I go into 2018 wishing that I had bought a couple of things a few years ago. Bitcoins and Pendragon shares. Though perhaps the last quarter has tempered faith in the latter, and the last 24 hours in the former. Certainly we have that a few misplaced words, a few unwelcome truths and an adverse market reaction can wipe millions off the value of either of those, or any other share, in the blink of an eye. Bitcoin dropped 20% this morning, but then it has risen 2000% in the past couple of years, and Pendragon plummeted by almost 50% towards the end of October with a profits warning. Shares in Spain followed a similar path after their election results.
And sales at a number of manufacturers have followed a similar path, as rapid expansion, poor quality control and at times over-hyped products has meant that they have borne the full impact of the demonisation of diesel. Other brands, more reliant upon petrol or electric have fared pretty well. A big question for all of us going into January will be “what happens to diesel now?” And I do not think the answer is simple.
But one thing is simple, we will probably continue to see manufacturers caught out for historical misdeeds regarding fuel consumption figures, quality control and “gaming the system”. A new report out today points the finger at Subaru, they join nearly all the other manufacturers over the past year who have suffered a similar scandal. The one that seems to have come out of it the best, ironically, is the one who kicked this whole thing off and are the biggest sinners in some people’s eyes, VW. Admittedly some of their executives and senior managers have been before the courts, and in some cases have been given sizeable jail sentences, especially in the States, but as a company they have gone from strength to strength not just in the UK but around the world. Get your bad news out there early and get on with it.
Careerwise this has been a tough year for many people. Many of the large groups have looked at their structures, the cost of their payroll and their predicted income and decided they are overmanned and at times overpaid. I think that 2018 will be quite a difficult year for salary levels for many people, especially those at the coal face of the industry in sales and service. The one area that continues to provide difficulties for all employers is technicians, it is difficult to tell at the moment whether this is a temporary thing, as apprenticeships grow dramatically and technology changes meaning there will, in theory, be much less reliance upon technical expertise for new electric vehicles. But at the moment there is no doubt that every technician is worth their weight in gold, whereas every sales executive is probably seen as somebody who can be replaced. Replaced in time by a very well designed website, a fate that may well be shared by car showrooms as well.
Until we sort this horrible Brexit mess out, it is difficult to see how registrations can return to their previous levels. The hidden horror of over-reliance on PCP’s is also coming home to roost, as used car values are taking a bit of a hammering, especially in the unfashionable diesel sector. Goodness knows what those deals look like on paper now, and how anybody is going to get out of the hidden accumulated losses on their balance sheets. Debt is a difficult thing for an economy to wean itself off, a debt driven boom can fall spectacularly. Hopefully this year we have seen the worst of it, and that we are not going to see a continuing descent over the next 12 months.
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