Weakest ‘new plate’ September for UK car industry

New car registrations were down 4.4% in September 2020, making it the weakest September this century.

Just 328,041 cars were registered, compared with 343,255 in the same month last year and 15.8% lower than the 10-year average of around 390,000 units for the month, the Society of Motor Manufacturers and Traders (SMMT) reported.

It follows already low volumes recorded in September 2018 and 2019, when regulatory changes surrounding a new emissions testing regime delayed vehicle certification and caused supply problems across Europe. Some brands that were hit by these factors saw substantial growth in September 2020, but total registrations fell well short of previous years, the industry body said.

Private registrations declined by 1.1% year-on-year while demand from business was down 5.8%, with around 10,000 fewer cars joining larger fleets.

Ongoing challenges to the industry include Brexit uncertainty and the threat of tariffs; the huge investment needed to enable the shift towards zero emission-capable vehicles; and the forthcoming end of the UK Government’s Covid-19 furlough scheme.

Commenting on the monthly figures, SMMT chief executive Mike Hawes said: “During a torrid year, the automotive industry has demonstrated incredible resilience, but this is not a recovery.

“Despite the boost of a new registration plate, new model introductions and attractive offers, this is still the poorest September since the two-plate system was introduced in 1999. Unless the pandemic is controlled and economy-wide consumer and business confidence rebuilt, the short-term future looks very challenging indeed.”

UK new car registrations reach all time high for September

New UK car registrations rose by 8.6% in September, according to the latest figures from UK automotive industry trade organisation The Society of Motor Manufacturers and Traders (SMMT) released on Tuesday.

SMMT data reveals that there were 462,517 new cars registered with a 65-plate in September. This is the 43rd consecutive month of growth in the market and the highest figure on record for September, which is traditionally the time of year when demand is highest. Also, year-to-date total registrations passed two million in September for the first time since 2004.The industry saw an increase in demand across all fuel types, as well as from private, fleet and business buyers.

So far this year, the total number of cars registered amounts to 2,096,886, which is 7.1% higher than at the same point last year. 

Registrations of diesel and petrol cars in September increased 4.1% and 12.3% respectively, while alternatively-fuelled vehicles (AFVs) saw another strong month with volumes up 21.7%. The SMMT figures put total year-to-date growth at 3.1% for diesel, 9.5% for petrol and 48.7% for AFVs.

Mike Hawes, SMMT chief executive, commented:”September is traditionally one of the year’s biggest months for new car registrations, and last month set an autumn record. With plenty of attractive, affordable deals available on the new 65-plate, Britain’s car buyers – whether private, fleet or business consumers – were busier than ever. The market reached pre-recession levels some time ago, and we anticipate some levelling off in the coming months. It is too early to draw conclusions, but customer demand for diesel remained strong, accounting for one in two cars registered.”

SMMT’s list of best selling models for September 2015 puts the Ford Fiesta at the top, with sales of 22,807; the Vauxhall Corsa was second, with sales of 15,670; the Ford Focus was third, with sales of 14,258; the Volkswagen Golf came fourth, selling 13,603 vehicles; the Volkswagen Polo was fifth, with sales of 11,026; the Nissan Qashqai was sixth on the list, with sales of 10,119; the MINI was in seventh place, with sales of 8,754; the Vauxhall Astra came eighth, with sales of 7,920; the Vauxhall Mokka was placed ninth, with sales of 7,670; and the Fiat 500 came tenth, with sales of  7,460.

According to SMMT, the automotive industry is a vital part of the UK economy and accounts for a turnover of over GBP69.5bn turnover and GBP15.5bn value added. The industry employs around 160,000 people directly in manufacturing, as well as more than 799,000 people across the wider automotive industry. Automotive sales account for 11.8% of total UK export of goods and the industry invests GBP2.4bn annually in automotive R&D. More than 70 vehicle models are manufactured by over 30 companies in the UK, which are supported by around 2,500 component providers and some of the world’s most skilled engineers.

German car giants Volkswagen and Porsche to complete merger

The boards of Porsche Automobil Holding SE (ETR:PAH3) andVolkswagen AG (ETR:VOW), or VW,  have approved a merger plan that will see the creation of an integrated automotive company on 1 August 2012.

VW will pay about €4.46bn ($5.59bn) in cash plus one VW common share for the 50.1% it does not own of Porsche AG, Porsche SE’s automotive business. The plan allows the two companies to complete the merger two years before it would have been possible to execute a tax-favourable transaction.

VW and Porsche SE entered into a merger agreement in 2009 and were initially planning to finalise it by the end of 2011. However, the companies announced last September they would not be able to proceed with that arrangement due to legal obstacles. Moreover, it would have been unfeasible in economic terms.

If VW had exercised its options to acquire the remainder of Porsche SE’s shares before August 2014, the move would have left the companies with a hefty tax bill.

After extensive consideration of alternative routes, VW and Porsche SE have found a way to accelerate the combination in an economically feasible manner. The announced plan classifies the transaction as a restructuring under Germany’s Reorganisation Tax Act, making it a low-tax endeavour.

VW’s chairman Martin Winterkorn described the integration of the two automotive  businesses as a positive development not only for VW and Porsche but also for the German industrial sector. The combination will create an even stronger automotive enterprise, both in financial and strategic terms.

Closer cooperation will make it possible to seize new growth opportunities in the lucrative premium vehicles segment through investment in innovative products and technology. This in turn will deliver benefits to customers, employees and shareholders, Winterkorn stated.

The consolidation of Porsche AG into VW’s accounts is expected to results in a non-cash contribution of more than €9bn to VW’s financial results for the current year. However, the purchase price and Porsche AG’s debts, which amount to some €2.5bn, will shrink VW’s net liquisity by about €7bn, the company said.

Peugeot-Citroen Sales Increase on Chinese Demand, Now Profitable

Peugeot Citroen LogoOutside of Europe, automaker Peugeot-Citroen has never been a major player. The French company has remained a major influence in Europe’s small and mid-sized car industry, releasing a large string of highly successful models every generation. However, with hot competition from Japanese motor vehicle companies and a lengthy list of regulations to cater to, the company is rarely seen in Asia.

However, the large auto company now has Chinese growth to thank for its success. Peugeot-Citroen sales steadily increased over the past year due to greater Chinese demand, particularly in the major economic centres of the country’s East Coast. On the back of greater demand in China and various other markets in Asia, the company has announced plans to sell half its cars in the region by 2015.

This marks the largest venture outside of Europe in the company’s history. Unlike the German and British automotive industries, which have typically survived on international demand, France’s big motoring companies have primarily operated within Europe. The company announced a partnership with China’s Dongfeng Motors in order to build an alliance within the country.

Revenue for the company has increased alongside the greater sales, growing by 21% over the last quarter and expected to grow further following European economic recovery. Vehicle sales have slumped within major Western markets due to the financial crisis, which has highlighted the value of Eastern markets to the world’s major automotive manufacturers.

With Chinese businesses continuing to expand and the country’s large middle class gaining access to disposable income, the automotive world is taking notice. Malaysian company Proton Auto has announced plans to export more cars to mainland China. A number of Japan’s major auto companies also plan to build factories within China as sales improve and the country’s regulations loosen.