Wednesday marks the beginning of the new-reg 202 car-buying season. Normally, the number of people buying a brand new motor at a time like this would be regarded as a barometer of wider public sentiment.
ut these are not normal times.
So what is happening in the salesrooms – or increasingly on dealer websites? Could it be a pointer to how confident, optimistic, frightened, pessimistic we are as we live more openly with the Covid-19 crisis.
Are there any buyers out there at a time when tens of thousands fear for their jobs – or have already lost one?
Is anyone prepared to spend thousands to own new, or newer, metal? Buying had been on the slide all through the big-selling first quarter before lockdown. Then there was a minor modicum of pickup in late May after dealers re-opened, and through June but that was mostly due to deliveries of orders taken earlier in the year.
So now it’s 202-reg crunch time: to buy or not to buy in the second biggest buying month of the year, behind January.
To get a sense of what has been happening in the new real world, we asked major distributors of car ranges in Ireland to give a clue of how things are unfolding. Some of what they report may surprise you.
Hyundai Ireland chief Stephen Gleeson said they have been “pleasantly surprised” at the level of enquiries about new and used cars since reopening for sales on May 18.
“We believe that we will be not far off July 2019 levels by the end of the month,” Mr Gleeson said. However, such numbers exclude car-hire sales as that business is effectively closed due to travel quarantine restrictions.
Mr Gleeson said his brand had invested heavily in making it easy for people to interact with dealers online, adding: “People are engaging in this manner more than before Covid 19.”
Nissan CEO James McCarthy said demand and dealership activity are better than anticipated considering the impact and fear that surrounded the pandemic. Dealers are reporting a “good level” of enquiries for new and used cars.
Mr McCarthy claimed there are good deals around as dealers try to reduce stock that has been “over-hanging the market” since lockdown and he believes another reason for people to buy is the concern that prices may go up in the autumn Budget.
“There is a concern that the anti-car lobby will use very blunt instruments to address complex issues as has happened in the past when the Green Party introduced a policy that promoted the sale of diesel engines,” Mr McCarthy said.
Like many others who replied to our survey, his dealers are finding that customers are much more advanced in their research and have done the majority of it online before physically visiting the dealership.
“They are coming in pretty much with their minds made up and ready to do a deal,” he added.
According to Volkswagen Group Ireland chief executive Carla Wentzel, the pleasant surprise is that retailers are reporting “robust activity” in used-car sales. Order intakes for new cars have been strong too.
Ms Wentzel forecasts 21,000 to 22,000 registrations in July overall, which “is healthy when you consider the absence of any rental car market to speak of at the moment”.
The Volkswagen group comprises Audi, SEAT, Skoda and Volkswagen and commercials and accounts for around 28pc of new-car sales.
Audi report “very strong” used-car performance while new-car buying is ramping up well. Volkswagen, ŠKODA and SEAT all have “healthy” order intakes too, she said.
“Many of the deliveries to customers which were due to take place in March and April have been now deferred to July instead,” she added.
An indication that more people are looking for finance to buy secondhand comes from Guénaël Geffroy, MD Volkswagen Financial Ireland.
“We have had significant demand for used-car finance in dealerships. Finance proposals are up 66pc since the re-opening in May,” Mr Geffroy said.
Paddy Magee, country operations director of the Renault group Ireland, reports “positive activity”. However, he pointed out that there will be no car-hire sales – because there are no tourists. That immediately means a 15pc drop in new registrations.
Retail orders have been “steady” compared with last year. Significantly – and this is something that came up a lot with many distributors – substantially more people are buying used cars (more than 20pc on June last year, according to Mr Magee).
“But we believe the market could be back 30pc taking into account all aspects of the business,” Mr Magee said.
Another big trend is how buyers are focusing on offers with special payment terms and finance rates.
Fleet renewals are strong and there is increased interest in electric vehicles.
Mercedes’ Ciaran Allen said: “Our expectation for the total market in July is around 14,000 cars registered. That would represent a 45pc reduction on July 2019.” Last year it was almost 25,000. The last five-year average for July is around the 27,000 mark.
His estimate for the total market over the year is 75,000 or so – that would mean a 36pc slump in what he described as “very challenging market conditions”.
Nonetheless, his brand is enjoying a 17pc increase in orders compared with the corresponding period (June 30) last year. This is mainly driven by the arrival of three new models in time for July delivery.
Ronan Flood of KIA Motors said there is especially strong demand for secondhand cars, while orders for new vehicles have outstripped, admittedly modest, expectations.
The reduction in the volume of secondhand imports has helped clear many home-based used cars. It is widely held in the industry that many people are opting for a secondhand car rather than use public transport.
“Dealer sentiment and indeed consumer sentiment would seem to be much more positive than it was in April,” Mr Flood said.
However, he warned that despite being more optimistic they are still being realistic that the market will be down “significantly”.
There is hope, he felt, that the 202-reg market might extend a little longer into August than in previous years.
“New-car sales are always a good economic barometer so a stronger than expected performance in July/August could be a positive sign for all of us,” Mr Flood added.
Jaguar Land Rover’s Eddie Kavanagh said they expect sales to be around 14,000 for July, considerably lower than the corresponding month last year. Mr Kavanagh emphasised that rental and fleet renewal accounted for a large percentage of purchases in July 2019, saying: “So this year is more reflective of customer interest, and a desire for people to self-isolate when commuting.”
Most visitors to their showrooms are “very close” to making a purchase decision by the time they arrive.
A Toyota spokeswoman said that while bookings for July this year will not be as strong as last, customer demand is better than they would have anticipated considering the circumstances.
The spokeswoman said: “There has been an increase in the use of the digital tools and our customers are very happy with the new virtual options, especially online trade-in valuations, finance approval applications and video calls.”
Volvo said that enquiries for the past two weeks have exceeded volumes for the corresponding weeks in 2019.
They expect to see registrations for July “in the region of 80pc of 2019 levels”. Part of the reason for that are customer orders that could not be delivered during the shutdown. But there has also been a good level of June orders.
They too describe demand for used cars as “very strong” and expect to see a shortage of fresher, secondhand vehicles in the coming months with no rental returns scheduled as normally would be the case for Quarter 4.
“Finally, customers are much more clear and decisive by the time they arrive to the showroom, with most browsing done online,” a Volvo spokesperson said.
Opel Ireland MD James Brooks anticipates “an unfortunate market decline of up to 35pc this year”. He called on the government to take immediate action to support the industry through a scrappage scheme, together with an increase in the CO2 bands.
Despite the decline, Opel website traffic reflects “solid customer interest” with dealers reporting steady orders for new vehicles. There is also a “strong run” on used vehicles.
Peugeot’s Colin Sheridan said that compared to forecasts 10-12 weeks ago, prospects are looking better than anticipated. The sales and marketing director at Gowan Distributors Ltd revealed how dealerships are “certainly seeing interest” and “strong enquiries for used cars are coming through”.
However, Mr Sheridan said the car market will not be on a par with last year due to the pandemic: “The economic outlook for the rest of the year remains uncertain and coupled with virtually no hire-drive activity (which will hit availability of used cars) it will certainly be a challenging year.”
He added: “For now, we remain positive on what is to come in July.”
BMW reports that they have had strong demand for used cars especially.
John Manning, Ford Ireland’s Market Lead said there has been “undoubtedly a more positive feeling” in recent weeks.
“There is a higher demand than what was originally thought of when planning for July started in early April,” Mr Manning said. “But there is no getting away from the fact that this positivity is transitioning from a base of low expectations.”
He is optimistic that July will be “robust enough” to bring some form of temporary sustainability to the business. Used-car activity has been good.
Mitsubishi predict new-car registrations will be down around 40pc when account is taken of the fact there will be no hire-drives sold. A spokeswoman also said: “The lack of any new incentives to assist the recovery of the new-car market is not helping with July sales, in comparison to other EU markets who have introduced state incentives – particularly for low emission vehicles.”
Like many other distributors used-car sales have been “quite robust”.
So that’s the view from the coalface.
A significant fall in the number of those prepared to buy new is expected but not by as much as had been initially feared perhaps. And lots of people are buying secondhand cars to avoid having to use public transport.
It is far too early to draw broad conclusions but the unexpectedly high levels of interest in car buying generally may reflect a fragile, tenuous confidence based on the practical necessities of requiring, in this instance, a new, or newer car to get on with the new normal.