Japanese car manufacturers are proving to be most affected by competition from Chinese new entrants, delegates to the Automotive Summit of the Vehicle Remarketing Association (VRA) were told today.
More than 180 attendees at the annual event, held at The Slate, Warwick University, heard the views of Michael Dunne, chief executive officer at global automotive consultancy Dunne Insights.
He said: “The impact of Chinese manufacturers’ global export push is proving to be enormous and raising a lot of questions. China has exported almost eight million vehicles this year, up from just one million in 2020.
“Dealers want to know who will be the Chinese Hyundai to pick the right retail partner, legacy manufacturers are a little shell shocked and searching for to respond, and investors want to know where to place their bets.
“For the moment, at least, European and US manufacturers, especially premium brands, are in less danger and several are forming partnerships with Chinese manufacturers to develop their capabilities.
“Instead, it’s the Japanese who are paying the price. Nissan and even Honda are losing ground in a way that we’d never have predicted a few years ago.
“If you talk to dealers selling Chinese new entrants, they are making conquest sales from Japanese manufacturers not just in the UK but comparable markets. Japanese companies are stunned by how quickly customer loyalty is evaporating. The one exception so far is Toyota, who are holding their own.”
The event was designed to provide a comprehensive meeting on the remarketing sector, starting with a presentation from Glynn Jones, Bank of England deputy agent for the West Midlands and Oxfordshire, on general economic prospects.
He said: “Our central projection shows inflation should fall to around 3% early next year and 2% in 2027. However, businesses – including those in the remarketing sector – continue to face cost pressures on a number of fronts. They can manage these through a number of channels including investment, employment, productivity, margins and prices. To the extent they are passed through primarily in price, it could contribute to more persistent inflationary pressures in this scenario.”
Chris Bond, business tax partner and head of motor retail at BDO, looked at the possible contents of next week’s Budget. He said: “We believe there will be a variety of measures affecting remarketing businesses. Especially, we’re waiting to see how employee car ownership schemes will change following intensive industry lobbying and the outcome could impact directly on dealer recruitment. Also, the pence per mile EV road tax has been widely trailed and could affect both new and used sales.
“On a wider basis, there’s likely to be a freezing in income allowances, bringing more people into higher tax brackets as wages rise. Also, pensions are likely to be an easy target for raising additional revenue, including restrictions on salary sacrifice.”
He was followed by Jonathan Butler, VRA legal counsel and partner at Geldards LLP, who explained there were three key legal developments for the remarketing sector – the ongoing FCA consultation, the Employment Rights Bill (ERB) and the Economic Crime and Corporate Transparency Act (ECCTA).
“The first of these has received the most attention but the others are potentially even more important in the longer term. The ERB fundamentally changes the relationship between employers and employees in several important respects and is seismic reform. ECCTA also carries high risks for remarketing businesses who deal with intermediaries such as auctions and dealers, with a greater risk of fraud in areas such as valuations, mileage and condition reports.”
The dealer sector was also represented. Duncan McPhee, chief operating officer at Hendy Group, said: “For franchise dealers, the market is tough at the moment with consumer confidence low and margins under pressure, but the truth is that the market is always tough in different ways and there are always opportunities.
“We’re working hard to make the most of those current opportunities and forming links with new entrants to the UK market is part of that. Some of the new brands are extremely attractive and offer excellent value for money. OMODO&JAECOO, BYD and soon, Chery, are all finding a place within our portfolio, alongside our established relationships. Our range of brands is deliberately diverse and all our franchises are important to us, with each paying important roles at different times.”
Extensive discussions also took place around fleet remarketing. Stuart Chamberlain, head of B2B and partnerships, Arval UK, looked at the evolving market for EVs.
“The good news is that EVs are now selling faster than ICE equivalents and there is a much wider choice of models in the used sector, some now falling into the more affordable sub-£10,000 category. This is an important development and 40% of the dealers and traders with which we work now buy at least some EVs.
“The downside is that supply continues to grow very quickly so we are dependent on demand rising to meet this, and repair capacity for EVs remains lower than needed, so preparing EVs for sale can be an issue. However, the overall situation is relatively positive – while the used EV market is not without issues, it continues to develop positively in several important respects.”
Lorna McAtear, fleet manager, National Grid, said battery health checks were likely to be a growing part of the used EV sector: “In one sense, BHCs shouldn’t be important, because most EVs have eight-year battery warranties in the UK. What a BHC instead provides is reassurance for the used car buyer but it remains a problem there is no recognised standard, so the information provided by each check provider is quite different. It’s crucial to explain to the buyer what each BHC actually means.”
The final session of the day covered the latest technological developments in remarketing, and featured Shaun McGirr, chief AI and data officer, at Dev On, who hosted a real time demonstration comparing different AI tools.
James Tew, chief executive and founder, iVendi, spoke about the latest developments in motor finance. He said: “Change is being driven by rapidly evolving consumer and compliance needs, so we are seeing technology used to create faster, more accurate and crucially, more transparent processes. In the showroom and online, generating product comparison information that allows vehicle buyers to make well-informed finance choices can now be achieved in seconds.”
The Summit was sponsored by companies including headline partner OMODA&JAECOO UK; event partner, Aviloo; session sponsor Keyloop; associate sponsors Geldards and Brego as well as exhibitors DRIVVN, MOBA and MTC.
Philip Nothard, VRA chair, said: “This was a superb event with our highest attendance ever, showing its growing reputation within the automotive industry calendar. We’re like to offer a heartfelt thanks to all of our sponsors, without whom the event would not be possible.”
Oliver Lowe, head of product at OMODA&JAECOO UK, was interviewed about remarketing as part of the Summit. He said: “Our team in China are very keen to understand what each country market needs on a local level. They understand the importance of remarketing in the UK and are ready to give us the resources we need in this area.
“Our new car sales this year have been double our initial projections, so there will be used stock coming back into the market in volume soon. We want to ensure residual values are strong, and we’re working with market experts, dealers and platforms across the market to manage them effectively. It’s a key part of our offering.”
Other speakers included Jacqui Barker, global OEM strategy director at Keyloop; Grainne van Berkum, president of OPENLANE Europe; Craig Ford, head of sales at Motability Operations; Vicky Hart, head of marketing and digital, Waylands; Martin Wilson, VP partnerships, Privacy4Cars; and Bruno Miradoli, European account director, Keyloop and Anthony Brennan, business development director at MTC. Also, Nikolaus Mayerhofer, chief technology officer, Aviloo provided a live battery health check demonstration.