Brexit Seems to Have Really Screwed Up Britain's Car Market
While some of Europe saw modest auto sale gains through the first nine months of 2017, the region has mirrored North America’s decline in deliveries since the end of the summer. The United States saw eight consecutive months of declining sales this year, with a positive bump in September and better than expected volume in Canada.
Europe, meanwhile, saw the inverse. Passenger car registrations fell 2 percent year-over-year to roughly 1.43 million deliveries in September, despite August seeing a 5.6-percent improvement. Overall, 2017 has the makings of a unsatisfactory sales year for both regions. But Europe seemed to be doing alright before the U.K. suddenly stopped buying cars.
British registrations took a massive nosedive after Brexit. By September, it represented a monthly decline of 9.3 percent, compared to Germany’s 3.3 percent slide. Even though the rest of the continent saw a gain in sales, having Europe’s two largest markets lagging guaranteed the net loss.
The U.K.’s decline represent sixth straight months of dwindling deliveries. Bloomberg attributes the fumble to a weak pound and unsuccessful Brexit negotiations. In fact, trade deals have been idled since the British Chambers of Commerce downgraded its medium-term economic growth outlook in early September.
Still, we shouldn’t attribute Britain’s lackluster sales performance entirely to Brexit. Shorter average commuter times within the United Kingdom have made ride-hailing apps like Uber and Lyft exceedingly popular. The relatively recent PCP car loan trend also appears to have plateaued and analysts are becoming fearful that it has created a dangerous bubble within the automotive industry — akin to what took place in the housing market during the Great Recession. British household indebtedness is also already extremely high and average household savings is virtually nonexistent.
Combine that with governmental promises that internal combustion vehicles will be banned by 2040, fairly high auto taxation rates (compared to the U.S.), a market hampered by right-hand drive models that cannot be sold in other parts of Europe while also leaving consumers with fewer options, and the United Kingdom doesn’t really look like the greatest place to own a car.
While other countries have promised similar regulatory measures and already implement fairly aggressive taxes on automobile ownership, the U.K. seems to be the one suffering the most. As a result, PSA Group said on Monday it has decided to eliminate 400 jobs at Vauxhall’s Ellesmere Port facility in Britain to cope with declining sales.
Of course, Vauxhall has problems that extend beyond the U.K. But the region’s sales slump is hurting other automakers popular among British consumers. New vehicle deliveries from Ford Motor Co., the U.K.’s best-selling brand, fell 13 points across Europe last month.
For the whole of the year, U.K. sales down 3.9 percent against 2016’s figures through September. The most noticeable gap comes from diesel sales. According to SMMT vehicle registration data, diesel-powered vehicles saw 21.7 percent fewer deliveries in September and a 13.7-point loss for the year so far.
No other segment has bothered to fill that void. Sales for all vehicle types are down within Britain this year. The only exception is alternative fuel vehicles — which saw massive gains in 2017. Sadly, that 4.6-percent market share isn’t growing fast enough patch the gaping hole left by internal combustion models.
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- Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
- Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
- Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
- William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
- Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
Brexit. The worse populist decision by any politican this Century. Putting aside, stagnant incomes, mixed with a depreciating currency, along with the expected inflationary pressures, the UK's auto manufacturer's are facing a declining export market. The EU is the UK's biggest market by far and it will shrink substantially. This doesn't factor in the declining financial sector that will move offshore. The Brexit supporters deserve ehat's coming yheir way, just like the supporters of the dismantling of NAFTA.
"a market hampered by right-hand drive models that cannot be sold in other parts of Europe while also leaving consumers with fewer options" I truly can't comprehend why there are still countries that stick to driving on the left. Back in the 1960's-70's when several countries switched to driving on the right, ALL of them should have done so. Right-hand-drive is unnatural. I realize this opinion is going to stir up a lot of hate from those who think driving on the left is better. So be it...