The economics of new car sales

[thelawnet]

So far this year:

2.14 million cars sold

'000s Maker
287 Ford
229 Vauxhall
184 Volkswagen
139 Audi
124 BMW
119 Nissan
108 Mercedes-Benz
91 Peugeot
82 Toyota
72 Citroen
71 Hyundai
69 Kia
65 Skoda
58 Fiat
55 Renault
49 Land Rover
47 Honda
46 SEAT
42 MINI
35 Volvo
34 Mazda
33 Suzuki
21 Dacia
16 Jaguar
13 Mitsubishi
10 Lexus
7 Porsche
5 Alfa Romeo
4 smart
3 Jeep
3 Chevrolet
2 Subaru
2 MG
2 Chrysler
1 Abarth
1 Ssangyong
1 Bentley
1 Other Imports
1 Maserati
1 Aston Martin
1 Other British
1 Infiniti

Sauce: http://www.smmt.co.uk/2014/11/new-car-registration...

49.9% diesel, 48.1% petrol, 2.0% hybrid/electric

Top models:

Ford Fiesta 116
Ford Focus 74
Vauxhall Corsa 69
Volkswagen Golf 64
Vauxhall Astra 51
Nissan Qashqai 43
Volkswagen Polo 41
Audi A3 39
Fiat 500 38
Nissan Juke 33

So:

• 66% of new Fords are Fiestas/Focii
• 52% of Vauxhalls Astras/Corsas.
• 57% of VWS are Golfs/Polos

Since 2004, avg CO2 has fallen from 179g to 122g, and mpg risen from 42.4 to 59.0mpg

And where the most popular car in 2004 was the Focus, it's now the Fiesta.
http://www.smmt.co.uk/2014/10/september-2014-new-c...

48.5% of new car sales are private, 46.5% fleet, and 5.0% business.

New car sales for 2013 are here:

http://www.smmt.co.uk/wp-content/uploads/sites/2/S...

It shows:

80k minis registered, of which 23k were i10s, 21k up!s and 13k Suzuki altos (top three models = 71.7% of sales)
813k superminis, of which 15% Fiestas, 10% Corsas, 5% Polos, 5% 208s, 5% Fiat 500s (top three = 30% of sales)
588k lower medium, of which 15% Foci, 12% Astras, 11% Golfs, 9% Qashqais, 7% 1 series (top 3 = 38% of sales)
239k upper medium, of which 18% 3 series, 13% C Class, 12% Insignias, 9% A4s, 7% Passatas, 7% Mondeos (top 3 = 43% of sales)
89k executive (once you strip out the C Class, which should be with 'upper medium') of which 32% E Class, 23% 5 series, 17% A6, 14% XF (so top 3= 72% of sales)
8k (!) luxury of which 1.6k S Class, 1.3k XJ, 1.3k SL, 1.2k A8, 1k 7 series (top 3 just over half of sales)
48k sports, of which TT 14%, SLK 11%, Scirocco 11%, MX-5 7%, 6 series 6% (top 3 36% of sales)
248k 'dual purpose' of which Kia Sportage 8%, Evoque 8%, CR-V 6%, Kuga 6%, Freelander 6% (top 3 just 22% of sales)
151k MPVs, of which Zafira 18%, C-Max 14%, B-max 11%, B-Class 5%, S-max 5% (top 3 43% of all sales)

Although there's a 50/50 split between fleet and private sales, the fleet sales are mostly Golf-sized cars:

63% of new Foci
72% of new Astras
67% of new Golfs

were sold to fleet sales

Private sales were much higher in the supermini:

62% of new Fiestas
41% of new Corsas
66% of new Polos
69% of new Fiat 500s

were private sales

Obviously Vauxhall churn out a lot of fleet cars!

And how do a million people a year afford to pay £10k+ on new cars?

They can't. 75% are on finance, most of these on PCP, with hire purchase now something of a relic. £200 a month and the sticker price is basically irrelevant.

Add in leases (which are owned by fleets)and you end up with a very small proportion of people actually buying their new vehicle.....

Whether these deals are actually good for the consumer is going to be a mystery to most people, and I doubt they care. Certainly 'personal finance education' is not really something the government wants to encourage when those millions of new cars a year are pumping billions into the economy....

[thelawnet]

andburg said:

amazes me that vauxhall sell so many cars.

Fleet sales mainly.

Although to be fair, if you strip out the fleet sales nobody (ok relatively few) people want a Focus or Golf either. But at least Ford can sell Fiestas to people paying with their own money (ok, someone else's borrowed money), and VW likewise with Polos.

I can only assume that the majority of the 28,383 Insignias sold went to car rental.

http://www.motoringresearch.com/car-news/vauxhall-...

"Vauxhall’s Fleet and Business-friendly Insignia appeared in the June 2014 top 10 new car registrations chart, seemingly disproving the myth that nobody buys D-sector cars anymore. Sales were up a staggering 114%, revealed Jackson, who explained that “a combination of attractive BIK and the summer months is driving demand, largely in the short-cycle leasing sector, creating ideal conditions for Vauxhall.”"

Short-cycle leasing is leases under a year and includes dealer demonstrators as well as driving school cars (7 month leases, apparently). So they dump a load of cars onto Avis, Hertz, etc.

[thelawnet]

Jim AK said:

Am I reading that right, 16 Jags & 1 Bentley?

If I am it's cobblers as I know my boss isn't the only person in country to have got one this year. V8 Flying Spur if anyone cares, replacing W12 Flying Spur.

If I'm not, my village is calling!!

Figures are in thousands.....

[thelawnet]

Scousefella said:

HP or Heinz.

Sorry but that stood out more than the figures.

http://www.urbandictionary.com/define.php?term=Sauce

[thelawnet]

Scousefella said:

Urban dictionary my arse!!

http://www.oxforddictionaries.com/definition/engli...

http://www.urbandictionary.com/define.php?term=my%20arse

[thelawnet]

Ozzie Osmond said:

2013 figures are clearly dodgy.

Specialist sports cars

Audi TT 6,870
Mercedes-Benz SLK 5,310
Volkswagen Scirocco 5,029
Mazda MX-5 3,285
BMW 6 Series 2,902

So Porsche didn't sell any cars in 2013, yet we're told they've sold 7,000 in 2014 already.
Clearly nonsense.

Just the top five.

And Porsche's biggest seller was the Cayenne, which isn't a sports car.

[thelawnet]

Thankyou4calling said:

Very interesting figures.

I'm surprised Mercedes is behind BMW and Audi but still a lot of cars.

Jaguar also surprises me. It's been quite a few years since the Purchase by TATA and they threaten to produce some good numbers but I'd say 16,000 is dissapointing considering the investment and marketing. Lease deals on Jaguars are nowhere near as good as the German brands so perhaps there goal is profit per unit rather than outright volume.

Jaguar's market was relatively small due to the lack of a 3-series-sized car, total volume in the markets they were competing in was only 100k or so. Still not great, of course - clearly people choose the Merc/Beemer over the Jaaaaaaaag, but it's not as bad as it seems.

[thelawnet]

daemon said:

You seem to see this as a problem?

Whats the issue? Your depreciation, warranty and moreoften your servicing wrapped up into a controlled monthly payment.

If thats worth £200 a month to someone or some family then whats the issue?

People generally get paid monthly, their mortgage is monthly, as are electric bills, phone bills, SKY bills, mobile phone bills, etc, etc, so why not the car?

And please dont quote the "cant afford it" or "fooling themselves" or "keep up with the jones" or "costing them a fortune" arguments. Try to be original.

I didn't say it was a problem, my point was that people signing up for monthly deals haven't got a clue what the total cost is. Like people who want a £50/month Ford Fiesta but then ignore the £2500 up-front payment. Whether it is a good deal for them is completely opaque.

Clearly conveniently packaged finance is a huge factor in getting all those brand new cars on the road, and without it we wouldn't have such a huge supply of cheap second-hand cars, but from an individual (rather than collective) perspective it's hard to account for.

[thelawnet]

nickfrog said:

As clearly explained and clarified this does not apply to new cars for which I am happy with say 60%.

Retaining 70% of the value of a 3-year old car after 3 years is piss easy.

No it is not.

From my perspective:

Volvo S80 2.5T 53 plate bought £7k 2007, sold 2011 £2.3k dent in one panel
VW Eos 2.0T 07 plate bought £13k 2011, sold soon I guess I'll get £5k for it, the cream interior slightly worse for family usage

Slightly more than 3 years, but more like 30% retained than 70%. If you want to retain 70% of value you will need to:

And I just bought a LS460 07 plate for £13k, and I don't particularly fancy my chances of getting more than 70% of its value in ONE year, never mind three.

• buy carefully with a good knowledge of price, and probably privately - fancy buying a £10k used car from a private seller? Most people don't
• keep the car in showroom condition - not a reality for most family cars
• negotiate well, both when buying and selling the car
• choose your car model carefully

It's non-trivial, and it's about as relevant as someone telling you how much they made buying and selling used coins - a specialist hobby requiring specialist knowledge, not something that every man in the street is going to be able to do.

[thelawnet]

Antony Moxey said:

I'd have thought you know exactly what the total cost is: deposit, x number of monthly payments, final balloon?

Well it's easy enough, but LOTS of people say/think they pay £300/month, without considering the deposit.

And then comparing the cost to the alternatives (cash purchase, used, lease, etc.) is difficult.

[thelawnet]

daemon said:

Again, applying YOUR beliefs on to them. Do you not think people can multiply £200 x 36 to see what something is going to cost them. And they'll know what the deposit is and whether it suits them to pay it.

That's only part of the equation though, there is the cost of a used car, depreciation, maintenance to compare as well.

And there are still lots of people who don't understand finance, the difference between compound and simple interest and all the rest.

If there were the same financial marketing behind used Honda Accords, I guess they would be more popular than they are. The fact that manufacturers control pricing of new but not used cars is how they can facilitate this. If 75% of new cars go on finance, the list price is almost irrelevant - clearly you can sell far more cars when its split up into convenient payments than if it's a big lump sum. In other countries where finance is less of a front-end part of car sales, used cars are expensive in relation to new.

[thelawnet]

daemon said:

As someone has posed already - which makes more sense -

• Spending £10,000 cash on a Seat MII?
• Paying £119 deposit and £119 a month?

http://www.lookers.co.uk/seat/offers/new-car-offer...

Which is going to give you more satisfaction? Looking out the window and thinking "st, that cost me £10,000" or "wow i've a brand new car on my drive for £119 a month"?

It's complicated. Unless you are a 17-year-old girl, I'm not sure you are get much pride about owning a Seat Mii anyway.

The finance is a decent deal but ultimately it's paid for by the customer. You could get a new 107 for £6k, for example. Or for £10k a new, larger car.

The finance is first and foremost in pricing that. Yes, the finance is better than cash here, but that's a marketing thing to sell more cars - they could cut the price of the car, but they make more money by selling huge numbers of the things on finance than by pricing it cheaper in the first place. If you have the £10k cash you can buy, say, a used Mercedes S Class, instead. And that's not possible on finance.

[thelawnet]

Antony Moxey said:

Its £109 actually, so a bit better. As it happens my daughter is a 20 year old girl and is pleased as punch to have a brand new Mii sat outside. I'll point out to her the error of her ways later, as well as chastising both myself and my wife for agreeing to the deal for her birthday present. Tw*t.

I beg your pardon. Unless you are a 20 year old girl.

[thelawnet]

KTF said:

A bank loan might disagree with that

Well not really, The stats show that people are buying Ford Fiestas and the like, which are conveniently wrapped up by the manufacturers into low monthly payment finance deals. These work because the new cost is low and so is depreciation.

OTOH, you aren't going to get into a new S Class on any kind of affordable deal.

Yes you can just borrow the price of a second hand one, but these dont have the same delicious PCP wrapping whereby you only pay the cost of leasing, so your payments are effectively cut in half.

[thelawnet]

Antony Moxey said:

Well she is so what's your point? You don't particularly like her car of choice so therefore it's a bad deal? Perhaps she'd look at your choice of car, and how you chose to pay for that car and scoff equally as dismissively - perhaps she'd have a point.

My point was that the audience for new cars ranges from 17 to 70 or so, and I would imagine the portion of that spectrum for which a new Ka, Up! or similar is an aspirational item is relatively small. So it suggests there are other reasons than 'I want a shiny 64 plate on my drive, that all those tens of thousands of new Fiestas are being purchased onto credit.

To my mind the most likely explanation is effective financial marketing, essentially. The same process whereby we have been convinced to spend four times as much for our housing, so that the banks can roll it up in trillions of pounds worth of debt. The credit products create the demand, rather than the other way round.

Although at least, to be fair, the automotive credit sector produces something tangible - I don't think that's a bad thing, it's just interesting the extent to which these financial products drive our society.

[thelawnet]

Grandfondo said:

I remember that "bigger picture" wasn't it that you got out of the rat race and could work when you wanted selling a few polished turds and then walk the dogs while wifie earned the corn in the call centre.

But it all went tits up and back onto the treadmill he went and back to renting a hack to get to the 9 till 5 that he hated so much!

And round and round we go but the fact is that PCP/lease gets some people into cars they can't afford to own FACT!

Go down to your local tyre place and ask them about the look of horror on renters faces when he tells them the 4tyres for there 4x4 is gong to be over £1k so onto the credit card it goes because everything is on the never never!

What do the lease terms say about fitting linglongs?