declined by 80 profit margins. As new and used Nevertheless, looking at the UK vehicle basis points (bp), caused by a changing vehicles provide an increasingly large registrations data in more detail, the revenue mix, as sales of new and used proportion of revenue, this will dilute market growth of Inchcape's represented vehicles rose. Underlying profit before the effect of the higher gross margins brands was broadly in line with the tax (PBT) increased by 16.4% and PBT in aftersales operations and could, in group’s retail revenue sales growth in margins increased by 7 bp, boosted by turn, reduce the dealers' traditional new vehicles. The second half of the lower interest charges. Performance in 'absorption' rate. year was impacted by the irregularities the business was mixed: the Stratstone The trend of industry consolidation surrounding VW’s emissions testing. business operating profits declined by continues apace and, at present, Trading profits declined by 2.8% year- 5.6%, caused by higher vehicle sales shows no sign of abating. Although on-year, dampened by higher vehicles and lower gross profit margins, which the automotive retail market is sales mix, lower used vehicle margins, declined by 100bp. Evans Halshaw’s fragmented, consolidation is taking increased facility costs and amortisation performance was strong: unit sales place at a fast pace. This raises the of IT. The aftersales business continued rose by 8.2%, and average revenue per questions: what will happen when the to perform well, benefiting from the vehicle increased by 6.1%. Gross profits acquisitions stop and where is organic increasing 1-5 year car parc. Inchcape were up 10.2%, but gross profit margins growth expected to come from? Fleet Solutions once again delivered a declined by 40bp.

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Lookers Plc Revenue for 2015 increased by 120.00 20% year-on-year; excluding the contribution of Benfield Motors from 100.00

September 2015 of £263 million, year- x 80.00 e d n on-year growth was 11%. Gross profit I

e 60.00 c i

– including a £32 million contribution r p

e 40.00 from Benfield Motors – rose by 14.1%; r a h excluding Benfield’s contribution, S 20.00 gross profit rose by 6%. Gross profit margins declined by 60bp; this was 01/04/2015 01/07/2015 01/10/2015 01/01/2016 01/04/2016 attributable to a change in the revenue Motor retail UK FTSE All share mix and a higher proportion of new and used vehicles sold relative to aftersales. Reported operating profit grew by 12% year-on-year; however, operating profit margins declined by 120.00 10bp to 2.4%. 100.00

Marshall Motors Holdings Plc x 80.00 e d n i

Revenue for 2015 grew by 13.5% to

e 60.00 c i

£1,232 million; this was boosted by r p

e 40.00 the acquisition of S G Smith which r a h contributed £17.4 million of revenue S 20.00 over the period. Total gross profit 0 increased by 15.5%, lifted by increases 01/04/2015 01/07/2015 01/10/2015 01/01/2016 01/04/2016 in all areas of operations. The motor Motor retail UK FTSE 100 retail business continued to perform so well (excluding Marshall Leasing). Revenue growth was driven by One potential reason for this increase increased mix of premium vehicle improvements in average prices of new could be a strategic shift towards the sales. Used vehicle sales increased, and used vehicles and also acquisitions, sale of more premium vehicles. and this performance was partially while like-for-like growth for new offset by the average gross profit vehicle unit sales rose by 7.2%, in line Vertu Motors Plc per vehicle declining from £1,190 with the market (brands only held Revenue for the full year for the (2015) to £1,165 (2016). The aftersales by Marshall Motors Holdings Plc.). Group increased by 16.8%. New business performed robustly, customer New vehicle gross margins remained vehicle retail units rose by 11% year- service plans have increased, both for steady at 7.2%. Used vehicle unit sales on-year. Like-for-like (LfL) growth manufacturer and also Vertu Motors' increased by 1.5% LfL and overall rate for New vehicle retail units was own three-year plans. Further benefit gross profit margins improved to up 4% with the difference caused by is also coming from more Vehicle 7.1%. Aftersales like-for-like and acquisitions over the last 12 months. Health Checks being undertaken. overall revenue growth was up 2.4%; Since March 2015 Vertu Motors Plc Gross margins for the aftersales meanwhile, overall gross margins has acquired 16 dealerships, which has business increased by 130bp. Post improved to 44.5%, compared with increased the Group's exposure to the balance sheet date, 42.8% in 2014. Interestingly, average premium brands e.g Mercedes-Benz. £35 million was raised by a revenue per new vehicle units rose by New Vehicle Retail and Motability share placing in order to fund more than £1,000 per unit (average revenue increase by 17.2% year-on- further acquisitions. Furthermore vehicle price £18,169) and per used year(YoY), however, gross margins management indicated trading in vehicle by £442 per unit (average came under pressure with a decline of March and April is ahead of the prior vehicle price £16,578). 10bp. Gross profit per unit improved, year. this can partly be attributed to the

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An automotive view on the EU referendum

We surveyed a range of businesses from across the industry to hear their views on the upcoming EU referendum

The planned referendum on Britain's membership of the European Union The automotive sector is an important part of the UK economy (EU) has triggered considerable debate. UK – facts and figures However, until the vote actually takes place on 23 June, the uncertainties surrounding the possible outcome and implications are likely to have the greatest immediate impact. Over half of the respondents to our survey had not planned for a potential The automotive The UK is the OVER HALF 800,000 PEOPLE vote to leave. In fact, just one business industry accounts 4th LARGEST of UK built vehicles in the UK are had discussed formal measures. This is for FOUR PERCENT manufacturer of are exported to the EMPLOYED across the perhaps unsurprising given the scale of of UK GDP vehicles in the EU EUROPEAN UNION automotive industry uncertainty facing business. While it is difficult for organisations Source: Department for Business Innovation and Skills / International Organisation of Motor Vehicle Manufacturers / Society of Motor Manufacturers & Traders. to put concrete plans in place, it is important that they are discussing potential outcomes and preparing for Toyota and Vauxhall, which are more various scenarios. With that in mind, Trade deals exposed to the EU than other brands here are a few possible effects that a vote The UK could find itself excluded from in the UK. to leave might have on the sector. the EU-US trade agreement (TTIP) and That said, Brexit could also offer existing EU FTAs with other markets. benefits; one being the freedom to New agreements would have to be negotiate trade agreements with high- Currency fluctuations created, which would take time and growth markets. An example would Currency risk is a key issue, with a weak could undermine confidence. be China, with whom the EU has not sterling potentially disrupting global There is also uncertainty around yet reached an agreement. Such deals trading. Following the announcement what deal would replace the UK's would be massively beneficial to firms of the referendum, Sterling weakened current access to the EU single market. such as which, at against the Euro and the US Dollar. A UK car exporters could potentially present, faces a 25% import tariff, 17% weak pound is beneficial for companies face new barriers to trade. This would sales tax and 9% consumption tax. that export, but will drive up the price prove particularly relevant for volume of imported products, including key raw manufacturers such as , Nissan, materials such as steel.

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Our survey shows an appetite for remaining in the European Union. While the Mixed feelings about the impact majority see Brexit as detrimental to their businesses growth prospects, there of leaving the EU on the sector is an underlying belief that leaving would have little impact on areas such as vehicle registrations and consumer demand. Greater concerns exist around What impact do you believe leaving the the impact on manufacturing of vehicles in the UK, trading relationships and EU would have on the following areas? the negative impact on supply chains. This is likely caused by the uncertainty surrounding our ongoing relationship with the EU following a vote to leave. In 7% any event, Grant Thornton's automotive team is well positioned to support our clients with relevant regulatory, business planning and risk services.

Owen Edwards 35% Associate Director 55% Manufacturing vehicles in UK

Automotive businesses in favour of remaining in the EU Should the remain a member of the European Union or leave the European Union? 7%

52% 30% 40% leave Vehicle 60% remain registrations

10%

Investments Supply chain ramifications 33% Britain is seen by many as the gateway European firms with a presence in the 45% to Europe. The ensuing uncertainty UK could experience disruptions to their Vehicle following a leave vote, around our supply chain as trade agreements are pricing trading relationship, could result in re-negotiated. Moreover, the additional further delays to investment decisions. administration and uncertainty could While Brexit is unlikely to affect slow down trading between automotive existing investments in the UK (this is suppliers and manufacturers. 10% a sunk cost and companies are unlikely Taking this into account, 25% to want to move production plants), it uncertainty is likely to remain the could put a brake on future investment prevailing mood across the entire in Britain's automotive industry as automotive industry. Though a vote to manufacturers and parts providers leave will prolong and intensify this Consumer demand look for easier trading routes. uncertainty, it is worth remembering 54% that businesses are pragmatic and that they will adapt to any outcome. During these uncertain times, it is critical that our clients understand their 10% exposure and, if possible, formulate a plan to address any immediate risks while capitalising on any longer-term 32% 53% opportunities that may transpire. UK trading Negative relationships No impact Positive

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News snippets

UK is also deep in the throes of self- end cost associated with R&D and New phrases, but 'old' meanings! registering again as illustrated by the product launches require target levels Traditionally for our Snippets, we look 2016 Q1 registrations (see page 2). The of output to be achieved to ensure out for the unusual, the slightly odd and, solution is simplicity itself. As Penske viability. Roger Penske’s view cannot in some cases, the downright ridiculous. went on to say: “It can be fixed pretty be argued with. However, it is difficult Our objective is not simply to repeat easily. Let’s slow down the inventory to achieve in an industry that moves news stories you can read in the industry and let’s get the right mix”. like an ocean liner rather than a speed press, but to draw attention to issues You cannot help but agree with the boat, due to its complexity.” that may seem unrelated to day-to-day sentiment, but the problem is a deep Punching or self-registering automotive, but actually connect. one. If production levels and mix have – whichever phrase you prefer – Our first snippet is old new news, been set and planned for in terms of will almost certainly continue for but in fact, it is the hot news! A the assembly line and supply chain, the foreseeable future, until the new term (at least to us) appeared how do you make quick changes economy significantly changes. out of NADA 2016, the US motor without huge upheaval and major loss 2008 was brought about by a set of retail convention held in Las Vegas. to profit? Vehicle production and sale circumstances which many argue 'Punching' had us doing a double-take. is a top down industry and every extra will not repeat in the same way. It came from Roger Penske, Chairman car produced generates an economy Nonetheless, even events such as a fall of the US retail group and ultimate of scale. Lose that and a vehicle in consumer confidence could impact owner of the UK . manufacturer can see a huge dip in demand for new product and if the Punching is a brilliant, alternative profitability. PCP or Personal Contract Hire (PCH) word for pre/self-registering new Neil Barrell, Head of replacement cycles are a safety net, vehicles. Grant Thornton’s Automotive extending contract terms could be the Roger Penske was very succinct: Upstream team, explains the scenario norm and that will definitely dampen “China got cold and manufacturers are even more clearly: “This, in its simplest registrations. That will be a very trying to move all this inventory and form, is a volume industry. The difficult ball for the manufacturers there’s pressure in the US”. Well, the manufacturing footprints and front to juggle.

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Tyres for $7.7 billion in late autumn China 2015. ChemChina is headed by Ren China is a massive influence on the Jianxin who is cited as part of the new world economy and how individual class of Chinese dealmakers with the country economic drivers behave. “connections, confidence and backing” News and data coming out of China to pursue their own multibillion dollar have recently directly impacted the takeovers and even UK stock market and the Brent crude gatecrash others. oil price. This is nothing new, but to In Q1 2016, have one global player consistently Thomson influential creates uncertainty. valued all cross- The growth rate of the Chinese border M&A at economy in 2015 was the lowest for 25 $311 billion, which years and continues on a downward represented 46% of similar to distributing passenger cars. curve. However, this declining growth total M&A activity at $682 billion. Interestingly, electric buses are at the conceals a tale of two parts: the old, The Chinese cross-border value was forefront of the new push. heavy industries are big losers; but the $101 billion, roughly one third of that The situation in China is, as ever, services sector and 'new industries' are sub-sector. ChemChina made the greatly influenced by the government. on an upward trajectory. These new biggest deal, acquiring a Swiss agro- The Central Bank of China has cut industries are also typically in private chemical business for $46.8 billion interest rates six times during the past rather than government ownership. debt-inclusive in cash! 18 months, lowering the cost of bank The similarities with the 'old' UK are We also note that 10% of global financing and thus encouraging capital striking and we noted a statistic that bus sales stem from the Chinese project spend such as classic M&A. the five-year China plan includes a manufacturer, Zhengzhou Yutong Bus But what we really like is another priority to cut 1.8 million jobs in the Company. A large portion of these catchy term, 'road passes', which we coal and steel sectors. buses were for the home market as understand to be Chinese mainland The way in which China is transport for migrant workers from regulators granting permission for achieving growth also appears to their hinterland homes to the booming (multiple) companies to hunt down be changing. We all appreciate the coastal regions. As the economy starts the (same) takeover target. The concept of organic growth versus to change China is no longer such beneficiaries have not been slow to growth by acquisition, and in China, an attractive market, so companies take up the opportunity! the latter means more than ever cross- like Yutong need to focus on global So, what does this all mean for border. A good example in auto has markets either via importation or the automotive sector? Quite a lot. been ChemChina acquiring Pirelli local manufacturer, in a model very

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News snippets continued...

The Chinese market is still critical to significant overseas interest in the Let’s first go back to traditional global automotive manufacturers, but UK market. We can only believe that (can we use such a term at this stage?) they may have to get used to slower this will continue to increase over the electric technology and the upward growth and adjust their aspirations to coming months. curve for Tesla. When orders opened lower levels. If not, they will continue Finally, and covered in more detail for the new Tesla Model 3, there was a to pour the increasing product next, the Chinese are pushing very deluge in demand with queues outside capacity into mature markets and hard at electric technology. Our US Tesla stores and orders exceeding rely on the economics to help them guess is this means our traditional 250,000 units in the first 72 hours. through. Three million registrations manufacturers will have to accelerate With a deposit of $1,000 (refundable) in the UK could be a rear-view mirror their own technologies and maybe it created a decent bank balance. This number if we see that happening. release them far quicker than they is all the more remarkable when the We can also expect further Chinese expected, or indeed, wanted to, release date is 18 months away and involvement on the global automotive creating a major technology leap shipping starts at the end of 2017. manufacturing scene which could and again serious impact on service $250 million to tide a business over is change the distribution landscape far delivery. a good position to be in. The problem from where we currently stand. Retail now – and we suspect it is a nice one groups may be attractive targets. to have – is how are they all produced We know that Chinese groups have The race to electric and driverless on time? been involved in European motor technology – where do we stand You might think that a capacity retail opportunities and continue In the previous snippet, we discussed published at 500,000 units a year to show interest. The deep pockets Yutong and its determination to get is more than adequate, however on display mean they could, indeed additional share of the true global the battery factory is not yet built! should, win every deal they fight for market, or, in other words, excluding Chevrolet may win the race to mass wherever that may be in Europe. That its home China patch. The strategy market with the Bolt, but real electric could be interesting for the UK retail seems to have two very distinct technology is about to start, big style. landscape. Recent news concerning branches: producing and selling Daimler shareholders have gone the acquisition of the Mercedes-Benz existing technology to developing on record to say they are concerned market areas of Birmingham and markets; and then winning mature about the Silicon Valley takeover and indicates markets over with technical prowess. vented a few spleens at their recent that there is This is where it gets really interesting. AGM. Concerns were raised over the lack of a Daimler competitor and also the driverless car competition which has suddenly gained huge momentum. It seems Daimler is aiming to offer an

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all-electric vehicle with full mileage to the many crucial range by the end of the decade, so rare earth metals behind the Silicon Valley pace. needed for battery We commented in the previous development and snippet that technology is coming batteries. In February, to market faster than maybe it was desired to be – an online poll by the announced a new deal German car magazine, Autobild, to develop an electric suggested two thirds of the 6,200 car by collaborating with German respondents wanted to have Chinese-backed start-up, a Tesla Model 3. Hybrid technology Faraday Future, known as is the natural bridge between fossil LeEco, which will provide the fuel and electric technology. Indeed drive system and battery pack. Daimler at its AGM stated that in 2017 When it comes to driver-less it will have ten plug-in hybrid vehicles cars, or Yutong’s buses, there are still for sale. The danger has to be it all a variety of strategies in play. The Israeli group gets leapfrogged as all-electric gains two US giants, GM and Ford, are and reputedly the world’s leading momentum. going down different routes. GM is supplier of driver-assist technology, Range-anxiety is still an issue, but acquiring Cruise Automation, a firm is deepening its links with the global even the electric bus development that creates self-driving technology. automotive industry. It is working on (back to Yutong) will create further Ford is moving into car-sharing, digital maps with several European awareness. While 92,000 'electric road- ride-hailing services and autonomous manufacturers; a crucial step towards ready buses' were registered in China cars by way of collating data through driverless cars. Mobileye believe in 2015, Yutong is seeking to win the thousands of miles driven by some traditional OEMs in auto will compete Paris city bus replacement contract for specially equipped Fusions at its well over Silicon Valley, not least due 9,200 buses with an extended electric Dearborn HQ, USA. As a concept, to the mass of data they continue to trial, and, of course, the UK has five in 'Super Cruise', an advance on cruise- have access to with and from cars circulation, supplied by BYD, another control, seems to be very popular. currently on the road. Chinese manufacturer. Google, via its parent, Alphabet, is Nissan and have both recently The Chinese government is fully going all out to develop a driverless made announcements on the subject of behind the electric vehicle technology. car. It has already suffered a high driverless cars. Volvo is aiming to pilot a In August 2015, a Yutong driver-less profile, if low impact, accident, but has trial in China with up to 100 self-drive bus apparently covered a 32km journey made capital by saying it has added the cars, alongside a similar trial to be run both stopping at traffic lights and learning points to its programme! in Gothenburg. Nissan have focussed overtaking! China has access internally Competition is fierce. Mobileye, the

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News snippets continued...

boost it does no more than five or six minutes. However, last year Dyson acquired Satki3 which is a US battery technology company, originated out of University of Michigan. What we do know is Sir James is a true British on the “autonomous” car which can run winner – But how will he distribute in motorway or dual carriageway lanes No loss of suction – and no lack of those cars? without driver control. So by no means ambition! One thing you can be sure of is the totally autonomous, but a step in that British love of eccentricity and sheer direction. Croeso y Cymru – the country bloody-mindedness. Long, long ago a where it all happens Not to be out-done, the world certain Mr Hoover produced a vacuum It will not have escaped your attention of trucks is getting involved and we cleaner so universally accepted and that a lot of automotive news has now have the prospect of another loved that the term vacuum cleaner revolved around – how apt is great term: 'platoon'. This is a convoy became replaced by hoover. You don’t the “Welcome to Wales” road sign? of trucks travelling incredibly close vacuum out the car at the weekend, One less pleasant matter is the Tata together and with no human driving – you hoover it! Truly brilliant. Then, plant at Port Talbot. The steel industry instead, on his or her tablet maybe? after all those years, a Brit challenged has been in tailspin, due largely to Again, what does this all mean? that dominance with the “no loss of cheap Chinese imports, and the owner All-electric is gaining momentum suction” slogan. We're not too sure of Jaguar Land Rover has taken the and autonomous vehicles are heading that we will ever “dyson out” the car, decision to sell or close. our way, in stages or in totality. There but we think you get the drift. Now An off-the-wall article suggested is disruption in the market as if one there is more! the situation be treated like the technology leapfrogs the others, and it Malmesbury in Wiltshire could collapse and re-birth become the centre of car assembly. in 2008 via the US process of Chapter works and appeals, everyone else will Dyson has been (sort of) confirmed 11, and with heavy intervention of follow suit. The trick is to be prepared as the recipient of public funding “to the President. The process allowed and at the forefront of that innovation develop a new battery electric vehicle”. a lot of legacy issues to be parcelled to be able to decide how best to adapt However, it is all very low profile, off, save the very good pieces, and to your business model. Good luck to all! including the government document restructure. A similar process in the being updated to remove references to UK could be a pre-pack and phoenix the Dyson car. Dyson needs to develop arrangement; however, using such a a range in batteries – those of you with process to separate out commitments is the latest cordless will know on full not without its political difficulties.

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Setting aside steel, we have a responding to, and managing, web- including the inevitable civil suits, number of positive announcements for based leads. The implications are clear range from $4.5 billion to € Wales: a TVR plant in Ebbw Vale; the and the reality is one of continuing $38 billion with VW having Circuit for Wales racetrack being built change in consumer habits and adaption provisioned €$6.7 billion to cover close-by; and Aston Martin opening to the change by those who seek to sell the cost. a production plant in Glamorgan. to them – and not just private sales, but VW faces a major challenge which The Welsh government team has fleet too. they have so far managed – how to done a strong selling job and has the stop the US outcome impacting the plaudits from the companies they are rest of their global markets, notably attracting. One is quoted as saying: Diesel-gate US style the $1,000 vouchers given to the “[we are] consistently impressed with Some might argue that the VW issues relevant US customers. A great quote, the focus on quality, cost and speed around emissions have all but become a allegedly out of VW, is that “Europe from the Welsh government team”. faded memory, with some UK retailers is not automatically comparable” with The reality may be more enjoying a reasonable Q1. It's not been other markets! However, the VW share challenging, but the confidence boost without its challenges, but some we price may say otherwise, having fallen is huge and the outcomes could be, we have spoken to are back in 'best ever' around 20% since the story broke. hope, of real benefit to the UK and territory. But this is in the UK. Across In the UK, VW registrations in Q1 Wales in particular. the water there is a different scenario 2016 have fallen in a growing marking playing out. and the brand itself has lost over half When this newsletter is published, a percentage of market share. This is Forecourt visit data points to the US deadline of 21 April for VW to a significant number, but could, of a trend find a fix will have passed and we may course, have been a lot worse. Audi Dealerweb, providers of showroom know more about the extent, cost and gained share which in an odd way sums management software, made public full implications. The US courts have up the situation: it is the VW badge research from Q1 2016 which suggests driven this effectively on behalf of the alone which is under assault and the that while new vehicle volumes are Environmental Protection Agency, the one that needs the attention. More increasing, test drives arefalling at 9% Californian Air Resources Board and information will have come from the year-on-year. It believes that growing the US Department of Justice. VW has delayed announcement of the 2015 numbers of consumers are opting for no room to move and must now find a results. Let’s hope there is a sensible virtual interaction and this means that solution and make it work. Numerous mood of restoring faith and moving on. retailers must have a robust process for estimates of the full cost to VW,

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UK new vehicle registrations

New car registrations in the UK grew by 5.3% in March, making it the biggest ever month since the bi-annual plate change began in 1999.

Total registrations in 2016 have Buyers of new cars in March can look Vauxhall and – the next reached 771,780; a 5.1% increase over forward to CO2 emissions of around two volume players in order of vehicles the first quarter in 2015. 518,707 new 20% lower than the average car on the registered – experienced a decline in cars were registered in March, making road. In fact, average new car CO2 is at market share. Peugeot and SEAT also it only the third time the market an all-time low of 121.4g/km – down notably lost market share with volume has surpassed half a million units in 32.9% compared with 15 years ago. falls of 5.8% and 5.4% respectively. a single month, thus rounding the In the premium segment, Audi, Once again the best-selling models month off as a record quarter. BMW, Jaguar Land Rover and in the UK remained unchanged, Demand for alternative fuel vehicles Mercedes-Benz collectively saw comprising Fiesta, Focus and Corsa. showed a notable increase of 21.5% in significant increase in market share. The VW Golf and Nissan Qashqai the month, as consumers continued Ford once again led the market with occupy positions four and five, while to favour lower emission vehicles market share of 12.2%, although this the Audi A3 remains the leading with lower running costs. Meanwhile was down on the first quarter of 2015's premium brand model. registrations of both diesel and petrol share of 12.9%. cars increased, with respective uplifts of 4.8% and 4.9%.

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UK new car registrations for three months to March 2016 (YTD)

YTD2016 YTD2015 2016/2015 FY15 FY14 FY13 FY12 Brand Units Share (%) Units Share (%) % Change Units Share (%) Units Share (%) Units Share (%) Units Share (%) Ford 93,897 12.2% 94,804 12.9% (1.0)% 335,267 12.7% 326,643 13.2% 310,865 13.7% 281,917 13.8% Vauxhall 75,032 9.7% 75,176 10.2% (0.2)% 269,766 10.2% 269,177 10.9% 259,444 11.5% 232,255 11.4% Volkswagen 57,443 7.4% 60,388 8.2% (4.9)% 223,784 8.5% 214,828 8.7% 194,085 8.6% 183,098 9.0% Audi 47,380 6.1% 44,919 6.1% 5.5% 166,709 6.3% 158,987 6.4% 142,040 6.3% 123,622 6.0% Mercedes-Benz 47,239 6.1% 40,311 5.5% 17.2% 145,254 5.5% 124,419 5.0% 109,456 4.8% 91,855 4.5% BMW 46,495 6.0% 40,024 5.4% 16.2% 167,391 6.4% 148,878 6.0% 135,583 6.0% 127,530 6.2% Nissan 43,843 5.7% 46,247 6.3% (5.2)% 153,937 5.8% 138,338 5.6% 117,967 5.2% 105,835 5.2% Peugeot 30,991 4.0% 32,913 4.5% (5.8)% 104,249 4.0% 103,566 4.2% 105,435 4.7% 99,486 4.9% Toyota 30,788 4.0% 30,210 4.1% 1.9% 98,709 3.7% 94,012 3.8% 88,648 3.9% 84,563 4.1% Citroen 26,638 3.5% 25,258 3.4% 5.5% 88,626 3.4% 83,397 3.4% 78,358 3.5% 73,656 3.6% Hyundai 25,368 3.3% 24,866 3.4% 2.0% 88,117 3.3% 81,986 3.3% 76,918 3.4% 74,285 3.6% 24,162 3.1% 22,265 3.0% 8.5% 78,489 3.0% 77,525 3.1% 72,090 3.2% 66,629 3.3% Land Rover 24,118 3.1% 20,605 2.8% 17.0% 66,574 2.5% 56,200 2.3% 54,699 2.4% 48,626 2.4% 23,959 3.1% 20,593 2.8% 16.3% 75,618 2.9% 66,334 2.7% 46,173 2.0% 40,760 2.0% Skoda 20,422 2.6% 18,731 2.5% 9.0% 74,692 2.8% 75,488 3.0% 66,081 2.9% 53,602 2.6% Honda 19,709 2.6% 17,164 2.3% 14.8% 53,417 2.0% 53,544 2.2% 55,660 2.5% 54,208 2.7% 18,665 2.4% 18,049 2.5% 3.4% 64,257 2.4% 67,162 2.7% 60,198 2.7% 49,907 2.4% Mazda 17,191 2.2% 14,730 2.0% 16.7% 45,504 1.7% 37,784 1.5% 31,228 1.4% 26,183 1.3% 16,178 2.1% 14,961 2.0% 8.1% 63,581 2.4% 53,661 2.2% 51,933 2.3% 51,324 2.5% SEAT 13,390 1.7% 14,158 1.9% (5.4)% 47,654 1.8% 53,512 2.2% 45,312 2.0% 38,798 1.9% Suzuki 11,545 1.5% 10,190 1.4% 13.3% 34,437 1.3% 37,395 1.5% 33,088 1.5% 24,893 1.2% Volvo 11,508 1.5% 10,591 1.4% 8.7% 43,432 1.6% 41,066 1.7% 32,666 1.4% 31,790 1.6% Jaguar 8,680 1.1% 4,952 0.7% 75.3% 23,954 0.9% 18,401 0.7% 16,210 0.7% 14,109 0.7% Dacia 7,453 1.0% 7,529 1.0% (1.0)% 26,228 1.0% 23,862 1.0% 17,146 0.8% - - Other 29,686 3.8% 24,954 3.4% 19.0% 93,857 3.6% 70,270 2.8% 63,454 2.8% 65,678 3.2% Total 771,780 734,588 5.06% 2,633,503 2,476,435 2,264,737 2,044,609 Source: SMMT

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New commercial vehicle registrations

98,906 vans were registered for the first three months in 2016, an up-lift of 1.2% compared to the same period in 2015.

The new van market finished the first saw registrations fall slightly by 1.9%, in market share from 11.9% in 2015 to three months in 2016 on a high with while demand for pickups showed a 10.5% in 2016; just above the 10.2% 3.3% uplift of demand in March. 5.3% gain, both in March. market share of third place Vauxhall. The trend towards heavier vehicles Ford maintains its dominance this Renault, positioned at seventh, achieved continued, with a substantial 14.2% year with a market share of 31.5% up an increasing growth of 21%. rise in the 2.5-3.5 tonne segment in from 26.4% at the same point in 2015 Unfortunately we cannot see the March, counteracting a decline in (up to 3.5 tonnes). VW was once again SMMT reporting over 6 tonne data so registrations of vans weighing less than the second largest register of under cannot currently comment on trucks. 2.5 tonnes. The 3.5-6.0 tonne sector 3.5 tonne vehicles, but saw a decline

Registrations of new commercial vehicles in the United Kingdom

Commercial vehicles < 3.5t YTD March YTD March 2016 2015 2016/2015 FY2015 FY2014 FY2013 FY2012 Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share % Units Share % Ford 31,130 31.5% 25,820 26.4% 20.6% 100,262 27.0% 82,519 25.7% 68,054 25.1% 62,372 26.0% Volkswagen 10,362 10.5% 11,603 11.9% -10.7% 43,091 11.6% 40,238 12.5% 36,925 13.6% 30,956 12.9% Vauxhall 10,089 10.2% 11,036 11.3% -8.6% 41,736 11.2% 32,619 10.1% 29,736 11.0% 26,524 11.1% Peugeot 9,518 9.6% 10,852 11.1% -12.3% 33,695 9.1% 31,867 9.9% 21,230 7.8% 21,272 8.9% Citroen 8,595 8.7% 8,654 8.9% -0.7% 30,119 8.1% 27,228 8.5% 22,989 8.5% 18,379 7.7% Mercedes 6,306 6.4% 5,947 6.1% 6.0% 31,887 8.6% 30,464 9.5% 25,667 9.5% 21,055 8.8% Renault 6,601 6.7% 5,457 5.6% 21.0% 25,371 6.8% 18,170 5.6% 12,978 4.8% 14,710 6.1% Nissan 3,711 3.8% 3,875 4.0% -4.2% 11,621 3.1% 10,270 3.2% 10,619 3.9% 10,136 4.2% Land Rover 2,433 2.5% 3,114 3.2% -21.9% 10,124 2.7% 9,611 3.0% 6,644 2.5% 5,917 2.5% Mitsubishi 2,396 2.4% 2,115 2.2% 13.3% 9,006 2.4% 6,946 2.2% 5,927 2.2% 4,853 2.0% Fiat 2,248 2.3% 3,445 3.5% -34.7% 11,704 3.1% 12,629 3.9% 12,019 4.4% 7,060 2.9% Toyota 2,335 2.4% 2,683 2.7% -13.0% 10,266 2.8% 8,344 2.6% 8,063 3.0% 7,747 3.2% Isuzu 1,601 1.6% 1,842 1.9% -13.1% 6,220 1.7% 5,502 1.7% 4,112 1.5% 2,762 1.2% 953 1.0% 761 0.8% 25.2% 4,326 1.2% 2,769 0.9% 3,275 1.2% 3,593 1.5% Other 628 0.6% 571 0.6% 10.0% 2,402 0.6% 2,510 0.8% 2,835 1.0% 2,305 1.0%

Total light CV 98,906 97,775 1.2% 371,830 321,686 271,073 239,641

Commercial vehicles > 3.5t and < 6.0t YTD March YTD March 16 15 2016/2015 FY2015 FY2014 FY2013 FY2012 Brand Units Share % Units Share % % Change Units Share % Units Share % Units Share % Units Share % Ford 587 31.1% 650 33.1% -9.7% 2,722 34.0% 1,852 27.2% 2,767 40.8% 2,879 40.4% Fiat 478 25.3% 437 22.2% 9.4% 1,954 24.4% 1,313 19.3% 1,231 18.1% 1,416 19.9% Mercedes 440 23.3% 452 23.0% -2.7% 1,858 23.2% 1,889 27.8% 1,485 21.9% 1,367 19.2% Peugeot 119 6.3% 185 9.4% -35.7% 673 8.4% 401 5.9% 200 2.9% 359 5.0% Iveco 111 5.9% 83 4.2% 33.7% 316 3.9% 402 5.9% 420 6.2% 444 6.2% Volkswagen 63 3.3% 85 4.3% -25.9% 195 2.4% 386 5.7% 342 5.0% 251 3.5% Vauxhall 67 3.5% 40 2.0% 67.5% 140 1.7% 135 2.0% 99 1.5% 73 1.0% Renault 17 0.9% 20 1.0% -15.0% 87 1.1% 74 1.1% 117 1.7% 215 3.0% Other 7 0.4% 13 0.7% -46.2% 56 0.7% 345 5.1% 127 1.9% 122 1.7%

Total heavy CV 1,889 1,965 (3.9)% 8,001 6,797 6,788 7,126

Source: SMMT

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EU and EFTA passenger car registrations

In March 2016, the EU passenger car market posted strong results again, marking the thirty-first consecutive month of growth, with registrations in March up by 6% to 1,700,683 units compared to March 2015.

In volume terms, this result is close EU and EFTA passenger car registrations March 2016 to March 2007 levels, just before the YTD2016 YTD2016 2016/2015 FY2015 FY2014 FY2013 FY2012 economic crisis hit the automotive Country Units Units % Change Units Units Units Units industry. Germany 791,424 757,630 4.5% 3,206,042 3,036,773 2,952,431 3,082,504 In the first quarter of 2016, EU- United Kingdom 771,780 734,588 5.1% 2,633,503 2,476,435 2,264,737 2,044,609 516,382 477,319 8.2% 1,917,226 1,795,885 1,790,456 1,898,760 only new passenger car registrations Italy 519,123 429,615 20.8% 1,574,872 1,360,578 1,304,648 1,403,010 increased by 8.2% totalling 3,819,259 285,495 267,142 6.9% 1,034,232 855,308 722,689 699,589 million units. Growth in Germany, UK 150,456 147,073 2.3% 501,066 482,939 486,065 486,737 Netherlands 98,558 109,702 -10.2% 449,393 387,565 416,730 502,479 and France was 4.5%, 5.1% and 8.2% Others 686,041 605,576 13.3% 2,397,192 2,155,721 1,941,817 1,936,369 respectively compared to the EU and Total EU 3,819,259 3,528,645 8.2% 13,713,526 12,551,204 11,879,573 12,054,057 EFTA's growth of 8.1% This suggests EFTA 112,644 109,929 2.5% 488,498 455,681 457,310 474,036 that although all major markets posted Total EU+EFTA 3,931,903 3,638,574 8.1% 14,202,024 13,006,885 12,336,883 12,528,093 Source : ACEA growth, the stronger growth came from outside the 'Big 3' (note Italy's performance) – as we commented in our last edition. We note that Poland also saw strong growth of 14.2% with new passenger car registrations rising to 104,688. However registrations in the Netherlands saw a decline in growth of 10.2%. Europe remains a fickle and fractured market.

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