CEO Update

Economic uncertainty masking fundamental strengths

16 August 2019 #CEO Update

There’s still a lot of hesitancy among car buyers – both new and used. This week’s numbers released by SMMT reveal a -2.8% drop in Q2 used car transactions, with the year-to-date market down -1.7% over the same period in 2018.

It’s perhaps not a surprise to see such a slowdown in action – with so much economic and political uncertainty around us, owners are holding on to their cars for longer. This has a further impact on air quality, as the best way to improve it is through the introduction of the latest, cleanest models on to our roads – and accelerate their take-up.

There’s also some turbulence in the commercial vehicle markets, with a 10th consecutive quarterly decline in bus and coach registrations but a boost in truck numbers. The former shows more uncertainty at work, with operators unsure about different local authority requirements for clean air zones, now and in the future. For the truck market, meanwhile, it may well be something of a false dawn as truck fleets expand ahead of the introduction of smart tachograph regulations, with the market expected to equalise later this year.

All areas of the industry are feeling the effects of the current economic conditions, and there is certainly a need to make efforts to boost consumer and business confidence. Government has measures within its gift but, of course, the one that would bolster our sector would be a Brexit deal. This would go a long way to turning around the fortunes of the industry and, indeed, the wider economy from their current path.

There are many other long-term challenges facing the global automotive industry, not least of which is air quality and the broader environmental challenges. The industry has the technologies to address these challenges; what we need is a strong appetite among consumers for them. This starts with the new car and CV markets but, given the way we purchase vehicles these days, quickly flows through to the used vehicle market. Having confidence to invest – whether an individual consumer or business – would help drive this transition and bring about the improvements we all seek.