How to sell cars in 2024: key webinar talking points
The new car market is growing for the first time in three years – but what challenges still lie ahead?
A panel of industry experts joined our Autocar Business team to discuss the challenges facing the automotive retail market in 2024. This is what they had to say
Since early 2020, the automotive industry has battled against a relentless onslaught of setbacks. Covid, Brexit, logistics issues and, more recently, the cost-of-living crisis mean that UK new car sales have been down by -30% for three consecutive years – making this one of the worst periods in car-selling history.
However, in 2023 the tide finally began to change as strained supply chains regained their strength, consumer confidence snowballed, and inflation began to drop. The result: a healthy 17.9% year-on-year (YoY) boost in new car sales and a modest 5.1% uptick in the used market. Thankfully, early hallmarks suggest that 2024 will continue this upward trend.
But as any seasoned car seller will know, to rest on your laurels is a dangerous game. Indeed, the new zero emissions vehicle (ZEV) mandate may yet prove to be one of the biggest challenges the industry has faced in recent times. At the same time, petrol and diesel used car supply constraints – fuelled by poor new car sales in recent years – could be set to turn a buoyant used car market on its head.
So, in order to better understand the challenges that lie ahead – and how to tackle them – we partnered with Cox Automotive, the world’s largest automotive services organisation, to host an expert-led webinar to discuss what 2024 will hold for automotive retail. Watch the on-demand webinar and read on to hear what they had to say.
For the one-hour session on Wednesday 7 February, we were joined by:
– Eurig Druce, Stellantis UK Vice President of Sales
- Robert Forrester, CEO of Vertu Motors
- Philip Nothard, Insight Director at Cox Automotive
*For more expert analysis, download Cox Automotive’s Insight Report for free*
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-*Selling cars in 2024: what’s to come?*-
Cox Automotive’s Insight Director Philip Nothard opened the webinar on a positive note, stating there’s reason to be optimistic for 2024: “We’re talking about a fairly stable market this year. We saw an increase last year for new cars; we forecast another marginal uplift.
Strengthening supply chains and falling inflation will go some way to fuel growth, but, according to Vertu Motors CEO Robert Forrester, it’s fleet demand that will do most of the heavy lifting: “January’s Society of Motor Manufacturers and Traders (SMMT) statistics told the story of a very, very buoyant fleet market, but a weakening retail market. And particular weakness in relation to electric vehicle sales, which were down considerably on last year.”
Indeed, January SMMT figures show that fleet demand for electric vehicles skyrocketed by 41.7%, while private sales plummeted by -25.1%. The main reason for this: lack of financial incentives. In June 2022 the government scrapped its plug-in car grant, denying EV intenders of a much-needed £1500 towards the cost of their new electric vehicle.
Cox Automotive’s Philip Nothard said schemes like these made a real difference. “I think it helped. Every bit in the consumer’s pocket does help,” Philip added. “Now, there are a lot of incentives form dealers or manufacturers instead, where they’re offering to put in [a home charger] as part of a purchase of a new car. But it’s not as effective. The fact they had the grant, and we’re the only major market in Europe that doesn’t have some kind of incentive in place for the consumer – removing it was the wrong thing to do. I think it should have [been] maintained.”
Stellantis UK Vice President of Sales Eurig Druce agreed, saying that EV sales had stalled since the plug-in grant was removed: “What we’ve seen is a decline since the grant has gone in terms of the volume of electric vehicles being sold. So, on the face of it, you have to conclude it was useful and helpful,” Eurig added.
But while this fall in private EV interest is concerning for both manufacturers and dealerships alike, it’s yet more potent (and worrying) in the context of the new ZEV mandate. Introduced on 3 January, the ZEV legislation dictates that 22% of new cars sold in 2024 must be pure electric. So far, the market is lagging far behind that target, with electric vehicles taking just a 14.7% market share in January.
“It will be the biggest issue, I think, that we face this year as an industry,” reckons Vertu Motors’ Robert Forrester. “[That’s] because the government has put in place a very, very hard-hitting, aspirational set of targets. It’s going to be very difficult for manufacturers if there isn’t a massive change in customer appetite for EVs – which I don’t think there is, without some sort of supply-side help from the government. Then it’s all on the manufacturers to discount the cars, but I don’t think they’ve got the profit in those cars. In which case I think we’ll see pressure on volume and people will actually want to sell less cars in the UK.”
Stellantis UK’s Eurig Druce concurred, saying: “The whole scenario generates a level of distortion in the marketplace. What we have, through this policy, is perhaps a compelling policy to drive supply – but not really a 360-degree strategy to drive the transition that’s required. So there’s nothing to drive demand. It’s something to drive [the] supply of vehicles in terms of electric, and the penalties for not reaching that level, but nothing to drive the consumer to want to make the change.”
-*Choppy waters ahead for used market*-
So, that’s the new car market, but what about used? SMMT figures claim that the market grew by 351,915 (5.1%) in 2023, while Cox Automotive predicts a smaller (yet still healthy) 2.8% YoY increase in 2024.
But choppy waters could lie ahead – especially when it comes to supply and demand – as Stellantis UK’s Eurig Druce explained: “We’ve come out of a Covid period which saw a new car market that wasn’t as big as it would normally be. So, fundamentally, supply in the used car market over the next two to three years is going to be where it has been historically.”
Cox Automotive’s Phillip Nothard raised concerns on the supply of petrol and diesel models specifically: “As we move to a more positive demand and appetite from retailers that begin to stock up again to their normal levels, that product [supply] will start to dry up, particularly in the zero-to-four-year-old products, and particularly in the non-BEV, petrol/diesel product. So, we’ve got to be very clear that vehicles that are entering the used vehicle parc in that bracket are getting slimmer and slimmer. There are some scary numbers that you are starting to see in the marketplace.”
This concern is made worse by the used market being dominated by ICE car sales. Around 94% of 2023’s total used car sales were either petrol (4.1m) or diesel (2.7m) – and this is further compounded by little appetite for used electric cars: they made up just 1.6% of total used car sales in 2023. It is hoped that, as new EV sales grow, more will continue to trickle down to the used market, freeing up ICE used car supplies.
However, while some dealerships may attempt to entice buyers into new electric cars through heavy discounts, Vertu Cars’ Robert Forrester advises caution: “If you have discounting on new cars, this does have a knock-on effect on used cars, as those used cars have to be cheaper If you’ve got 0% [interest rates] in the new market, and 11.9% in the used market, people will switch from buying used cars to new cars, which dampens demand and can have an impact on used car values."
But Forrester was also ultimately optimistic in his outlook on used car affordability going forward: “Demand, actually, for new cars is very robust, even though we’ve got high interest rates. When these come down, as we expect they will, over the year, this will make used cars more affordable.”
So, it’s fair to say that there’s plenty in store for car sellers in 2024, and many challenges lie ahead. To find out more about how you can conquer 2024’s retail landscape, download Cox Automotive’s extensive Insight Report – a comprehensive analysis of the trends shaping the automotive sector – for free *here*.