Automotive Messenger - Grant Thornton UK · PDF file02 Quarter 1 2015 starts with a bang! 03 topic a real hot potato.Grant Thornton Professor of ... 20 7728 2404 M +44 (0) ... Automotive

Automotive Messenger

02 Quarter 1 2015 starts with a bang!

03 Grant Thornton Professor of Automotive Management

04 Finance products

07 News snippets

09 Registration data

Contents

Records keep tumbling – where to next?

April 2015

It was looking quite ominous at one or two points during the month of March, but when the final results were added up, March 2015 became the best month for passenger car registrations this century. Therefore March takes the accolade of the best month since twice-yearly number plate changes were introduced in 1999, 16 years ago.

The SMMT headlined in their press releases the ‘contribution of

automotive to the UK economy’ and later ‘whatever the general election result, the new government must keep up the commitment to the sector which is delivering at home and abroad’. Exactly how a vocal trade body should be lobbying – and a reflection of the nervousness around political change slamming policies and working practices in to reverse at speed.

In this edition of Automotive Messenger, we announce our new sponsorship at the University of Buckingham, introducing the latest member of the ‘team’, Colin Tourick who takes up the post of Grant Thornton Professor of Automotive Management. We are very excited about this collaboration and look forward to reporting further developments in future issues.

Tarun MistryT +44 (0)20 7728 2404M +44 (0)7966 432 299E [email protected]

Neil BarrellT +44 (0)20 7865 2700M +44 (0)7976 550 312E [email protected]

Bill Parfitt CBET +44 (0)20 7385 5100M +44 (0)7528 870 341E [email protected]

Paul BurrowsT +44 (0)1908 359 554M +44 (0)7850 538 309E [email protected]

We take a more detailed look at the March registrations and consider the equally impressive boom in commercial vehicles. European registrations are covered again to March and we have the usual snippets for your enjoyment. We had a very successful, and inaugural, webinar this month looking at the hot topic of PCP (Personal Contract Purchase). Chaired by Paul Burrows, our panel of Colin Tourick, Bill Parfitt formerly VP GM Europe and Richard Parkin formerly EuroTax Glasses shared their collective view and answered questions from the live audience. The debate was lively and the topic a real hot potato.

As ever, please enjoy your read and do not hesitate to contact a member of the team if you have any burning issues.

Quarter 1 2015 starts with a bang!

Before writing this article, we thought it opportune to revisit the Messenger from last year and get a flavour of the adjectives used. ‘Superlative’ and ‘bumper’ stood out, and here we are again with March 2015 smashing the record at 492,774. With at least one brand with some product undelivered on the docks – can we ever get to half a million? The quantum was a cool 6% over March 2014 and takes the cumulative registrations to 734,588. This is a cumulative increase of 6.75% over 2014. But before we analyse the trends, what of the individual performances for the year-to-date?

Ford is still number one at 94,804 although that is actually 72 vehicles down on the comparative period. Likewise Vauxhall holds on to number two spot having registered an extra 884 vehicles but lost half a percent market share. There is no room for complacency at the top and I am sure every effort will be made by these two to regain the market share ground – Ford’s drop was nearly one whole percentage point.

Where has that market share moved? In reality, it has been very well spread with a few notable exceptions. Mercedes have registered 19% more product year-on-year, gaining 0.58 percentage points in market share, which is a phenomenal performance and illustrates the case for more diversified product and strong PCP offerings with a conduit to deal with any residual value issues at the back end. Nissan have fared even better, with an increase of 22% and they have consequently gained 0.8 percentage points in market share. But the winner this quarter has been Mitsubishi who gained 0.68 percentage points in market

The year has started with a seriously strong headline number – but will profitability follow or is the push getting too hard?


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share but actually registered 192% more vehicles than the equivalent period last year. On those numbers, it must be happy days for their dealer meetings!

Volkswagen and Toyota both saw some rebound of registrations but only small improvements in market share. We did not include MINI above as the volumes are not comparable to either Mercedes or Nissan, but 0.62 percentage points increase in market share is commendable and represents a 53% rise in registrations. It is hard to find any real losers in volume except Suzuki where registrations fell 11.55% and market share dropped by 17%. Otherwise, there were no catastrophes or melt downs; let’s hope all the brands met their own internal objectives?

Ford leads in CVHaving noted the relative flat line of Ford’s passenger car registrations, we take our hats off to their commercial vehicle registrations which have risen by a staggering 40% in the first quarter, to over 25,000 units and taking an increased market share at 26.4%. The attraction of the product built around Transit derivatives is plain to see and the investment in new retail facilities and the focus on standalone operations are paying dividends. If you consider their performance against passenger cars, Ford CV would come in at number ten, a truly excellent performance. We have been asked by a few retailers if we can suggest a Ford Transit franchise opportunity, which speaks volumes!

Ford have not been the only beneficiary with the quarter posting a registration rise of over 20% in the light commercial vehicles sector, reflecting

the confidence factor in the economy. It may be a worn record but the ‘white van man’ is back and confident enough to spend some cash on capital outlays – that has to be a strong sign. Anecdotally, we spoke to a small used car retailer who had bought a batch of six very well spec’d Renault vans and sold them at a full up margin in a matter of days – he was saying that all manner of small businesses had contacted him and he could have sold them four or five times over, yet more evidence of economic confidence.

The heavy truck market has also (thankfully) rebounded after the issues we noted at the back end of 2014. Registrations were up over 50% with the big 4 – DAF, Mercedes, Scania and Volvo all posting increases of 70% plus over the first quarter in 2014. You would expect this given the Euro 6 issues bringing forward registrations to the last quarter of 2013. However, in comparison to the first quarter of 2013, truck registrations have grown by around 350 units so at least we can demonstrate an upward trend. It may well be that post-election will see the defining period for heavy trucks as whichever Government comes in to power decides on public infrastructure spending for the next five years. It feels a bit like a restrained budget so on that basis we don’t expect heavies’ numbers to reflect substantial growth.

Can Europe catch up?This is a pivotal question and its answer will hold the key to what may happen to UK registrations during the remainder of 2015. Production schedules are fixed for this year and despite whatever happens

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Automotive Messenger April 2015 3

in any one country, unsold production will have to find a home somewhere – and so it will be absorbed. Much has been said around the problems currently being faced by manufacturers in Russia and how that ‘falling off a cliff’ position means more allocation of product to be sold in the UK. If Europe fails to recover and pull its weight, then more vehicles may come our way. As long as the right versus left hand drive difference can easily be accommodated - we suspect these types of crucial decisions will be made not too far in to 2015. We will report any changes in upcoming issues.

Encouragingly, March data for Europe shows good growth with passenger car registrations up by 8.5% with only Belgium going backwards. Average growth rates are pitched around 5% although both Spain and Italy are faring better but from much lower bases. Let’s hope this general upward trend continues.

Volume and marginWe asked the question earlier as to whether profitability is being impacted by the volume push on passenger cars in the UK? We see clear evidence that it is and it becomes the main topic of conversation in discussions with retailers and manufacturers alike. The nature of the game has very much changed – each quarter is a volume challenge and retailers’ ability to absorb product almost an essential. This led to huge problems before the 2008 recession so the warning signs are flashing!

Registration data is just that – it does not tell the full picture of where those vehicles are actually heading. There are management cars, demonstrators, courtesy car fleets, rentals and then pack cars with or without assisted funding to consider. The process is becoming a different beast with those able to take big tranches of product and fund them doing the strongest business – they have processes in place to sell on these cars across their sites and without too much impact on the normal used car operations. The problem comes for those without deep pockets – challenging decisions such as whether to hit quarterly targets or go down a ‘better’

margin route. Inevitably having so much volume dictates a sacrifice in unit margin to get the product out of the door.

We have spoken to several dealers who find their 2015 target beyond their capabilities. They are choosing to focus on used product and better new margins, sacrificing a slice of reward to avoid any log jam of product and then a possible future funding issue. The industry has moved towards consolidation with the biggest dealers growing – no doubt this will continue as trading patterns dictate and the art of the possible gets ever tougher.

Quarter 2 is never a glittering period as it lacks a registration plate change month. However, with the move to a quarterly focus, it remains to be seen what happens at the end of June and whether there is enough capacity to absorb product within the constraints of free cash and without decimating margins. The cycle of PCP business continues to get ever shorter and the pressures on the secondary (used) market increases – this brings in to focus the role of remarketers, secondary funders and even logistics. We will be looking at these aspects in future editions of our Messenger.

Grant Thornton Professor of Automotive ManagementWe are delighted to announce the establishment of the Grant Thornton Chair in Automotive Management at the University of Buckingham Business School and that Colin Tourick has agreed to become our first Grant Thornton Professor of Automotive Management.

The University of Buckingham’s Centre for Automotive Management has carried out research, published reports and run educational programmes, events and seminars for the automotive sector for many years and we see this new association as an important part of our automotive strategy.

Colin Tourick MSc FCA FCCA MICFM is a business adviser who has spent 35 years in the downstream automotive industry with a focus

on leasing. He has been chief accountant of LeasePlan UK, general manager at Commercial Union Vehicle Finance, corporate finance director of BNP Paribas Lease Group and managing director at CitiCapital Fleet. This experience has now been brought to the world of advisory - Colin has served on the Finance and Leasing Association and British Vehicle Rental and Leasing Association committees. He advises banks, motor manufacturers, leasing companies and fleet managers, has written 13 books on asset finance and fleet management and has been a visiting professor at the University of Buckingham Business School for eight years.

Our sponsorship of the Chair has been made in order to capitalise on

our complementary strengths and to act as a focus for our joint activities moving forward. We are particularly keen to develop research and to publish thought leadership material that combines the best academic traditions with strong business understanding. We have a long-standing presence in the automotive advisory field and there had been a growing collaboration between the parties on a range of issues. We hope to announce further initiatives between us in future editions of Automotive Messenger. In the meantime, we welcome Colin to our team and look forward to working alongside our new friends at the University of Buckingham.


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Finance products – their structure and influence on the market

What makes PCP attractive?All the important economic factors have aligned themselves to create the ideal environment for PCP to grow into the core product it has now become. Low interest rates, favourable exchange rates, improved credit performance and robust used car values have all served to make PCP the ideal product. In so far as the ‘private’ element of new vehicle registrations, or roughly half the annual total, goes, the consumer is enjoying the benefit, the finance companies are going great guns and the retailers are enjoying the shortening of the change cycle to generate more sales and the increased associated service products that sit alongside. There are dangers as we note elsewhere in this edition – volume comes at the expense of margin and that could quite easily flip to a problem situation.

Nonetheless, PCP is something to enjoy whilst all the economics work. If you visit our webinar link, you will see the range of views and visions, so we have not repeated them here. But the ‘private’ side of new vehicle sales is only half, the other half belongs to the world of ‘fleet’, and in particular, the leasing

and contract hire market. Interestingly, this half also contains products which are often more, or at least, as relevant to private new vehicle buyers. It is just that PCP is so attractive they may not be competitive enough.

The pricing conundrumMotor finance and leasing companies have enjoyed very good trading conditions in recent years for the same reasons covered above. Competition has, however, been fierce and retention performance has been built around absolute levels of service and pricing. Frankly, the latter has started to grow in importance and this has been seen in many industries where pricing is not a ‘one size fits all’ issue. There is flexibility but it has to be competitive.

In the last decade pricing has undergone something of a revolution in many markets though not in ours. We need only go online to buy a book, plane ticket or to book a hotel room, to realise that prices are much more dynamic than they used to be. There are far fewer fixed prices; prices are continuously being modified to reflect demand and supply, in some cases

changing every couple of weeks but in other cases this happens every day or even more frequently.

This is happening because those vendors are trying to hit the pricing sweet spot: the price that is as high as possible whilst maximising the probability of winning the sale.

Fifty years ago, economists Granger and Gabor asked consumers how much they would be prepared to pay for a product. They then increased the price until the consumer said no. They developed this chart, which shows the optimum price point for anyone selling a fairly standardised product to multiple buyers. It plots the total revenue the supplier would earn at different price levels. It works for vendors of consumer goods and also for leasing and motor finance companies selling Contract Hire (CH) or PCP.

Pricing is a key consideration for all asset finance businesses and Colin Tourick has developed a particular specialism in the way that Automotive Finance and Fleet Leasing companies carry out their pricing. Colin discussed some of the issues with the editorial team.



Finding and utilising the ‘sweet spot’The ‘sweet spot’ in the chart above is the price at which total revenues are at their highest. The question is; how to determine the sweet spot? The answer differs depending on which financial product you are selling.

Let’s consider one product: Contract Hire (though the principles are similar for PCP price setting by the Finance Companies). If you check how many quotes are issued every month by a CH provider, and see how many of these turn into orders, you might be surprised. Quote conversion rates are quite low for a variety of reasons, including the fact that clients shop around and get several quotes for each car.

If the CH provider has conservative residual values (RVs) or over-determined service, maintenance and repair (SMR) budgets, it will certainly find itself losing out, though as it happens few Leasing or Finance companies go to this level of detail and modify their prices according to the ‘competitiveness’ of their RVs and SMR budgets. But when they do, they get good results.

This approach can be enhanced by plotting the ‘competitiveness’ of the RVs and SMR budgets against actual success in converting quotes into orders. So, for example, if the CH provider has a model where RVs and SMR budgets are competitive and a high proportion of quotes are converting into orders, that’s the time

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to nudge up margin. Where RVs and SMR budgets are uncompetitive and relatively few quotes are converting into orders, this should be the time to consider lowering the margin, because there’s no point in quoting high and losing too many deals.

A number of CH providers (and Lessors/Finance providers) have started adopting these approaches, using the data they already hold in-house to gain useful insights into how to price the next deal. These methods can be highly sophisticated; tailoring the rental perfectly for an individual client, a particular model, for a specific term and mileage and taking into account recent experience in quoting to that specific client, similar clients or all clients.

Source: Clive Granger and André Gabor, 1965


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The benefits to be gainedUltimately a CH provider should aspire to be able to calculate the optimum price to quote in every situation; a price governed by real insight rather than gut feel, and modified in real time according to the success in issuing the most recent quotes in identical situations. If this is successful, Messrs Gabor and Granger will be applauding.

Colin has carried out a lot of work in this arena, and is like most of us, coming to grips with the fundamental performance drivers and the world of PCP. Pricing in the world of Fleet is very similar to Private consumer-land, albeit credit scoring influences headline rates more for the latter. What is clear, as Colin notes, is that “Finance and the motor vehicle are inextricably related, they create the demand environment together, and pricing strategy is key”.

PCP webinarThis edition of Automotive Messenger has more than one reference to Personal Contract Purchase, or PCP, products. We have been asked by many stakeholders in the industry to pass comment on the rise and popularity of this finance product for new vehicle sales. On 23 April we held a webinar on this subject, chaired by Paul Burrows and with panellists Bill Parfitt, Colin Tourick and Richard Parkin.

All of the panel come from an industry background and have touched PCP from many different angles. Bill was the former UK MD of Vauxhall Motors and VP General Motors Europe so understands how the manufacturer sees the opportunity. Colin’s CV is noted elsewhere in this edition and he brings to the table a vast amount of knowledge from the Leasing world. Richard is the former Head of Valuations at EuroTax Glasses and so has intimate knowledge of residual value management, a fundamental part of PCP management.

Below is a link to the webinar which lasts around 40 minutes and includes a number of questions from the audience watching online. You will enjoy a lively debate and see that the topic brings with it many differing points of view. We will continue to develop our thoughts on the subject matter as the year unfolds, and will be happy to discuss any issues you may have, just contact one of the team.

Please click here to view

http://responsive.policyreview.tv/video/1024/7886

http://responsive.policyreview.tv/video/1024/7886

News snippets from the automotive industry



Much ado for JLRIn late March, there were two new announcements that are important for the future development of JLR. Firstly Tata confirmed it was planning to raise $1bn through a rights issue, to be used to cut debt, but also to jump-start its loss making Indian car business. The third quarter loss in 2014 for the Indian business was put at Rs21bn roubles whereas JLR weighed in with a profit of almost £600 million – quite a divergence. Analysts believe the rights issue will reduce the risk that financial resources are diverted from JLR.

Secondly, and in support of that theory, JLR is to invest £400 million in a plant near Birmingham and a big expansion of its engineering base. The money will be invested in the Castle Bromwich facility and in expanding the Whitley HQ site - the latter to expand the company’s research and development centre and interestingly to increase its focus on low emission vehicles. JLR sold 463,000 vehicles globally last year, which is only around a quarter of BMW. The key will be to bring up the Jaguar brand which currently sits at around 18% of JLR’s sales – in the UK the two brands are often owned by the same partner, in the same geography and the aim must be to make both profit contributors.

Switching on to electricBlack cabs are back in the news – Geely, owner of the London Taxi Company, has set out its vision to introduce a new cab which is aluminium in construction and with battery-power backed up by a small

petrol engine. The strap line quoted is to build a cab that can run without refuel from Piccadilly Circus in London to Piccadilly Railway Station in Manchester! (might be a big fare though). This news comes in response to the impending 2018 rules on taxi emissions within London and reflects the serious nature of cleaner technology for vehicles in general.

One company who commentators admire for cracking early stage attraction of electric vehicles is Mitsubishi, and more particularly, its Outlander PHEV. It holds the title as the best-selling, battery-powered vehicle here in the UK, and more importantly it seems, it looks just like a diesel derivative. It has an Outlander shell. Also it is priced around the same as the normally-aspirated model, taking account of the £5,000 government grant. Could this reflect the current desire of the consumer to have a vehicle that looks the same as an existing model, and not necessarily a new design?

Only time will tell. New technology costs a fortune to develop and cleaner emission is no different – even the £5,000 extra price advantage above is not going to be sufficient to offset the massive development cost. Then there is the recently revived discussion around hydrogen fuel cell technology and which is the better bet for the future? The old Betamax/VHS video battle is looming and global Auto manufacturers need to be making big profits, and generating substantial free cashflow, from a buoyant market to fund the development costs both pre and post the final choice. Quite a challenge!

The importance of remarketingAfter the false start around its UK float, BCA is changing hands to a new financial owner. No surprise there as the world of Private Equity demands a churn factor to generate both profit and cashflow. What is more relevant is the future of physical auctions and the development by BCA of on-line and its ability to embrace the path many believe is an inevitability. The role of remarketing in all its forms in the UK is fundamental – it is like no other European country, only the US on the global stage is an equivalent.

We see a lot of consolidation around this space – logistics, refurbishment, warranty, storage, transactional to name but a few sub-sectors. The rise of PCP and the shortening of the change cycle will only add fuel to the fire – product in the ‘secondary and tertiary’ markets will have to move quicker and with ever increasing efficiency. We have started our own debate around this with our recent webinar on the topic of PCP. If you missed the actual broadcast, please follow the link on page six to see what we covered with our live, online audience.

Les Bleues and Les Jaunes!It was no surprise to see the French Government swiftly step in to maintain its grip on Renault by acquiring an extra 5% stake to block a motion set to be voted on at the AGM on 30 April. A recent piece of legislation dubbed the ‘Florange’ law has created more votes for shares held over time but as ever it is likely to create a series of unintended consequences. In 2014 the French


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Government took a 14% stake in PSA Peugeot Citroen and thus it maintains a high degree of involvement in both its big automotive manufacturers – and naturally, employers!

In car strikes a cord..and orders a pizza!Previous snippets mentioned the battle ground between the OEMs and the Technology companies trying to gain control of the ‘cockpit’ in the car. Well it seems that the battle has been joined by Pizza Hut who demonstrated an App combined with payment card VISA at a recent industry conference to order and pay for a pizza on the move and Domino’s who have a voice-activated App on test with Ford.

We speculated that both Google and Apple connectivity would make car brands more attractive where the allegiance to mobile is strong – customers only choosing a brand of car where they get the fit? But could this run to pizzas as well? Whatever your conclusion is around this story, the point to be made is very serious and could have a huge role to play in the future success of individual car brands.

East Anglia Part 1 – Another retail group joins the world of plcAlmost without fuss has come the listing of around 30% of shares in Marshall Motor Holdings and a very early 20% rise in their price on AIM (10 April). Marshall Motor now has access to additional funds to both grow and spend on existing facilities – and equally important, the Marshall family retaining

the not insubstantial business left behind (Cambridge Airport, Engineering, Military) can focus on those activities instead of motor.

This transaction of placing shares appears to have been well received and with the double benefits above, all seems positive. The local BBC carried this as their major story and certainly in East Anglia it is big news. A very private business going public attracts a great deal of interest and inevitably leads to speculation around who will be next? Of course, such events are few and far between but they could be a pointer to the future if capital becomes scarce and growth remains the driving force behind a business. Motor distribution is going through a purple patch and some family businesses must be observing how value can be created when they are not necessarily in the box seat.

East Anglia Part 2 – is Lotus headed in the right direction?You could almost hear the groans when another Lotus turnaround plan hit the stocks after the appointment of Jean-Marc Gales as CEO – this company has seen a few in its time. Based in Norfolk – not renowned as a hotbed of heavy manufacturing – and with an owner who has paid their dues but cannot commit massive R&D monies, what of the future? A new model, the Evora 400, was launched at Geneva and sales for the twelve months to March 2015 have increased 55% over the previous year – so could this be the plan that works? In fairness, it has to be given an opportunity, but the world does not stand still around Lotus and the challenge is as it is for any

niche product – can it create its own value without breaking the bank?

VW power struggleIt isn’t just Mr Rosberg in F1 who is a German unhappy with his business partner – the undercurrent at Volkswagen group has flared up again and now the Porsche and Piech families are publically at odds. This is not for the first time and one hopes, does not rock the boat too much, remember the history of Porsche (not) buying Volkswagen and the ensuing issues.

Now the Chairman (Piech) seems to have fallen out with the longstanding CEO (Winterkorn) who has driven the business along at frenetic pace, albeit with a few blips along the way, namely low margin issues at passenger cars leading to the 2014 cost-cutting programme, and the relative lack of success in the (previously) booming US market. It seems that the employee base and the regional state of Lower Saxony are behind the CEO so it will be interesting to see where this all leads.

Mr Winterkorn evidently enjoys a salary package of €£15.9 million so he should be able to cope with this discord! It does, however, reflect the tension behind the OEMs and the knock on impact this has on the distribution network and the end customer touch-points. Thin margins are a real challenge as everyone in the cycle lives with a high cost base – volume compensates unless it isn’t there!

Footnote: Piech has just resigned!

News snippets continued...


Registration data

• 2015 has started very well indeed but sustainability will largely surround the shortening PCP cycle and the strong finance offers available. There is a determination to sustain earlier year’s growth but that may have to be in a pressured market. 37 months of continuous growth is beginning to reveal a few cracks so optimism and celebration have to be tempered with an eye to the future

• The first quarter of 2015 has seen a shift from private to fleet buyer, with the former reducing share from 50.5% to 47.9%. The SMMT comment that this is a positive in the fleet market and good for the UK economy. The issue for retailers is the shift in margin this creates and the lack of service work that will follow. We will know more at the end of Quarter 2

• The top three best sellers remain Fiesta, Corsa and Focus albeit the Vauxhall offering has moved in to second place and has already put quite an amount of blue sky between it and the Focus. Qashqai registrations have been strong in the quarter and clearly impacted Nissan’s overall performance.


Audi’s A3 remained the best for premium but was run close this time by the Mercedes C Class.

• On this note, whilst the Audi/BMW battle for volume supremacy rages, Mercedes has snuck up on the rails and overtaken BMW by a mere 287 units. The brand is now a serious challenger to this duo and in the future, we expect to report on the trio going head to head. PCP is undoubtedly helping enormously and registrations between the three have climbed 9,000 over 2014, a rather large increase!

• Dacia has continued to grow its market share and now has 1% which we recall was an aspirational level not so long ago, Mazda has topped 2% market share and Land Rover has registered an additional 20% of product over 2014. You can never be sure where the next winner or loser is coming from!

UK new car registrations for three months to March 2015 (YTD)YTD2015 YTD2014 2015/2014 FY2014 FY2013 FY2012 FY2011

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

Ford 94,804 12.9% 94,876 13.8% (0.1)% 326,643 13.2% 310,865 13.7% 281,917 13.8% 265,894 13.7%

Vauxhall 75,176 10.2% 74,292 10.8% 1.2% 269,177 10.9% 259,444 11.5% 232,255 11.4% 234,710 12.1%

Volkswagen 60,388 8.2% 56,271 8.2% 7.3% 214,828 8.7% 194,085 8.6% 183,098 9.0% 179,290 9.2%

Nissan 46,247 6.3% 37,808 5.5% 22.3% 138,338 5.6% 117,967 5.2% 105,835 5.2% 96,269 5.0%

Audi 44,919 6.1% 43,766 6.4% 2.6% 158,987 6.4% 142,040 6.3% 123,622 6.0% 113,797 5.9%

Mercedes-Benz 40,311 5.5% 33,799 4.9% 19.3% 124,419 5.0% 109,456 4.8% 91,855 4.5% 81,873 4.2%

BMW 40,024 5.4% 37,937 5.5% 5.5% 148,878 6.0% 135,583 6.0% 127,530 6.2% 116,642 6.0%

Peugeot 32,913 4.5% 32,433 4.7% 1.5% 103,566 4.2% 105,435 4.7% 99,486 4.9% 94,989 4.9%

Toyota 30,210 4.1% 27,732 4.0% 8.9% 94,012 3.8% 88,648 3.9% 84,563 4.1% 73,589 3.8%

Citroen 25,258 3.4% 24,178 3.5% 4.5% 83,397 3.4% 78,358 3.5% 73,656 3.6% 68,464 3.5%

Hyundai 24,866 3.4% 23,103 3.4% 7.6% 81,986 3.3% 76,918 3.4% 74,285 3.6% 62,900 3.2%

Kia 22,265 3.0% 21,608 3.1% 3.0% 77,525 3.1% 72,090 3.2% 66,629 3.3% 53,615 2.8%

Land Rover 20,605 2.8% 17,098 2.5% 20.5% 56,200 2.3% 54,699 2.4% 48,626 2.4% 37,637 1.9%

Renault 20,593 2.8% 17,656 2.6% 16.6% 66,334 2.7% 46,173 2.0% 40,760 2.0% 68,449 3.5%

Skoda 18,731 2.5% 20,307 3.0% (7.8)% 75,488 3.0% 66,081 2.9% 53,602 2.6% 45,061 2.3%

Fiat 18,049 2.5% 18,782 2.7% (3.9)% 67,162 2.7% 60,198 2.7% 49,907 2.4% 41,612 2.1%

Honda 17,164 2.3% 18,265 2.7% (6.0)% 53,544 2.2% 55,660 2.5% 54,208 2.7% 50,577 2.6%

MINI 14,961 2.0% 9,767 1.4% 53.2% 53,661 2.2% 51,933 2.3% 51,324 2.5% 50,138 2.6%

Mazda 14,730 2.0% 12,487 1.8% 18.0% 37,784 1.5% 31,228 1.4% 26,183 1.3% 31,219 1.6%

SEAT 14,158 1.9% 14,023 2.0% 1.0% 53,512 2.2% 45,312 2.0% 38,798 1.9% 36,089 1.9%

Volvo 10,591 1.4% 9,909 1.4% 6.9% 41,066 1.7% 32,666 1.4% 31,790 1.6% 32,657 1.7%

Suzuki 10,190 1.4% 11,520 1.7% (11.5)% 37,395 1.5% 33,088 1.5% 24,893 1.2% 20,295 1.0%

Dacia 7,529 1.0% 6,821 1.0% 10.4% 23,862 1.0% 17,146 0.8% - - - -

Jaguar 4,952 0.7% 5,474 0.8% (9.5)% 18,401 0.7% 16,210 0.7% 14,109 0.7% 13,787 0.7%

Other 24,954 3.4% 18,210 2.6% 37.0% 70,270 2.8% 63,454 2.8% 65,678 3.2% 71,700 3.7%

Total 734,588 688,122 2,476,435 2,264,737 2,044,609 1,941,253

Source: SMMT


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*EU27, data for Malta unavailable

• Europe and EFTA are on the rise again, continuing the good work of 2014. The first two months of 2015 were reasonable but it has been the month of March with its 10.8% increase that gave the big impetus to end the first quarter 8.5% ahead of 2014. Whilst the UK has played its part, other countries have come to the fore and shown some real growth of their own.

• Spain and Italy have made the greatest improvements, but those results have been achieved off a low base and Spain in particular has a long way to go to reach its former peak levels. The economy of that country has taken a real pounding and it remains to be seen if recovery gains momentum. Nonetheless, 32.2% growth (as recorded by Spain) is fantastic and again this sort of data must be a signpost to positive economic recovery.

• Outside of the major countries, the Czech Republic has done well, advancing by nearly 24% but its near neighbour – and bigger market – Poland has actually gone backwards by 6% which is very disappointing if understandable given the political situation in the region. Portugal and Ireland have both seen around 30% increases in volume, the latter, obviously closer to home, adding an extra 14,771 units over 2014. That will be a welcome boost and bring a smile to the face of those UK based NSCs who cover across the Irish sea.

New passender car registrations in the EU (month trend 2005-2015)

Source : SMMT

EU and EFTA passenger car registrations for three months to March 2015YTD2015 YTD2014 2015/2014 FY2014 FY2013 FY2012 FY2011

Country Units Units % Change Units Units Units Units

Germany 757,630 711,753 6.4% 3,036,773 2,952,431 3,082,504 3,173,634

United Kingdom 734,588 688,122 6.8% 2,476,435 2,264,737 2,044,609 1,941,253

France 477,319 446,609 6.9% 1,795,885 1,790,456 1,898,760 2,204,229

Italy 428,464 377,629 13.5% 1,359,616 1,304,648 1,403,010 1,749,074

Spain 267,137 202,127 32.2% 855,308 722,689 699,589 808,051

Belgium 147,073 148,532 -1.0% 482,939 486,065 486,737 572,211

Netherlands 110,158 107,031 2.9% 387,835 416,730 502,479 555,798

Others 605,335 565,289 7.1% 2,155,916 1,941,817 1,936,369 2,142,520

Total EU 3,527,704 3,247,092 8.6% 12,550,707 11,879,573 12,054,057 13,146,770

EFTA 109,931 106,461 3.3% 455,680 457,310 474,036 460,229

Total EU28*+EFTA 3,637,635 3,353,553 8.5% 13,006,387 12,336,883 12,528,093 13,606,999

Source: ACEA

• In terms of brand performance, VW Group with its multi marque portfolio, comfortably retains its number one position with 24% market share, and has seen registrations grow by 9% over 2014, representing 76,000 extra units. This is a big boost for the group with the US coming a little off the boil. VW Group’s growth is by no means the most impressive in percentage terms – Nissan has achieved 25.8% and Daimler (Mercedes/Smart) 16.8%. Elsewhere growth performance is mixed but notably, if you extract individual brands from their collective ACEA groupings, then MINI and Land Rover achieved big improvements alongside Jeep and Lexus. The Fiat strategy around its enlarged group shows through in its improved performance, considering the Fiat 500 is a major single vehicle derivative and other ‘iconic’ brands in the stable have needed major surgery and have gone backwards. Finally, we hope that the near 50% rise at Porsche, already included in the VW group performance, is a sign that high net worth and high earners are back out to play, feeling confident about the economic environment.

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• March quarter for 2015 has seen an exceptional increase in registrations for both light and heavy vehicles over 2014, with a combined rise of 24% or 20,965 units which is a terrific performance. The star of the show in the light segment, as previously mentioned, has been Ford with a whopping 7,000 unit increase. The SMMT commented in their press release around the numbers that there has been a clear shift towards the larger vehicles in the sector in the first three months of the year – 2.5 to 3.5t vans and three axle artic trucks have been the beneficiaries. Fleet replacement seems to be a reason, combined with operators seeking to make their fleets as flexible and cost-effective as possible.

• The heavy side is especially pleasing with the top four players universally doubling their unit registrations. This does need to be tempered with the comments we made in the February edition where major vehicle ‘type approval’ issues had

Registrations of new commercial vehicles in the United KingdomCommercial vehicles < 3.5t

YTD2015 YTD2014 2015/2014 FY2014 FY2013 FY2012 FY2011

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

Ford 25,820 26.4% 18,530 23.2% 39.3% 82,519 25.7% 68,054 25.1% 62,372 26.0% 70,226 27.0%

Volkswagen 11,603 11.9% 10,669 13.4% 8.8% 40,238 12.5% 36,925 13.6% 30,956 12.9% 31,716 12.2%

Vauxhall 11,036 11.3% 8,379 10.5% 31.7% 32,619 10.1% 29,736 11.0% 26,524 11.1% 33,514 12.9%

Peugeot 10,852 11.1% 8,396 10.5% 29.3% 31,867 9.9% 21,230 7.8% 21,272 8.9% 19,328 7.4%

Citroen 8,654 8.9% 7,665 9.6% 12.9% 30,464 9.5% 22,989 8.5% 18,379 7.7% 17,275 6.6%

Mercedes 5,947 6.1% 5,571 7.0% 6.7% 27,228 8.5% 25,667 9.5% 21,055 8.8% 19,495 7.5%

Renault 5,457 5.6% 3,985 5.0% 36.9% 18,170 5.6% 12,978 4.8% 14,710 6.1% 19,382 7.5%

Nissan 3,875 4.0% 3,616 4.5% 7.2% 10,270 3.2% 10,619 3.9% 10,136 4.2% 10,854 4.2%

Fiat 3,445 3.5% 3,733 4.7% -7.7% 12,629 3.9% 12,019 4.4% 7,060 2.9% 8,130 3.1%

Land Rover 3,114 3.2% 2,313 2.9% 34.6% 8,344 2.6% 6,644 2.5% 5,917 2.5% 6,209 2.4%

Toyota 2,683 2.7% 2,509 3.1% 6.9% 9,611 3.0% 8,063 3.0% 7,747 3.2% 8,391 3.2%

Mitsubishi 2,115 2.2% 1,835 2.3% 15.3% 6,946 2.2% 5,927 2.2% 4,853 2.0% 7,341 2.8%

Isuzu 1,842 1.9% 1,322 1.7% 39.3% 5,502 1.7% 4,112 1.5% 2,762 1.2% 2,431 0.9%

Iveco 761 0.8% 632 0.8% 20.4% 2,769 0.9% 3,275 1.2% 3,593 1.5% 3,628 1.4%

Other 571 0.6% 762 1.0% -25.1% 2,510 0.8% 2,835 1.0% 2,305 1.0% 2,233 0.9%

Total light CV 97,775 79,917 22.3% 321,686 271,073 239,641 260,153

Commercial vehicles > 3.5t and < 6.0t

YTD2015 YTD2014 2015/2014 FY2014 FY2013 FY2012 FY2011


Ford 650 33.1% 720 38.1% -9.7% 1,852 27.2% 2,767 40.8% 2,879 40.4% 1,381 25.0%

Mercedes 452 23.0% 434 22.9% 4.1% 1,889 27.8% 1,485 21.9% 1,367 19.2% 1,458 26.3%

Fiat 437 22.2% 259 13.7% 68.7% 1,313 19.3% 1,231 18.1% 1,416 19.9% 1,171 21.2%

Peugeot 185 9.4% 97 5.1% 90.7% 386 5.7% 200 2.9% 359 5.0% 354 6.4%

Volkswagen 85 4.3% 88 4.7% -3.4% 401 5.9% 342 5.0% 251 3.5% 221 4.0%

Iveco 83 4.2% 121 6.4% -31.4% 402 5.9% 420 6.2% 444 6.2% 567 10.2%

Vauxhall 40 2.0% 46 2.4% -13.0% - - - - - - - -

Renault 20 1.0% 21 1.1% -4.8% 74 1.1% 117 1.7% 215 3.0% 113 2.0%

Other 13 0.7% 106 5.6% -87.7% 480 7.1% 226 3.3% 195 2.7% 269 4.9%

Total heavy CV 1,965 1,892 3.9% 6,797 6,788 7,126 5,534

Commercial vehicles > = 6.0t

YTD2015 YTD2014 2015/2014 FY2014 FY2013 FY2012 FY2011


Daf Trucks 2,185 25.1% 1,091 19.2% 100.3% 8,616 24.9% 14,046 28.4% 11,153 28.9% 9,863 26.4%

Mercedes 1,627 18.7% 929 16.3% 75.1% 6,485 18.7% 8,793 17.8% 6,422 16.6% 6,326 16.9%

Scania 1,508 17.3% 736 13.0% 104.9% 4,752 13.7% 6,846 13.8% 4,652 12.1% 4,071 10.9%

Volvo Trucks 1,209 13.9% 686 12.1% 76.2% 4,074 11.8% 5,524 11.2% 3,976 10.3% 4,624 12.4%

Iveco 651 7.5% 734 12.9% -11.3% 2,876 8.3% 3,773 7.6% 2,908 7.5% 2,834 7.6%

Man 609 7.0% 410 7.2% 48.5% 3,381 9.8% 4,934 10.0% 4,324 11.2% 4,772 12.8%

Renault Trucks 400 4.6% 668 11.8% -40.1% 2,050 5.9% 2,534 5.1% 2,555 6.6% 2,763 7.4%

Other 527 6.0% 428 7.5% 23.1% 2,438 7.0% 2,980 6.0% 2,586 6.7% 2,157 5.8%

Total heavy CV 8,716 5,682 53.4% 34,672 49,430 38,576 37,410

Sources : SMMT

arisen at the end of 2014 holding over those registrations. Nonetheless we will bank those statistics as a sign of business confidence and trust that the trend can continue for the whole of the year.

• In the light vehicles, and aside from Ford, eight brands registered growth in double figures and whilst in some cases that is from a low base, it represents strong profit opportunities for the respective dealer networks. We have commented before around how light trucks are sold – standalone, within car showrooms or alongside heavier trucks. The impact on management accounts will be different depending on this allocation and thus less easy to isolate for comparison. The most welcome will be in non-car showrooms where there has been no offset from new vehicle registration performance. We may start to see some changes and consolidation in these areas.

© 2015 Grant Thornton UK LLP. All rights reserved. ‘Grant Thornton’ means Grant Thornton UK LLP, a limited liability partnership.

Grant Thornton is a member firm of Grant Thornton International Ltd (Grant Thornton International). References to ‘Grant Thornton’ are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients. This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.

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