A THUMPING on car diesel registrations in March; overall sales down by 15.7%; van sales slipping too.
And all this on a plate change month.
Yet for cars this was the fourth biggest March on record.
As Ashley Barnett, Head of Consultancy at Lex Autolease noted:
“March is usually a strong month for registrations and 2018 is no exception, with significantly higher numbers than January or February, due to the new number plate release.”
But, he added:
“Even though last year’s March numbers were boosted ahead of new Vehicle Excise Duty taxation changes coming into force, this is the first year-on-year decline we’ve seen in seven years.
“Political, economic and regulatory factors are playing an important role and combined with the recent increase in interest rates and another potential rise in May, consumers and fleets are naturally more hesitant when it comes to big ticket purchases.”
Headlines say decline, but brokers say mad March
While the retail space seems to have taken a hit – and diesel is ditched as consumers react to all the negative press – leasing brokers appear to have ended March on a high.
We contacted Leasing Broker Federation Steering Committee members for their reaction to March.
The majority said that, despite the snow, which affected deliveries, March was really strong and Q1 was a welcome high.
Keith Hawes, Director, Nationwide Vehicle Contracts, said:
“We are up 9% versus YTD march 2017, which in itself was a very strong start to the year – currently it’s manic!
“The major issue was getting vehicles delivered/collected due to the adverse weather conditions.”
However, Keith did say that Nationwide was “struggling to get the strong offers from manufacturers for diesel product” believing that this was due to funders re-positioning diesel RVs – “so I can fully understand the impact on the diesel market”.
An increase in Nationwide’s PPC spend was generating record numbers of enquiries/proposals but in turn was stretching Nationwide’s resource added Keith
Stephen Greenstreet, Director of B2B brokerage Greenfleets was equally bullish.
“The figures issued regarding new cars sales must be a reflection of retail sales,” said Stephen
“We have found business to be very good, finishing Q1 21% up on deliveries compared to last year. Q2 is also already higher than last year and we have only just entered this quarter.”
Stephen was quite blunt about the SMMT registration figures, saying:
“I never take any notice of the published figures as the market we are in is a small percentage of the total and is not a reflection of the overall picture. If we where reliant on the PCH market I would be starting to worry and I can see some of our larger competitors in this market starting to reduce their headcount and size of their businesses,” he warned.
Lynette Randall, Director of Alpha Contracts, said that although the snow had tried to get in their way, “At Alpha Contracts our car sales were up on this time last year. With the increase in Vehicle Excise Duty in April we pushed more deals through for end users to save them money – obviously with a view to ‘Treating Customer Fairly’.”
Lee Duerden, CEO of The Best Car Deals added that while there was a slight decrease in margin the brokerage was “bringing them in”. He added; “We’ve had the best start to the year, with sales volume up 8%.”
Rob Marshall, the Operations Director at Gateway2Lease confirmed the general trend.
“We had record ever months for volume in January and then February. March was our largest ever month for turnover, although units were slightly behind February.”
And added that:
“I am hearing that dealerships are feeling the pinch in the retail sector and I can only imagine that the headline stats reflects a drop in PCP and retail sales while PCH (under fleet sector) feels like it is increasing.”
Garry Harrison‑Lea, Vehicle Sales Manager for Academy Leasing said “We killed it frankly!” And added: “The overspill due to the weather meant April was 80% done before we even got into the month.”
However, there was a note of caution from Mike Lloyd, the Managing Director of Central Contracts.
“Our order take was up on last year’s record March,” said Mike, “but not quite as much as we had hoped, while the weather provided a major distraction. It meant that our delivery total in March was down and this was totally due to the weather.”
Nevertheless, Mike said the company had “more potential deliveries for April than our total for March”.
Adding further to the note of caution was Scott Norville, Account Director at Silverstone Fleet Management. Scott noted:
“Q1 has been a tough quarter and we feel this may carry on to Q2 and even Q3 with all the engine/tax changes that are coming. Some of the premium brands have been off the boil as targets were overachieved in Q4 2017. We are starting to see the offers slowly reappear for Q2, but not as strong as in previous months.
“If it wasn’t for our funding partners with stock specials, it would have been even harder. Overall, we did see a decline in the number of enquiries so for us, going ‘outbound’ and focusing on local businesses with plenty of networking managed to push us over the line.”
Scott also noted the issue of brokers selling for doc fees only. “With all the changes happening, we all need to maintain a certain amount of profit for longevity, not just desperate selling,” he added.
Nevertheless, it appears the general trend for leasing brokers continues to be upward. However, it would be foolish to believe a red carpet towards end Q4 had been laid out for brokers.
Potential issues on the horizon for brokers
There is still plenty of confusion out there in an unclear market landscape, while Brexit is also an ever-present issue.
For example, there is still no sign of the benefit in kind tax tables beyond 2020/21; details of the Plug-in Car Grant extension have yet to be revealed; there is the introduction of the new WLTP emissions testing procedures; and the introduction of Clean Air Zones.
“These factors are heavily influencing vehicle choice and a lack of understanding can result in the wrong decision,” commented Lex Autolease’s Ashley Barnett.
“Greater clarity is essential and it’s important that government tax policy and the green agenda complement each other in working towards the common goal of reducing NOx and CO2 emissions.”