Graham Hill Summarizes 2010

Wednesday, 29. December 2010

This year has been a bit of a struggle for many industry sectors but not so much for the motor industry. Following the scrappage scheme it was expected that the motor industry would contract and dealerships close, something I personally didn’t think would happen. In anticipation of a potential downturn the manufacturers started to scale down production in 2008/9, some would say too far, as virtually every new car drifted out to long delivery lead times as demand remained relatively high. This situation has continued to cause problems. The worst of the suppliers being VW/Audi with some Audi’s now taking 6 months to get to customers, it’s ridiculous. Having said that, they claim that the factories are, more or less, back up to full working capacity, so it’s not a result of massive cut backs that they are reluctant to reverse, causing the delays, simply excessive demand. Doesn’t help my cash flow though when we have to quote 20 and 24 week delivery periods. The fact is that new car sales are down but leasing remains pretty buoyant, even with many lessees choosing to extend contracts. The net effect has been a 4% drop from last year so leasing is still proving to be popular. As for next year, what will it hold for us in the industry? I have to say that next year will be one of the least predictable ever. Motoring costs will rise as a result of new car price increases due in January, the VAT increase adding to the pain of these increases. The same will apply to fuel. The fuel cost will continue to rise with VAT adding to the increase. There will be no oversupply of vehicles so manufacturers will be reluctant to provide extra bonuses to the leasing companies so if you see a deal on a car that you like, 2011 will not be a ‘wait and see’ year, more like a ‘buy it now’ year. Car bargains will come and go quicker than ever. With increased pressure on used cars as a result of the long lead times on new cars we will see lease rates on used cars working out much higher than new cars. The leasing industry will remain buoyant as a result of large companies turning to leasing from cash purchase in order to enjoy the cash flow and cost benefits whilst small businesses stick with their old traditional methods of funding their company vehicles. One thing is for sure I will continue to keep you up to date with the very latest information as well as the latest changes to your rights as the EU Consumer Credit Directive completes its transition period and comes into full force in February. How do you feel the economy or the motor sector will go in 2011? By Graham Hill