Markets love certainty, and with the news of the Tories sizeable majority hitting the airwaves last night, markets around the world reacted. And not surprisingly, so did our industry bodies. With both the SMMT and the NFDA issuing statements today, congratulating the Tories and hoping we can get back to business. Certainly a majority of this size will allow the Prime Minister to negotiate confidently with the European Union, and not have to worry about any disruptive tendencies in his party, be they Leave or Remain. And many experts think that this has effectively ruled out a hard Brexit, because anything in between will be much easier to negotiate.
It is certain that the election will have an effect on our industry, though perhaps not quite so much of an effect as it did on The Car Centre in Petersfield. Rather imaginatively, they have been used as a polling station in the past and so it proved again this time. I mean, if you want to get your footfall stats up for the month I can think of no better way. And upon reflection, I am surprised that not more dealers have tried it. The article also referred to a White Horse pub that performed a similar service. You’ve got five years to plan it if you think it is a good strategy.
While the world certainly liked the look of our election result, there was also cautious optimism about Trump’s trade deal with China. Though analysts were quick to point out that it is actually quite limited in scale. As far as the automotive industry is concerned, a much more worrying statistic is that the Chinese market has just had its 17th month of decline in a row. And when you are as big as they are, it has a massive global impact.
Trump also tweeted congratulations last night, and told us to get ready for the “biggest trade deal ever” which is encouraging. Though precisely how this deal will play out remains to be seen. Plenty to keep us busy over the next two years or so, I am sure.
There’s not much more than two weeks left of this decade now. Quite a sobering thought. I remember at the turn of the millennium thinking what a milestone. It is difficult to think that it was 20 years ago. Still, let’s hope we can enter the New Year with confidence and a 2020 vision both for the UK and for the automotive industry.
Have a great weekend, might be time to apply for that European passport?
The very purpose of existence is to reconcile the glowing opinion we have of ourselves with the appalling things that other people think about us.
The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.
It matters not whether you win or lose; what matters is whether I win or lose.
Whatever you do will be insignificant, but it is very important that you do it.
Mahatma Gandhi (1869 – 1948)
It has been a difficult year for sales most dealer groups would admit. But I tell you one thing that has started selling like hot cakes recently, VW dealerships. Look at the announcements in the past quarter, first Inchcape sold some of its VW sites to Group 1, selling two more this week to Citygate. Last month Sytner sold four sites to Johnson cars in the North West and finally this week’s Marshalls bought seven sites from Jardines.
This is quite a realignment of the VW network, concentrating ownership into a smaller number of trusted groups. In the light of the franchises acknowledged WLTP delivery issues, it also shows great faith by the new owners, who are presumably expecting much better things for 2020.
This was not the only reason that VW was in the news this week. 90,000 VW owners in the UK have got together to sue the German carmaker over the emissions scandal. Recent history of such legal actions in the US suggest that payouts could be quite large, although German consumers did rather worse, picking up only around €900 an owner. So far the company has paid more than £26 billion in fines, as well as recall costs and other settlements. On the plus side, it has enjoyed probably its strongest two years for some time since 2017.
Whether it will continue to do so is largely up to the global automotive market. A market that the Financial Times reported was shrinking at an alarming rate. In fact according to the VDA, the German industry association, the global market has shrunk faster than it did in 2008, with year-on-year sales down by 4 million units. That is about 5% down on global sales of just over 80 million vehicles.
Still, losing manufacturing won’t affect us much in the UK after Brexit. The future already looks very uncertain anyway. Whereas Germany employs nearly 900,000 people in car manufacturing alone.
Have a great weekend, make sure you know where to find your polling card for next week.
Nobody believes the official spokesman… but everybody trusts an unidentified source.
Money can’t buy friends, but it can get you a better class of enemy.
If two men agree on everything, you may be sure that one of them is doing the thinking.
Lyndon B. Johnson (1908 – 1973)
The young have aspirations that never come to pass, the old have reminiscences of what never happened.
To lose one chief executive in a top-10 group in the year is unfortunate, to lose two seems careless, so the announcement of the departure of the fourth senior CEO this year (Pendragon lost 2 remember), Darren Guiver, at Group 1 came as a bit of a shock. Apart from the normal pleasantries of wanting to spend more time with his family, there has been not much clarification over the circumstances. No doubt the analysts will be wading their way through the group’s results. And senior executives from competitors will be looking a little more nervously over their shoulders.
Another group much further down the AM100 league, Caffyns, announced their results this week. It has been a tough year, and a 92% fall in profits does not look great. To be fair to them they have been involved with VW and Audi, each of which had their own specific WLTP challenges in the past 12 months, but it is evidence of a tough market.
In a move that some analysts say could scupper the proposed PSA and FCA merger, GM has launched a lawsuit against FCA. They claim that they colluded with unions to gain a competitive advantage. I have not read many details of the case yet, but it would seem that they are accusing Fiat Chrysler of “persuading” the unions to accept lower terms with them, while demanding much higher pay increases from GM. The suit is allegedly worth billions of dollars and will no doubt play highly in the headlines over the coming months.
The golden rule of vehicle launch presentations when you announce anything, make sure it works. And if you want to demonstrate how fantastically tough something is, it had better stand up to the treatment you are about to dish out. (It almost reminds me of the Everest double glazing advertisements, if any of you are old enough to remember them.) So if you hit your new vehicle with a sledgehammer on the windscreen it is not great if it cracks, badly.. So Elon Musk demonstrating his unbreakable windscreen on his new pickup truck has created lots of news, but not many great headlines.
Have a great weekend, I’m happy, Test Cricket is back on. Oh, and the Davis cup.
|THIS WEEK’S JOBS
Here are some jobs from the past ten days. Check these out and see if there is anything tempting. Click on the link to apply immediately through our site. The situation is changing the whole time and if any link refuses to work, it is probably because it has already been filled and removed. Check out all our jobs at on our Jobs Page
|QUOTE OF THE WEEKIf fifty million people say a foolish thing, it is still a foolish thing.
Anatole France (1844 – 1924)
The best time to plant an oak tree was twenty-five years ago. The second best time is today.
All the President is, is a glorified public relations man who spends his time flattering, kissing and kicking people to get them to do what they are supposed to do anyway.
Harry S Truman (1884 – 1972), Letter to his sister, Nov. 14, 1947
People can have the Model T in any colour–so long as it’s black.
Henry Ford (1863 – 1947)
Nobody said the move to electric cars would be easy. And the news from Daimler over the past two weeks has put this sharply into focus. Mercedes has said that it needs to sell many more electric vehicles, mainly to meet much tougher EU rules over CO2 emissions. And so they can afford that investment, they are cutting 10% of their global workforce, saving €1.1 billion. Tough medicine, but much needed in the opinion of the analysts.
Arndt Ellinghorst, one of the most compelling voices here in London, put it very elegantly. “Daimler urgently needs to move away from its’ spray and pray’ investment philosophy”. He has been warning for months now that manufacturers have to be radical in their approach to model mix to avoid swingeing fines from the EU next year on emissions.
And why is next year important? Because it and 2021 set the benchmark for manufacturers for 2030 (by which time they will have to cut emissions by a further 37.5%). There has been a worry that some might try to game the system by setting high levels in 2021 so 2030 gets easier. Manufacturers gaming the emissions figures? You know that will never happen…
Still, there was some compensation for Germany this week as Tesla announced the creation of 7,000 new jobs in their new manufacturing operation to be based near Berlin. An operation the UK very much had its eye on, but, it is claimed, an investment we have lost out on because of our probable departure from Europe.
New cars in the UK might be a problem, but the last quarter has seen a bit of an uptick in used car sales. Nothing like a bumper time, however, but a modest 0.9% increase over last year. And it would have better had September not dampened the trend. Any good news is good, isn’t it?
Have a good weekend, steer clear of the floods if you can.
Of those who say nothing, few are silent.
I passionately hate the idea of being with it, I think an artist has always to be out of step with his time.
Orson Welles (1915 – 1985)
People care more about being thought to have taste than about being thought either good, clever or amiable.
Samuel Butler (1835 – 1902)
‘Tis better to be silent and be thought a fool, than to speak and remove all doubt.
Abraham Lincoln (1809 – 1865), (attributed)
When you have gone bust seven times in your history, the City gets a bit twitchy when you deliver bad news, especially if you preface it with positive spin.
So Aston Martin may continue to do good business with the James Bond franchise, but news of a collapse in their sales in Asia combined with a softening in its home market has not pleased the stock market this week. According to analysts, shares initially rose as the company was quite upbeat about its annual profits, but once they studied the figures everything was downgraded and shares have headed south. Unlike a lot of their unsold units.
I suspect it is wishing it never made its stock market debut last year, shares have fallen 80% since that time. Still, they are hoping that the launch next year of the DBX, their first 4×4, will get them out of a hole. At £158,000 a time they probably don’t have to sell too many.
Things couldn’t be rosier for Toyota, however, as they bucked industry trends and announced bumper profits on Thursday. And Inchcape this week reported satisfactory Q3 trading, bolstered by the sale of a number of its dealerships, something that had been widely trailed in the media.
Restructuring might be the way forward for the retail industry in the UK, but BP has put its money into something much more radical. Up until now you may not have heard of MaaS, or “mobility as a service”, but that is exactly what a new app called Whim is offering. Launched in Helsinki it cleverly develop combines lots of new technology to offer clients the cheapest and quickest way to get from A to B.
Offering taxis, public transport, bicycles and even car rental as options, depending upon where the user wants to go. The offering varies from a pay-as-you-go service, to €499 a month for their top of the range, complete transport solution. Automotive News Europe reports that private car use among app users in Finland reduced by a substantial 38%. In theory, they reckon, it could replace car ownership completely. A cheery thought for a Friday afternoon.
Have a great weekend, enjoy your fireworks.
The great thing in this world is not so much where you stand, as in what direction you are moving.
Oliver Wendell Holmes (1809 – 1894)
Remember that happiness is a way of travel – not a destination.
Roy M. Goodman
I believe in an open mind, but not so open that your brains fall out.
Arthur Hays Sulzberger
Sometimes the measure of friendship isn’t your ability to not harm but your capacity to forgive the things done to you and ask forgiveness for your own mistakes.
Randy K. Milholland, Something Positive Comic, 11-07-05
Not much to talk about in the news this week really. If you discount the fact that Peugeot and FCA announced their merger this week. Creating the fourth largest car manufacturer, a $50 billion group which is almost as big as anything in the world market, this is a big deal. And analysts were still working whether it was a genuine merger, or whether one was buying the other. In which case was Peugeot buying Fiat Chrysler or the other way round?
Nothing much more in the news, unless you discount Amazon’s announcement that it is talking to car manufacturers. No manufacturer has been brave enough to admit they have signed up, and some have said they have talked and discounted the idea. The increased digitisation of car sales means that it is hardly surprising that the world’s biggest retailer wants to retail some of the world’s biggest retail products.
Plenty of outsiders have entered this marketplace before, only to be confounded by supply problems and the notoriously difficult part exchange issue. The advent of webuyanycar.com and others has largely solved that problem. And privately most manufacturers acknowledge that they would love a system that does not involve dealers. Mind you, many dealers would love a system that didn’t involve manufacturers so much.
Nothing much in automotive news in the retail sector, if you discount the shock announcement that the senior management team at Lookers was shown the door today. Chief executive Andy Bruce and his deputy Nigel McMinn have announced their departure. This comes after a number of profit warnings this year and the announcement that trading since the middle of September has been dire. Interesting times for the group, especially as they are undergoing a very high profile FCA investigation into how they deal with car finance.
And nothing else really in the national news, if you discount the announcement of a general election on December 12. I am slightly sceptical that we will see a government returned that has any sort of working majority, I suspect it will be even more divided than it is now, but nevertheless they have to do something to break this awful deadlock.
Have a great weekend, not much sport on either (after tomorrow morning is over, that is) – come on England!
Democracy is the name we give the people whenever we need them.
Marquis de Flers Robert and Arman de Caillavet
Whoever ceases to be a student has never been a student.
When I was a boy I was told that anybody could become President. Now I’m beginning to believe it.
Clarence Darrow (1857 – 1938)
Water, taken in moderation, cannot hurt anybody.
Mark Twain (1835 – 1910)
I don’t know about you, but I love reading the reader’s comments under some articles. Once you filter out the trolls, and the fact that any item can be turned into a Brexit vs Remain debate, there are some very interesting insights. For instance, the news that has got everybody excited this week is that Tesla is surprisingly, back into profit. After reporting a thumping great loss earlier in the year, they reckon they made nearly $150 million in the third quarter. But, as many commentators point out, (I was reading the article in The Times) with a manufacturer that moves up and down as quickly as Tesla, taking a snapshot of one quarter is not an accurate reflection of the success of the business. Nevertheless, profit is profit.
And profit is not something that most of the other manufacturers are talking about, unless they combine it with the word “falling”. Because everyone is concerned about the slowdown in Chinese growth. Volvo is one exception, reporting a 90% jump ytd, but Daimler, in particular, is concerned about the future, and seems unconvinced about the commercial benefits of electrification, even if the world is moving inexorably in that direction. So they, along with Renault, have “trimmed” their forecasts.
Having said all of that, it is not all doom and gloom (unless you are looking at the UK market). The European new market enjoyed one of the best bounces in sales ever in September with sales 19% up. However we do need to temper this with some historical background. Last year sales were an eye watering 23% down, largely because of WLTP woes. The aforementioned Tesla, however, enjoyed a fantastic month, recording almost half of the electric vehicles registered across the EU, boosted by the Model 3. Staggeringly, it only just failed to make it into the top 10 selling models in Europe, with 17,500 units it was 11th. Elon Musk must be bursting with pride.
Have a great weekend, make sure the TV is warmed up for 9 o’clock tomorrow morning.
The first duty of love is to listen.
Paul Tillich (1886 – 1965)
Success is liking yourself, liking what you do, and liking how you do it.
Maya Angelou (1928 – )
This became a credo of mine…attempt the impossible in order to improve your work.
Bette Davis (1908 – 1989)
Between two evils, I always pick the one I never tried before.
Mae West (1892 – 1980), Klondike Annie (1936 film)
Whatever else is happening in the world, and let’s face it there is plenty at the moment, a decision by the FCA to ban interest linked commissions on finance agreements will have serious ramifications. The Financial Times reports that it will save consumers £165 million a year, or you could look at it another way – it will cost the motor industry a similar amount. You cannot fault their logic, if a sales executive is rewarded for selling higher interest products, interest payments are likely to go up. Combine this with their very wide ranging investigation into Lookers and you see that this is an industry under fire. Falling sales, a rapidly changing market and a complicated economy are bad news, losing one of the few areas of profitability won’t make it easier.
Electric vehicles have not had it easy either. They are in the news for a number of reasons. The market in China has dropped by 34%, for instance, which shows how vulnerable such sales are to falls in subsidies. Maybe this is why James Dyson decided to pull the plug on his own electric car project, because making such vehicles is definitely not easy. As Harley-Davidson has also found out this week, (though an electric Hog just doesn’t sound quite right, does it?) as they had to halt production after finding a serious glitch.
Two French manufacturers have been making headlines too. In an interview with Citroen U.K.’s MD, Karl Howkins, it was suggested that the danger of recession could cause sales figures to drop by as much as 25%. Something which would definitely put their dealers at risk. At the same time Renault UK said it is considering a restructure of its network, not to reduce it but to make it more efficient with a hub and spoke structure. No doubt if apocalyptic predictions for the car industry come true over the next year they will be much restructuring anyway, not least from casualties, as 2020 promises to be a difficult start to the new decade.
Have a great weekend, not much going on so you might as well watch the rugby. Come on the northern hemisphere!
That’s the way things come clear. All of a sudden. And then you realize how obvious they’ve been all along.
Madeleine L’Engle (1918 – ), The Arm of the Starfish, 1965
Be a good listener. Your ears will never get you in trouble.
However beautiful the strategy, you should occasionally look at the results.
Sir Winston Churchill (1874 – 1965)
I have the consolation of having added nothing to my private fortune during my public service, and of retiring with hands clean as they are empty.
Thomas Jefferson (1743 – 1826), letter to Count Diodati, 1807
What great news. Car production rises for the first time in many months in August, up over 3%. Admittedly this comes from a very low base, but in view of the turmoil everywhere else, any growth has got to be welcomed. But, before you get too carried away, we are still 17% down ytd.
Growth is something that Aston Martin would certainly welcome over the coming 12 months. Especially, as it has been reported, as they have opted for what might be called “speculative” borrowing. This has come in the form of a bond issue which, as I read it, will pay out at 12% if they have a cracking year with the launch of new models, and revert to 15% if the news is not so good. Such levels of interest on corporate debt are unusually high and not surprising their credit rating is not exactly on the crest of a wave at this moment. For a company that has gone bust something like 7 times in the past 100 years, we all hope that history is not repeating itself.
Nissan are not exactly enjoying the best of times either. And news today that the chief executive of Suntory (some of us will remember them as the sponsors of the world Matchplay golf tournament at Wentworth many years ago) has turned down their approach to be their new chief executive. Apparently there are two other high-level Japanese candidates in the frame, but they were hoping to have tied it up by now.
BMW is also having issues, but they have said, apparently, that they have no interest in settling the cartel case the European Union has brought against them and four other manufacturers. This is around delaying the introduction of emissions technology, charges they will robustly defend. Though insiders suggest they are not completely confident as they have laid aside 1bn euros to pay any fines.
Good luck for September, we hear that some brands are struggling under the new RDE regulations to produce enough compliant vehicles. Others, it is rumoured, are producing plenty of vehicles, just not the ones people want to buy. Testing times, still only a couple of days to go.
Have a great weekend, and a great finish to September.
Nothing is really work unless you would rather be doing something else.
James M. Barrie (1860 – 1937)
Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.
Mark Twain (1835 – 1910)
The highest reward for man’s toil is not what he gets for it, but what he becomes by it.
John Ruskin (1819 – 1900)
Hold a true friend with both hands.
Unusually today, The Times is carrying a number of motoring headlines. And interesting reading they make too.
It is not a good time for Nissan, and the revelation today that Carlos Ghosn’s successor as Chief Executive has had to repay nearly £400,000 does not make good reading. You will recall that Mr Ghosn was charged with numerous financial crimes. Having his successor admit that he has overpaid himself looks careless at best.
As we speed, or rather limp, into the September car market, it seems scarcely credible that Tesla should have been number three in car sales last month. Or rather its Model 3 was appropriately the third bestselling model in the UK market in August. It beat the Ford Focus, the Mercedes A-class and the Vauxhall Corsa, only being outsold by the Fiesta and Golf. There may be some structural reasons for this, not least the withdrawal of the £2500 subsidy for plug-in hybrids, but nevertheless it is a staggering achievement. Especially when you compare it to diesel sales which are now making up only 27% of registrations – still, at least some of them are being sold.
Tesla also announced this week that it was moving into the insurance business. Elon Musk has complained for some time that premiums on Tesla’s are too high, and they reckon they can undercut the market by 20 to 30%. This is partly because of the way the car operates, providing enormous amounts of data back to the manufacturer on every single one of its drivers. If you can accurately assess the way an owner drives, you can accurately assess their risk on the road.
Interestingly, Warren Buffett commented on the move, as he owns one of the largest car insurers around, saying that “the chances of an automaker becoming a successful insurer are about as good as a car insurer becoming a successful automaker”. Interesting quote, but I would say that running an insurance company with pretty perfect data is a lot less complicated than making a successful car in today’s environment. Mr Musk has surprised us before, is he about to do so again?
Have a great weekend – time to snuggle down, light a fire and watch some cricket perhaps?
Ability will never catch up with the demand for it.
Malcolm Forbes (1919 – 1990)
Be a first rate version of yourself, not a second rate version of someone else.
Judy Garland (1922 – 1969), to her daughter, Liza Minelli
Make a decision, even if it’s wrong.
Love doesn’t sit there like a stone, it has to be made, like bread: remade all the time, made new.
Og Mandino (1923 – 1996)