10/01/2020
Hopefully some positive news from the car sales sector for the coming year and we can return to selling vehicles again -
The UK is entering a period of relative stability. The country has an elected government with a significant majority, meaning that a second referendum is unlikely and a “leave” agreement will pass through Parliament, albeit with some minor changes, allowing an orderly exit from the European Union. Over the course of 2020, the UK Government will work on new global trading agreements to reduce the impact of Brexit further.
With Brexit anxiety reduced, this newfound stability suggests that the appetite for the various fuel types in both the new-car and used-car markets should become more representative of true levels.
Stability in the new-car market is likely, with forecasts suggesting a similar figure to 2019 of around 2.3 million new-car registrations, unless increased allocations of alternative-fuel vehicles (AFVs) enter the UK supply chain.
The mix of fuel types is likely to change significantly over the year. The decline of diesel will continue but at a slower overall pace as customers for whom the fuel type is still the best overall solution will continue to purchase new diesel cars.
The choice of available fuel types will dominate new-car advertising and communications from manufacturers. It is likely that AFV registrations will rise significantly in 2020 as manufacturers attempt to register as many low-emission vehicles as possible to avoid enormous CAFE fines for not meeting the new stringent CO2 targets.
However, there will still be demand for new petrol and diesel cars, with buyers making informed choices regarding which fuel type is right for their driving needs at the same time as meeting their aspirations and budget requirements.
It is possible that the UK could see some manufacturers offering incentives for electric vehicles to increase pe*******on further. Additionally, the zero Benefit-in-Kind (BIK) costs for zero-emission vehicles is creating significant noise in the market from company-car drivers and contract-hire and leasing companies. They have already seen EV interest increasing, with orders doubling after HM Treasury published the new BIK rates in Q3 2019.
Through 2020, following an orderly Brexit, used-car sales and values will stabilise, with a true levels of demand returning to the market. Residual values came under substantial pressure at the start of 2019 but there was some recovery towards the end of the year.