The Top 5 industry issues you need to know as the world gets moving

Published 22 April 2021
in Advice
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As the UK eases out of lockdown and we all look ahead to sunnier, more sociable days, we’ve put together the top 5 things our Private Client team suggest you keep in mind to avoid....

The world has moved on in the past 12 months, and perhaps none more so than the world of ‘mobility’, or automotive as it was previously known…

1)  The Death of Retail

Whilst far from solely a car industry issue, the challenges in retail do extend to the dealership model, with high fixed costs, tumbling sales figures and a model that manufacturers are beginning to openly question the very future existence of.  

What does this mean for consumers?  Expect more pressures on customer services, as almost all dealership groups have reported a reduction in headcount over the past 12 months, with this particularly true in the mostly loss-making area of new car sales.

We predict dealer groups may well cut back some of their more aggressive discounting to customers, meaning higher prices on many of the leading manufacturers.

2) Component supply issues

One of the more dry subject matters is how the pandemic has affected the supply of key components to most car manufacturers.  The BBC reported back in January that computer-chip shortages were affecting production of many manufacturers.  We’re now seeing the result of this with Audi, in particular, experiencing delays to deliveries for clients.

Now, both Volvo and Jaguar Land Rover have announced their own semi-conductor supply issues are restricting the supply of their hybrid and electric.

Our advice to clients is to forget the previous rules of car buying and aim to make plans 6 months before the end of contract, and not expect a raft of ‘deals’ on stock cars, with stock amongst high demand brands at its lowest for a decade. 

3) Manufacturers try to recoup lost income by not discounting on new electric models

Tesla led the way with their simplified supply chain model, meaning they carried far less stock, and allowing them to avoid discounting cars. 

Now, we’re seeing the Mach E from Ford being offered at list price to early-adopters.  As one of the biggest discounters in the industry, this is a break from the norm by Ford, and contrasts directly with some of its electric equivalents with the Mercedes EQC attracting as much as 18% discount as recently as last quarter.

With each manufacturer lacking a wide range of electric-only models (even Tesla has cut its model line up to only 1 car for 2021, the Model 3), it underlines the value of taking independent, expert advice around the switch to electric.

4) Government support continues to be cut back on electric cars

On the 18th March, the UK government conducted a sudden cut to the plug in grant for electric vehicles, with Tesla the biggest loser, meaning all of its models became £3000 more expensive overnight. 

Some manufacturers such as Kia reacted to the lower qualifying list price (£35,000), by creating a new pricing structure for their highly-popular e-Niro range, meaning that car now qualifies again for the new, lower grant of £2500.

We predict further reductions in the grant in the years to come as the government both tries to balance the public finances, and not be caught out by a faster-than-expected growth in electric vehicle sales.

5) Electric vehicle tax certainty

To finish on a positive, the UK government has now committed to the incredibly strong tax advantages of taking an electric vehicle through your employment. 

We are seeing huge uptake amongst employers of our Salary Sacrifice product, driven by the 1-2% benefit in kind tax rates on electric vehicles of the next 3 years.

With a typical driver saving [below] between £150-200 per month on a typical electric car, and far more choice now on the market, the opportunity to switch to a greener, simpler and cheaper method of car transport is now very clear.