Opinion: You need to move quickly if you want a new car
Early evidence suggests reopened retailers will find pent-up demand and react by tightening discounts
As we stand on the cusp of a deep global recession, it's hard to imagine that if you want to buy a new car, you need to crack on with it in order to both get to the front of what will be a lengthy queue and to beat almost certain price rises.
That, however, is the reality of the situation, and if you're looking to be part of the race, the bad news is that the starting gun has already fired, the hammer hitting the primer when the government confirmed last week that dealerships can sell cars online and deliver new vehicles so long as they obey all social distancing rules.
In some regards, the statement was non-news: manufacturers operating online sales channels had never closed them, while some (but far from all) retailers had kept a handful of staff off furlough to do the same. Furthermore, the current lockdown had always allowed travel if you couldn’t run your business any other way.
But while some trades carried on, the majority of the car industry - and pretty much all OEMs and franchised dealers - reasoned that the wider social need eclipsed their desire to sell cars.
But the significance of the government making a clear statement on the rules of engagement shouldn't be underestimated: within moments of the news, web traffic to the websites of Autocar and sister title What Car? lit up, and within hours dealer sources were talking about scrabbling to get staff off furlough.
Car buyers were researching new models again and dealers were scrabbling to make arrangements to both deliver cars that had already been bought but not collected prior to the lockdown and to rebuild pipelines of orders to keep them in business for the long-term.
Coincidentally, but equally significantly, in the 48 hours surrounding that announcement, the automotive industry’s global (and, in a limited but no less significant way, European) manufacturing base also started to announce plans to crank slowly back into action. From Kia to Jaguar Land Rover to Vauxhall, taking in Aston Martin in St Athan and more, the blanket approach to shutdown received notice that it was being eased.
Yes, output will be defined for some time by social distancing protocols and the number of staff volunteering to work, but the wheels are in motion to get the factories running again - and once they do, they're too expensive to keep stopping. Once new cars start rolling off the line, the industry has to get back to work, marketing, selling and more to ensure that the vehicles quickly find new homes rather than depreciate in fields and car parks.
Will there really be enough eager buyers, though? The answer is emphatically yes, at least for the short to medium term, chiefly because so much of the UK market is dominated by regular renewal cycles driven by the mass uptake of PCP finance deals, but also because there's now a significant backlog of pent-up demand from would-be buyers who have been unable to complete their orders for months.
This in itself is a risk for the manufacturers, who will have restarted their factories as soon as morally feasible at least in part fearing that large numbers of people will switch to nearly new or used alternatives if demand isn't met in a reasonable timeframe. Already, a typical 12-week waiting time for a factory-order car pre-crisis is being talked of in terms of being a 26-week order. If that's true, it’s not hard to imagine why many buyers might see what’s in stock for immediate collection instead, And while it’s also true that many manufacturers operate nearly new schemes, and profit handsomely from them, it's also an immovable truth of the industry that those shiny new cars rolling off the production lines need shifting.
But with supply still expected to fall short of demand quickly (a recent survey revealed that almost one in five visitors to whatcar.com, a heavily car-buying focused website, were planning to buy within a month of lockdown ending), this desperation among manufacturers and retailers to shift cars isn't expected to last long.
As a result, it's widely expected that previously negotiable discounts will rapidly be reduced, and the hard-hit car makers and sellers will look to recover some of their lost trading year by shoring up profit margins, at least until the balance shifts.
Pat Hoy, who analyses market pricing for What Car?, says he has already detected that discounts are contracting. “While the market is frozen, most dealers that are open have been nurturing leads, making it harder to get a clear indication of what their plans are for when business opens up again,” he says. “But the clear expectation is that, as soon as demand outstrips supply, they will look to reduce incentives and discounts and focus on profitability.
“Of course, there will be variables within that. Some manufacturers will have supply sacrifice profit for market share, and a scrappage scheme focused on taking older cars off the road and getting people into hybrid and electric vehicles could skew the picture, but the likelihood is that, for most buyers, discounts will narrow as soon as the market opens up.”
That leads to the final point: which brands might we see soaring as the crisis eases? Pundits are cautious, but the likelihood seems to be that it will be those who can deliver cars made in countries that are further along in dealing with the impacts of the coronavirus. That suggests China - and notably MG, which has already been making strides with its compelling ZS EV and is looking to import its new 5 electric estate once the lockdown ends - and South Korea, from where Hyundai, Kia and Ssangyong import many of their vehicles.
For now, though, the message is clear: the shortest waiting times and the best discounts won't be around for long.
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