Automotive insolvencies drop in May
July 2010

The rate of business insolvencies for the automotive industry almost halved from 0.12% in May 2009 to 0.07% in May 2010, according to the latest insolvency and late payment indices from information services company Experian.

As well as seeing a year-on-year fall, the rate dropped from 0.08% last month to 0.07%, a low not seen since December 2007.

The financial strength of the automotive industry also saw a slight improvement both year-on-year and month-on-month, going up to 79.71 from 79.31 in May 2009 and from 79.67 in April 2010.

However, automotive businesses saw a slight increase in late payment with them paying their bills 16.67 days after agreed terms in May last year, rising to 16.86 days late in May this year.

Mark Wilkinson, sales director for Experian’s automotive business, said: “The decline in insolvencies and improvement in financial strength in May is a good result for the industry in the current economic climate.

"Feedback from automotive businesses in the UK is that chasing debt is a key issue. For the financial strength of the industry to remain buoyant, keeping in touch with supplier terms, and managing risk around those, will remain key.”

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SMMT predicts growth
May 2010

Forecasts for new UK car and van registrations have been increased following a better than expected first quarter market performance.

The Society of Motor Manufacturers and Traders (SMMT) announced the improved 2010 registration forecast, increasing its outlook by 107,000 units since the last projection made in January this year. The 5.6% (car) and 7.7% (van) increases in expected annual totals is a positive sign for industry, reflecting increased confidence and stability and a sustained level of consumer demand.

Despite the revised figures showing a greater number of registrations than first anticipated in January this year, the full year car figure is still 3.6% down on 2009 levels. Largely unaffected by the scrappage incentive, van registrations are set to be about 8.6% up on 2009 reflecting greater business confidence.
“SMMT’s latest forecasts reflect the better than expected results in the first quarter and improving consumer confidence," said SMMT chief executive Paul Everitt. "The coming months will be challenging now that the scrappage scheme has ended, but industry remains cautiously optimistic. Sustaining the economic recovery and improving access to more and better priced finance for businesses and consumers should be the priority for any new government.”

SMMT revises its forecasts on a quarterly basis with a panel of industry market analysts. The next forecast is due in July 2010.

news from http://www.themanufacturer.com

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2009’s used car sales lowest since 2000, according to Experian
March 2010

2009 was the worst year that the used car industry has seen since 2000, according to the latest data from Experian, the global information services company. 

Annual sales fell by 5.7% during 2009 to 6,798,864 used cars. The last time the used car industry experienced similar performance, was in 2000, when 6,713,269 used cars were sold.

Used car sales had been falling during each quarter of the year, with the final quarter (October to December) seeing a drop of 5.9% compared to the same period in 2008. However, in comparison to the previous quarter (Q3 - July to September) sales during Q4 experienced a far greater drop-down 15.7%.

Ford and Vauxhall continue to own the lion’s share of used car sales. The best selling used car of Q4 2009 was the Ford Fiesta. Second, was the Vauxhall Corsa with the Ford Focus and Vauxhall Astra taking third and fourth place respectively. BMW was the only manufacturer to see a rise in sales across all used models for the year as a whole.

Kirk Fletcher, managing director for Experian Business Information and Automotive, said: “The recession and the scrappage scheme have had a big impact on the used car market.

“Consumers who would have normally bought a used car were now considering a cheaper new car through the scrappage scheme. This resulted in smaller new cars moving into a price range that had previously been occupied by used cars. 

“The scrappage scheme has also affected the number of used cars available for sale. Normally, when a new car is bought, a used car inevitably comes onto the market. However, with the scrappage scheme, the part exchange vehicles have been scrapped.

“Furthermore, the recession has resulted in people holding onto their cars for longer, which has also affected the choice of used cars on the market.

“The scrappage scheme is coming to an end, but value for money will remain at the forefront of consumer’s minds, which means that they could relax their criteria and seek out older, lower priced vehicles. This will bode well for dealers that adapt their stock profile policies and extend the age profile, remove previous owner limitations and relax the mileage limits of their used cars to ensure they have a healthy supply of used vehicles to retail.” 

Sales of the used cars in the Mini segment, such as the Fiat Seicento and the Daewoo Matiz, saw the biggest drop in 2009 (9.1%). Upper Medium, which includes the BMW 3 Series and the Ford Mondeo, fared the worst when compared with Q4 2008, seeing a drop of 10.3%.  When comparing Q4 sales to the previous quarter (Q3), Specialist Sports, such as the Audi TT and the Mazda MX-5, came off the worst with a 23.2% decrease. This was in contrast to the year-on-year results where the Specialist Sports segment was the only sector to see an increase in sales, - 5.7% higher than Q4 2008. As in 2008, the best selling segment for 2009 was the lupermini, which includes the Ford Fiesta and the Vauxhall Corsa.

Fuel

The alternative fuel market is bucking the trend by seeing sales almost double in 2009 with hybrid models becoming increasingly popular. Although the majority of used cars being sold are still petrol run, it is the only fuel type to see a drop in sales during 2009 as a whole, with an 8.7% fall compared to 2008.

Age

With the boost in new car sales due to the scrappage scheme, the 0-3 year old cars have suffered the most with sales dropping by 15.4% when compared with Q4 2008. Cars over nine years old were the only age group to see any form of increase, albeit a marginal 0.4% improvement on Q4 2008 figures.

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Bumpy road ahead
February 2010

Commenting on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures, Mike Steventon, partner with KPMG's automotive group, said: "New car sales continue to show year on year growth, with new car registrations rising by 29.8% in January to 145,479 units.

This peak has been supported by the ongoing UK scrappage scheme which has boosted the market for the seventh consecutive month, however as the scrappage scheme comes to an end in March 2010, extended by one month, the impact on UK car sales is likely to be substantial from April onwards.

"The car scrappage scheme has recently ended in Germany and new car sales in January 2010 fell to its lowest level in 20 years. It is highly likely that UK new car sales will also experience a significant reduction following the end of the UK scrappage scheme - UK car retailers should brace themselves for a bumpy road ahead. However, as the vast majority of cars sold in the UK under the scrappage scheme are imported vehicles, there will be less of an impact on UK car manufacturers and parts suppliers who are more reliant on overseas and prestige markets."

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Auto industry faces more restructuring in 2010
January 2010

KPMG's 2010 survey of the global automotive industry is predicting that - despite a year of business failures and closures - much of the expected restructuring in the sector is yet to come.

Three-quarters of senior auto executives predict merger and acquisition activity (M&A) to increase for vehicle manufacturers in the next five years, which is expected to be driven heavily by corporate debt and insolvency casualties.

According to 89% of respondents, the specific drivers of alliances, mergers and acquisitions include companies holding too much debt and risk of insolvency, access to new technologies and products (84%), potential for product synergies (83%) and access to new markets and customers (82%).

The global survey of 200 leading executives also cited difficulties over high overcapacity (especially in Europe and the US) - and the need to focus on investing in innovation and new technologies to produce the next generation of energy efficient vehicles.

Mike Steventon, head of automotive for KPMG in the UK, said: "Growth and investment are back on the agenda - but that will come at the price of continued restructuring of an industry that is still burdened by huge overcapacity. The change has only just begun.

"Companies also face the challenge of financing the cycle of innovation - while consumers feel that they are poorer than before, and less inclined to spend. That means that companies are likely to have to compete on technology and on cost. That is a tall order."

Key findings include:

• 47% of senior executives predict strong growth and investment in Eastern Europe - while growth expectations for western Europe are low.
• Executives still see profitability as a significant issue - with 33% expecting a decline, and 40% expecting profits to be stable.
  
• Substantial majorities of those surveyed think that M&A will increase for tier one suppliers (just over 70%), tier two suppliers (56%) and dealers (52%).
  
• Faster rationalisation over the last year means that M&A among dealer networks is likely to fall back, according to the survey.
  
• Excluding the BRIC countries of Brazil, Russia, India and China, executives said consumer demand for autos will grow the fastest over the next five years in South East Asia (37%) and eastern Europe (30%).

Marc Summers, UK director in Automotive at KPMG, said: "Auto executives expect that M&A activity will increase across manufacturers and suppliers mainly driven by the companies' determination to succeed through access to new technologies and products and delivering product synergies. This will lead to more alliances, joint ventures and acquisitions, particularly by the strong players - this will allow them to share the high cost and burden on investment in innovation.

"On a less positive note, the executives expect a key driver of M&A activity through further restructuring in the industry as they believe there is still a way to go in right-sizing and balancing the supply-demand equation, therefore further closures, stressed and distressed sales are predicted.

"The right-sizing within dealer groups will continue and become a key focus of 2010 in the UK as the scrappage scheme ends and consumers confidence sinks - executives expect M&A activity globally within dealers to fall with further dealer group closures, albeit that this will present an opportunity for picking and choosing sites by the stronger players in the market."

Other findings:

New technology: nine of 10 executives in the KPMG survey expect vehicle manufacturers to increase their investment over the next two years in new technologies and new models/products while just fewer than 30% expect investment in new plants. Asked the same question about an increase in investment by suppliers, 91% of the executives said they expected increased investment in new technologies, 78% in new models/products and only 28% in new plants.

Sales of hybrids, alternative fuel vehicles to increase: the KPMG survey respondents overwhelmingly agreed that the sale of hybrid fuel vehicles could help the auto industry get back on its feet is the sale of hybrid fuel vehicles. A full 93% think unit sales of hybrids will increase the most in the next five years, followed by other alternative fuel vehicles (83%) and low cost or introduction cars (82%).

Hybrid seen as most important fuel technology: in line with consumer expectations, when asked to rate the importance of alternative fuel technologies to the industry over the next five years, hybrid fuel systems came out on top (almost 85%), followed by battery electric power (68%), fuel cell electric power (63%), and biodiesel (42%).

Fuel efficiency cited as key purchase factor: when asked what would influence consumer purchase decisions over the next five years, fuel efficiency was most frequently cited (94%), fairly flat from last year's high of 96%, strongly ahead of other factors, followed by environmental friendliness (just over 80%), safety innovation (71%) and vehicle styling (61%).

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Private car sales account for 40% of motor fraud
December 2009

Almost 40% of motor finance fraud cases in Q3 2009 were committed by people selling cars which they did not own, according to new figures released by the Finance and Leasing Association. Around 25% of motor fraud involved applicants giving false information on their finance application form.

As a consequence of the recession, finance companies have reported an increase in the number of people selling cars before settling their outstanding finance - known as conversion fraud. Under a hire purchase or personal contract purchase agreement a customer does not own the car outright until all repayments have been made and an option to purchase fee has been paid (customers with lease agreements do not have the option to buy the car outright and so must return the car to the finance company).

Fraudulent deals cost the industry £3.4m in the third quarter of this year. But the efforts of motor finance companies to combat fraud meant that the number of fraud cases fell by 29% compared with the same period in 2008. The figures show that at least 2,700 cases of attempted motor finance fraud
were prevented in Q3 2009 alone. If these applications had not been detected, fraudsters would have stolen £35m from motor finance providers. Industry action is helping to stop criminals, make the roads safer and save honest customers money. So far in 2009, motor lenders have prevented at least 8,500 fraudulent deals worth £100m.

According to FLA figures, London remains the nation's motor finance fraud hotspot, followed by Glasgow and Manchester. Paul Harrison, head of motor finance at the FLA, said: "Conversion fraud is on the increase as some customers try to escape their financial commitments and profit from the sale of a car that does not belong to them. It is sometimes the case that a customer genuinely believes all the finance has been settled when it hasn't. Whether fraudulent or mistaken, this kind of car sale can cause distress for the third party buyer. I would urge anyone interested in buying a used car to run a car background check to ensure it is free of finance before purchasing it. Anyone having trouble making payments on their car, or on any other loan, should immediately discuss the matter with their lender.

"Finance companies have been especially vigilant during the recession so as to stamp out fraud, whether opportunist or organised. Fraud is not a victimless crime. Our work with the police is also helping to prosecute organised gangs who use stolen cars to finance drugs and firearms trafficking."

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Fuel cell vehicles at COP15
December 2009

Honda has displayed its award-winning new hydrogen powered fuel cell car, the FCX Clarity, at the Copenhagen Climate Conference (COP15).

Honda supplied the two-week climate summit, with a fleet of low-emission Insight hybrid cars. The FCX Clarity, Honda’s ground-breaking, zero emission hydrogen powered fuel cell electric vehicle, was also present at the summit as part of a COP15 showcase – "Driving the Future". The cars were used to transport delegates, VIPs and journalists to key venues at the conference.

The FCX Clarity is the world's first fully-completed, mass-produceable, fuel cell car, to use hydrogen fuel to generate electricity while emitting water vapour as the sole by-product. However only 200 vehicles are currently planned for release in Japan and the US, with a select group of US customers, including actress Jamie Lee Curtis to pay $600 (£360) a month to lease a Clarity over the next three years.

Honda is not the only manufacturer to be working on a hydrogen powered car. General Motors will have a fleet of 100 Chevrolet Equinox fuel-cell SUVs on the road by the end of the year. More than 60 have already begun real-world testing by families, commercial users, and military and government agencies. GM has said it wants to have 1000 Fuel Cell Vehicles (FCVs) on the road by 2013, 10,000 by 2015, and 100,000 by 2018 and is hoping to open a hydrogen fuelling station near LAX airport. At Toyota, the target for the start of higher volume commercialization of a Fuel Carbon Vehicle is 2015.

John Simister, from www.motoring.co.za said: “The huge snag is this: where does the hydrogen come from?” And of course he is correct. There is currently extremely limited hydrogen-supply infrastructure. Despite the claims that the gas is the most prolific element in the universe, on Earth it has to be sourced through the electrolysis of water and requires a considerable amount of power to create.

"Also, while the lithium-ion batteries used in the Clarity are considered non-hazardous in the US and are potentially recyclable, disposing of them in landfill poses a potential water contamination risk.

"Indeed, to retain their green credentials, future FCVs will need to be supported by the construction of adequate infrastructure to provide carbon friendly energy such as renewable or nuclear and by environmentally responsible battery decommissioning facilities."

news from themanufacturer.com

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GM talks
November 2009

Nick Reilly, General Motors’ head of operations in Europe, is due to meet today (17 November) with business secretary Lord Mandelson to discuss the future of Vauxhall employees in the UK following the fall-through of the Magna-General Motors Europe deal.

The union Unite, representing the 5,500 UK workers will also be present at the meeting and will seek assurances against plant closures or large scale redundancies.

GM had agreed to sell its European operation to Canadian car parts maker Magna, which had Russian backing. The US firm reneged on the deal earlier this month though, with chairman Ed Whitacre explaining that in light of an upturn in business for the firm overall it was keen to keep hold of its interests this side of the Atlantic.

Business conditions are in fact so good that GM plans to start paying instalments on its $1.2bn debt to the US government next month, making good on a promise made by Whitacre last month. GM is not obliged to start making payments until 2015.

General Motors Europe operates two Vauxhall plants in the UK; one in Luton and the other at Ellesmere Port on Merseyside.

The latter was given a boost yesterday from GM’s president and chief executive, Fritz Henderson. “We feel very good about the plant,” he said.

"Ellesmere Port is the lead plant building our new Astra. If that's not a better signal about the future of the plant, I don't know what is.”

A decision over all Vauxhall and Opel operations in Europe is expected in the next two weeks and at least some jobs are thought likely to be lost in a cost-cutting exercise.

"We know it is disturbing and unsettling to have this hanging over your head for such a period of time and so we intend to take that decision in a relatively short period of time,” said Reilly, speaking recently to GM workers in Europe.

news from themanufacturer.com
 

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Demand for commercial vehicles keeps pushing up prices

October 2009