• OFFICIAL DOCUMENT REVEALS WLTP DEROGATION VOLUMES
• EURO CO2 PLANS TO `JEOPARDISE INDUSTRY’
• £4M DEEPER HOLE IN RENAULT RETAIL PENSION SCHEME
• USED CAR SUPERMARKETS ONLY IN TOP TRACK 250 GROWTH TABLE
• TAX BREAKS BOOST PICK-UP MARKET
• SERVICE PLANS DRIVE AFTERSALES, SAYS FORD/VW GROUP
• BANK TO ENTER CAR MARKET `WITHIN DAYS’
• DATE SET FOR AUTO RETAIL LIVE Q4 BRIEFING
• WORLD NEWS – PSA open to collaboration, Danes join petrol/diesel ban
• STOCKWATCH – big drop for Inchcape
• LAUNCH DIARY – BMW 3 Series, Lexus UX
• COMING UP – labour market stats, Vertu half year results
• MONEY MATTERS – pay rises grow
• OUR BLOG – could airfields make more than showrooms?

Official document reveals WLTP derogation volumes

Several manufacturers look set to face a challenge to clear a large number of NEDC-tested vehicles by the end of August 2019.

An official Vehicle Certification Agency document seen by Auto Retail has revealed how many NEDC cars each manufacturer has requested permission to sell after the official launch of the WLTP testing regime on 1 September 2018.

Retailers that work with the smaller brands like Subaru and Aston Martin are the ones that face the biggest challenge. While they have carried over fewer cars, they represent a higher percentage of the brands’ annual sales – Subaru has derogated 1991 cars, which is 74.32% of its 2017 total sales, while Aston Martin’s 944 cars represent 64.17% of 2017’s registrations.

Several big-name manufacturers came close to the 10% permitted limit, but most of these did so intentionally rather than as a result of poor planning. The Mazda3 doesn’t meet WLTP standards, so the company has derogated enough stock to last until the new model arrives, and Kia says it has cleared most of the 9285 cars it carried over thanks to a successful August and September.

Retailers still retain concerns about the cars carried over, though, with one senior figure in the industry telling Auto Retail that they wouldn’t be surprised if the stock that had been derogated was not the desirable models that retailers might want, pointing out that there wouldn’t be the need to carry over cars that are in demand.

See the full list of derogated vehicles in the October issue of Auto Retail Bulletin, out this week.

Euro CO2 plans to ‘jeopardise’ industry

EU regulators start talks this week on proposals that could force CO2 emissions down to a level some car makers believe financially impossible without fundamentally hurting the industry.

On Wednesday the European Parliament voted in favour of a motion demanding that by 2025 they must be 20% below the 2021 level and 40% by 2030.

Car makers will be incentivised and those whose sales of zero/low emission vehicles hit 20% of their total annual sales by 2025 and 35% by 2030 will be allowed 5% leeway on the CO2 targets.  Those exceeding them will be fined although details are yet to be decided.

Three way talks between the Parliament, the European Commission and the Council of the EU are now due to start on Tuesday in Luxembourg and a final deal is expected early next year.

£4m deeper hole in Renault Retail pension scheme

The pension deficit at the Renault Retail Group widened by more than £4 million in 2017, according to the firm’s latest financial results. However, the directors of the manufacturer-owned business say they are confident a recovery plan will allow it to meet its commitments.

It said: “The Defined Benefit Pension Scheme in which the company participates shows a deficit of £27,919,00 before tax (2016 deficit: £23,696,000), The scheme is now closed to entrants. The directors are confident that scheme will be able to meet its future liabilities by means of a structured recovery plan agreed with the Pensions Register and the Pension Scheme Trustees.”

Used car supermarkets only in Top Track 250 growth table

Four auto supermarkets are the only car retailers listed in the Sunday Times Top Track 250 of the fastest growing, privately owned mid-market companies by sales and profit.

In 51st is AvailableCar which retails 600 cars a week from its four sites. 2017 sales of £363 million are up 7% and profits of £9.7m are up 25%.

Trade Centre Wales (156^th) opened a fourth centre in the West Midlands last year helping sales rise 68% to £179m and profit up 39% to £15.3m. In May it opened what it says is Europe’s biggest used car site, in Coventry.

Motordepot (211th) saw sales grow by nearly a third (31%) last year to £148m and profit by 30% to £7.2m. In the past year it has opened five new sites, doubling its footprint.

Imperial Cars (222^nd) has 12 showrooms, saw sales rise 22% to £142m in 2017 and profits jump 82% to £4.4m.

Tax breaks boost pick-up market

Favourable benefit-in-bind tax breaks are helping the UK’s pick-up market become the biggest in Europe after registrations surged by 9% last month. The jump was the one bright spot in an otherwise depressed LCV sector where year-on-year registrations overall fell 6%, partly because car-derived vans were hit by WLTP.

Service plans drive aftersales says Ford/VW group

Service plans helped underpin growth in workshop hours at Ford and VW Group retailer Mon Motors which maintained turnover and profit despite a drop in vehicle sales.

The 10-site group saw turnover and pre-tax profit remain stable at £334 million (£330m) and £2.9m (£2.8m) respectively.

The directors said: “Aftersales contributes a substantial element of group gross profit from service, parts and bodyshop operations’, noting `growth is driven through…the recent trend in manufacturers offering service plans and fixed price servicing.”

Bank to enter car market ‘within days’

BNP Paribas Personal Finance UK is to enter the UK car finance market this month after announcing the move on social media. BNP Paribas Personal Finance’s portfolio has handled car finance in several countries since the 1970s and in 2015 set up a joint venture with Volvo/Lotus parent, Geely, to tap into China’s booming auto market.

Date set for Auto Retail Live Q4 Briefing

Retailers looking to improve performance in the final quarter are invited to register for a free webinar bringing together industry leaders from retail, manufacturers and market analysts.

The Auto Retail Q4 Live Briefing, sponsored by Auto Trader, on November 6 is a 30 minute broadcast from our central London studio and can be watched on your mobile or PC.

Our guests in this programme include Alison Jones, managing director of Volkswagen UK, Bill Dobie owner of Dobies Cumbria and Rebecca Clark, manufacturer & agency director, Auto Trader.

To register for Auto Retail Live Q4 Briefing click here https://bit.ly/2Pbq3CH

WORLD NEWS

PSA open to more collaboration

PSA Group’s success in turning around Opel/Vauxhall so quickly is making it attractive to tie ups with other manufacturers facing rising costs, according to CEO Carlos Tavares. From being nearly bankrupt in 2013/14 the group posted an 8% H1 operating margin within less than a year.

https://bit.ly/2y2iB6y

Danes to ban IC vehicles by 2030

The Danish government has voted to ban the sale of new petrol and diesel cars by 2030 by when it aims to have one million EVs on the roads. The sale of hybrid vehicles may also be banned in 2035, according to prime minister Lars Rasmussen.

https://bit.ly/2ykPVon

STOCKWATCH

Closing prices at October 5 and weekly movement

BCA 207.0p (+3.0p)

Cambria 53.0p (-0.5p)

Caffyns 425p (no change)

Inchcape 629.5p (-39.0p)

Lookers 99.6p (-6.8p)

Marshall Motor Holdings 141.0p (-6.5p)

Motorpoint 209.0p (-6.0p)

Pendragon 26.6p (-0.6p)

Vertu 41.7p (-1.6p)

LAUNCH DIARY

November: Nissan Qashqai with first use of Renault-Nissan Alliance’s 1.3 petrol engine. CAP predicts class leading residual of 50%. From £19,595

Q1 2019:

Seventh gen BMW 3 Series including PHEV and Intelligent Personal Assistant. From £33,610.

Lexus UX, Audi Q2 / BMW X2-rivalling compact hybrid SUV. From £29,990

COMING UP

Wednesday, Vertu half year results

October 16, Government labour market statistics

MONEY MATTERS

Pay rises growing

Average pay rises grew in the three months to August after a short slowdown as the median increase returned to an annual 2.5%, wage data firm XpertHR said.

A spokesman said: “This follows seven years where pay awards hovered around the 2% mark.”

XpertHR collects details of pay settlements for around 1,600 employee groups each year and said it sampled 91 pay awards covering almost 1.4 million employees.

OUR BLOG

Could airfields make more money than showrooms?

Right now I reckon there is probably more money to be made from letting airfields so manufacturers can store tens of thousands of (currently) unwanted cars on them than there is selling the metal.

The industry has been blindsided by WLTP and under the rules of derogation allowing them to have up to 10% of their annual sales beyond the September 1 cut-off date but to be sold within a year, there are now virtually 180,000 (179,425 at the time of going to press) cars built under the old emissions testing protocol awaiting new owners.

Except who is going to buy them? Would you, would one of your customers enquiring about a new car but declining the offer of one that is indeed unregistered but certified under the old and discredited system? Even less so when these cars are probably not a hybrid or something for which there is a demand but a diesel.

Those of us in the car trade understand the situation but just wait until the more sensational end of the national press get hold of this story. You can already see the screaming headlines of `Car manufacturers and dealers still selling banned cars’ and such like.

Try selling one after that.

These will only move if they are given away and incentivised beyond belief but dumping so many cars at toxic prices will do few favours for residuals as they move into the used sector where buyers are not so fussy about how a car is certified.

It’s a mess, there is no other way of putting it and no amount of spin from industry PRs can alter that.

And then you read our main story and discover that early next year the EU will unveil legislation fuelled by its determination to smash resistance from car manufacturers to fundamental cuts in emissions (and I’m completely with the EU on this) which will make WLTP look like a stroll in the park.

Enjoy the rest of your week.

Editor