Monday, 18 May 2009

IN THE NEWS

Small car shortage ahead of scrappage scheme

Carmakers are reporting a surge in showroom and web traffic ahead of Monday’s (May 18) launch of the vehicle scrapping scheme, which is expected to spark higher sales of their smallest cars and cheapest models.

However, while the scheme has been welcomed by the motor industry, analysts say it will worsen an existing shortage of small cars.

Additionally, some manufacturers have complained about having to co-sponsor the £2,000 discount on some of their most in-demand but lowest margin models.

As the scheme will deliver proportionately the biggest discount on lower-priced cars – and because drivers of older vehicles tend to have less money – it is expected to spark demand for small cars, which are already much sought after because of the recession and higher fuel prices.

Adrian Rushmore, managing editor of Glass’s Guide, said: “We’re predicting worsening shortages of small cars. A wait of 12 weeks is not unusual for a small car and these shortages will become more protracted.”

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, confirmed: “Vehicle manufacturers are not going to be making lots of money out of this process.” (Financial Times: May 15).

D-Day looms for GM Europe investors

Potential investors in General Motors’ European operations have been given a deadline of Wednesday (May 20) to submit detailed proposals.

General Motors has been given a deadline of the end of the month by the US Government to submit detailed restructuring plans as it battles for survival and hopes for more state aid.

A major part of its restructuring is the disposal of a majority stake in its European operations, which include Vauxhall in the UK and Opel on the continent.

Fiat and Canadian parts manufacturers Magna are leading the race, but German ministers say that plans submitted so far by suitors are ‘too basic’.

Meanwhile, Ford, the only major US carmaker not to take Government support, has told its AGM that it intends to return to profitability by 2011.

Chief executive Alan Mulally said Ford would emerge from recession as a ‘lean, globally integrated company poised for long-term profitable growth’.

The third US carmaker, Chrysler, says it will close a quarter of its 3,200 dealerships in the country as its battles to restructure amid Chapter 11 bankruptcy. (Daily Telegraph: May 15).

Nissan creates specialist dealers

Nissan GB is creating specialisms within its network to better target its market segments.

The carmaker has been working with its network to identify market opportunities and agree a three-year business plan with each dealer.

Managing director Paul Willcox has a target to increase the brand’s share of the UK new car market from 3.5 per cent to 5 per cent in 2012 through driving improvements in five areas: product, brand perception, quality, operational processes and dealers.

This includes a roll-out of specialisms within the retail network. Among its 185-strong network most will have 4x4 specialists, 60 will have fleet and LCV specialists and up to 25 will be designated high performance centres.

“We’re doing this to enable the network to right-size their businesses. Every dealer will get everything in our range, but specialist means that those dealers that have a particular market opportunity will invest at a higher level for that and will get a higher level of margin to support them in meeting the expectations of their customers,” said Mr Willcox.

Dealerships with specialist status will add branding and a dedicated section of the showroom to promote that fact.

These changes will be accompanied by a reduction in network size to around 165 locations by 2012. (AM-Online: May 15).

Recession-hit drivers buy three-year-old motors

Credit crunched motorists are buying ever-more three-year-old cars, as they cut back on spending.

A new survey reveals a doubling of the market for older cars with more than 41 per cent of buyers plan to buy an older car. That’s up from 22 per cent a year ago, says American Express Insurance Services.

In contrast, nearly new sales are suffering with the survey revealing a decrease of over a quarter in car buyers intending to buy a car under three-years-old.

But new car sales have not suffered any change in intent, according to the survey, which suggests that just under a third of buyers still plan to buy a new car next time round.

It’s the overall ‘intend to purchase’ market that has declined, by over 20 per cent with head of American Express Insurance Services, Chris Rolland, saying: “With fuel prices on the increase yet again, and the economic environment still putting a strain on many household finances, people are clearly looking for ways to save money.” (Car Dealer Magazine.co.uk: May 15).