motoring guide

Motoring industry stalls as times begin to change

To some it may seem absurd that a product which is largely affordable and in constant demand can ever suffer hardships. However, the first-hand car market is currently suffering massively because of the success of its near-neighbour, the second-hand market. Many are increasingly turning to used and second-hand cars but what effect will this have on the industry, the consumers and the environment?

It seems that ironically, the motor industry's strengths and advancements have proven to be its downfall. The fact that cars are now becoming increasingly environmentally efficient and less wasteful in petrol means that people are not increasingly chopping and changing them for the newest technology.

Cars are also becoming more and more reliable meaning that consumers are becoming quite happy to purchase the one car, drive it for a number of years before eventually selling it and trading in for a another newer second hand car. What's more the market is more than willing to let them do so too.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders (SMMT), recently backed up this sentiment by declaring that there had indeed been what he described as a “fundamental shift” in the habits of consumers when it came to purchasing cars.

Mr Everitt was quoted by The Mirror as saying: "We always expected 2011 to be challenging given everything that’s going on. Clearly consumers are uncertain at the moment, what with higher taxes and a rise in the cost of living. Surveys also suggest that consumer confidence is relatively low."

"We are unlikely to see a return to the sort of pre-recession levels any time soon. There has been a fundamental shift in new car purchasing, people who used to buy nine or 10-year-old cars are now going for ones that are six or seven years old and the same is true for newer vehicles too."

Speaking on the eve of one of the most symbolic days in the motor vehicle world's calendar, the latest ‘61’ number plate change, the SMMT rolled out a prediction that around 330,000 new cars will take to the roads of Britain during the month of September. That figure is around 17 per cent of the annual total and was matched only by the other plate change which took place in March.

Despite these positive predictions, the total is still not expected to have grown since last September. A sharp rise in fleet and business registrations could be said to have masked a huge drop in private sales, which look like they may drop eight per cent to just under the 171,000 mark.

New car sales for the year are currently track to reach 1.93 million, with around 900,000 of them through private arrangements, down from just over two million last year in comparison with the peak levels of almost 2.58 million in 2003.

Mr Everitt also spoke to Car Dealer magazine during the month and said: "We simply haven't made the progress this year that we thought we would. At the beginning of the year we were all thinking it would be a tough first half then we’d see growth, but we just haven’t seen that at all."

"We need consumers to feel more confident. I feel like Arsene Wenger when I say it, but it's easy too lose however it takes a long time to get confidence back!"

One shining headlight in the motor industry is that research has shown the internet is fast becoming a driving force in the way that consumers search for places to buy first hand cars and at the moment, the industry really needs all the help it can get.  

Digital media company and owner of MySpace, Specific Media, found in its survey of 1,009 consumers that just short of three quarters (74 per cent) said the internet was an important place when it came to researching which car to buy while a further 66 per cent agreed that it provided greater independence when making vehicle choices and 48 per cent said it gave access to a broad range of motoring opinions.

Chris Worrell, European research manager at Specific Media, said: "The automotive consumer of today is well informed and comes to the forecourt armed with information. Dealers and manufacturers need to acknowledge this and look to add value in other areas of their service such as post-sale support."

Perhaps a more curious statistic that came from the study was that 38 per cent described researching vehicles on the web as interesting and 32 per cent viewed it as being enjoyable. All these statistics show that the internet is proving extremely useful in helping people find cars for sale. As mentioned before, anything that helps customers make decisions and prevents them being frightened away from buying new cars is a positive step for the market.

Mr Worrell added: "Manufacturers should look to advertise more effectively online by targeting people who are most likely to buy their cars. This may sometimes challenge received wisdom about target audiences."

While the study showed that the internet is being used as a growing tool for researching what cars consumers are buying, the survey did show that cars are still being purchased face to face in a forecourt. However, now consumers now know their stuff and are less likely to be put off by pushy salesmen.

Well over half of respondents said that they purchase from a main car dealer, a fifth buy at other dealers and garages while a mere three per cent buy cars through online auctions, sales sites and internet sites.

With the last word, Mr Worrell said: "Manufacturers should look to advertise more effectively online by targeting people who are most likely to buy their cars. This may sometimes challenge received wisdom about target audiences but it is where the power of digital advertising and actionable insight can produce results for automotive brands."

So while the car industry may not be motoring fully at the moment, it is still on course to remain stable even though it may not hit top gear and record sales similar to those in the halcyon days of 1993. Trends change, products change and consumers change; it seems even the world of motoring is not immune to that.

28 Sep 2011