Cazana’s new website to help the war on COVID-19

Introducing KeyworkerGarages.co.uk

The team at Cazana today launched KeyworkerGarages.co.uk  to help all those who are on the front line fighting COVID-19 stay mobile during these unprecedented times. This is a free website that contains vital information on the service centres that are still offering motor support services to key workers.

If you are an NHS worker, police, delivery driver etc. in need of vehicle services (maintenance, repair, tyres etc) all you need do is enter your postcode and the website will show you the nearest open service centre including opening hours and contact details to get your vehicle booked in as soon as possible.

Despite many business shutdowns, there are still millions of keyworkers, volunteers and support staff who need their vehicles repaired and there are a number of service centres staying open to support this group and willing to help! The team at Cazana have collated the data of open service centres from their partner dealers that remain open. Cazana encourages any centres not listed to submit their details on the site and help us to keep this website up to date to give keyworkers a definitive list of locations that can help.

Tom Wood at Cazana commented:

“This is a challenging time for both the automotive industry and all those who are on the front line fighting this pandemic and we wanted to do something as a team to help both the nation’s essential keyworkers and the dealer service departments remaining open. I’m massively proud of the team here at Cazana who have been collecting data and have built this new site over the past week with the intention of helping people to stay mobile during this crisis”.

For more information, please visit KeyworkerGarages.co.uk. Please help us get the word out about this website so we can ensure that those who need to be on the road during this pandemic keep mobile.

Cazana’s Rustmap – rusty cars and where to find them

Over the last 6 months, there has been an array of bad weather conditions including one hurricane (Ophelia) and 21 storms in the UK including the more notable ones such as Storm Brian, Storm Georgina and Storm Aileen. All of this rainfall and harsh weather takes an unfortunate toll on our vehicles.

With this in mind, we have searched the extensive Cazana database and highlighted the counties in the UK that have the highest proportion of rusty cars, and identified which are the most rust prone. This was identified by looking at the volume of cars that have rust and corrosion warnings noted on MOT data.

It will come as no surprise that 5 of the rustiest counties for car owners in the UK are situated in Scotland where the weather conditions can often be harsher.

Top 10 rustiest counties in the UK for car owners

Here you have it, the worst offending counties for rusty cars.

Another unsurprising fact is that the top 3 counties with the highest proportion of rusty cars are close to the sea. While living close to the ocean may look stunning and have so many wonderful perks, unfortunately, it can be a tougher environment for cars. Certain environmental factors such as salt and fog near the coast can cause rust on a vehicle and accelerate vehicle corrosion.

  1. West Dunbartonshire, Scotland
  2. Fife, Scotland
  3. Northumberland, North East England
  4. Roxburghshire, Scotland
  5. Banffshire, Scotland
  6. Midlothian, Scotland
  7. Herefordshire, West Midlands
  8. Durham, Central England
  9. Lincolnshire, Central England
  10. Yorkshire, Northern England

Other counties that are high on the list include Lanarkshire, West Lothian, Angus and Flintshire. There is a clear pattern of either being close to the sea and somewhere where the weather conditions are tougher.

The counties with the lowest proportion of rusty cars

So in contrast to the list above, the counties with the lowest volume of rusty cars are mostly in the south and Wales.

  1. Antrim, Northern Ireland
  2. Middlesex, South East England
  3. Hampshire, South England
  4. Oxfordshire, South East England
  5. Surrey, South East England
  6. Denbighshire, North East Wales
  7. Kent, South East England
  8. Caernarfonshire, Wales

The top 10 rustiest cars in the UK

It’s surprising to see the nations favourite Ford Fiesta on here and not only that but it is top of the list. With so many on our roads and often older it is possible that they are also less well cared for. Land Rover and Jeep, however, are not as surprising to see on this list as they are often used heavily in off-road conditions where water and dirt are commonplace.

  1. Ford Fiesta
  2. Vauxhall Corsa
  3. Land Rover Range Rover Sport
  4. Ford StreetKa
  5. Toyota Rav-4
  6. Jeep Wrangler
  7. Volkswagen Polo Hatch
  8. MINI Hatchback
  9.  Ford Ka
  10. Fiat Grande Punto

What are the main causes of rust in vehicles?

rusty car in the sea

Rust is the reddish-brown/yellow colour that coats iron or steel when exposed to air and moisture. Our vehicles can be a big investment and financial commitment and to ensure we protect them we need to first understand what the main causes of rust are.

  • Location  

As fun as living near the coast is, as we mentioned above, it can take a toll on your car. Both the salt and moisture (water) in the air can cause vehicles to rust. Therefore it is no surprise that 6 out of the top 10 rustiest counties in this list are close to the sea.

  • Salt

Most road users in colder places will use salt to get rid of ice and snow from their vehicles and it is also used extensively to keep the roads clear. However, lengthy exposure to salt can be harmful to vehicles and make them more susceptible to corrosion as it gets caught in the nooks and crannies of the car.

  • Weather conditions

As we already mentioned water and moisture is a big cause of rust on and in cars. Rain, snow and fog are big factors in why our cars rust and corrode over time.

  • Neglect

Like anything in life if we ignore a bad situation it will eventually get worse. Not checking your car regularly and not keeping up with maintenance and more important cleanliness will cause minor instances of rust to flourish and turn into more serious issues.

Top 6 ways to prevent rust in vehicles

prevent rust in vehicles

  1. Regular maintenance. This may sound obvious but keep up with regular repairs as it can make all the difference when something is caught early.
  2. Inspect your car regularly and act on what you find covering body scratches and dings as quickly as possible
  3. Wash your car regularly. Make sure wheel arches and the underbody are regularly cleaned.
  4. Keep your car in a sheltered area. If you are lucky enough to have a garage or sheltered area to park make sure you use it to help protect your car from harsh weather conditions. If you don’t have a sheltered place to park then consider getting a car cover.
  5. Wax. Get your vehicle waxed twice a year (especially if you live near the seaside) and consider having a body protection treatment added.  
  6. Keep the inside of your car clean too. Don’t just wash the outside of the car, keep the interiors clean as well especially during Winter when there is more salt on the roads.

Cazana Weekly Retail Price Watch

The last two weeks Retail Price Watch reports have given the industry an invaluable view of the retail pricing activity taking place in the UK automotive market. Cazana has previously looked at the number of newly placed adverts in the UK market nationwide and reflected the pricing levels of those new adverts in comparison with the previous week. As the country is now two weeks into the lockdown period, and with no auction or wholesale activity taking place the number of new adverts placed has all but stopped, rendering this view of the market redundant.

However, where other traditional valuation providers no longer have any data on which to base their output as the auction halls lie silent and logistics operations are similarly dormant, Cazana are the only business in the UK that looks at all the retail data across the UK market as a whole rather than just as an individual retail advertising platform from a retail pricing perspective on a real-time basis and are able to review what is happening with the retail pricing of vehicles currently showing for sale. Therefore, going forward this Weekly Retail Price Watch will focus on pricing shifts based on all cars currently showing as available for sale in the market and will be compared against the previous week.

Where many initially expected pricing to remain completely static, the reality is somewhat different as dealers realised that the retail buyer was still looking at, and in some cases reserving and buying cars online.

The data displayed in the first chart looks at average pricing performance for petrol cars by market sector for the whole retail market between the period commencing on April 1st and the previous period commencing March 25th .

Whole-Market-Retail-Pricing-Movement-by-Market-Sector-7-Day-Period-0104-against-Period-2503

Data powered by Cazana

The chart reflects the fact that there was a 0.24% decrease in retail pricing for petrol-powered cars across all market sectors. Given that the average price across these sectors is £19,529 this means that the price shift was £47 car. Of specific note was the decrease of almost 1% for the F sector or luxury car market where the average price was £40,918 meaning a price shift of £396 per car.

Looking by diesel propulsion and the retail pricing movements have been negligible with an average drop of 0.01% across the sector. The largest move has been for retail pricing in the C sector or small family cars at 0.29% or £35. This reinforces the strength of diesel car demand in the market and is a relevant point given that diesel-powered cars are not popular in the new car market right now. It is also worth noting that C Sector cars account for 7.9% of the total used car market as seen in the next chart: –

Whole-Market-Diesel-Retail-Pricing-Movement-by-Market-Sector-7-Day-Period-0104-against-Period-2503

Data powered by Cazana

The petrol-hybrid propulsion type remains reasonably new in the market when compared against petrol and diesel and the volume of data is therefore lower, although market penetration is and will continue to increase. The average movement for this fuel type week on week was a decline of 0.85% as shown in the chart below:-

Whole-Market-Petrol-Hybrid-Retail-Pricing-Movement-by-Market-Sector-7-Day-Period-0104-against-Period-2503

Data powered by Cazana

This fuel type is not represented in every market sector and there are no A sector hybrid mini cars in the market. The largest move in for this fuel type came in the S sector and at 0.6% downwards represented a reduction of £309 per car with the D sector close behind with a 0.53% reduction or £105 per car.

The chart below depicts the retail pricing performance of BEVs in the market in the last period and it is clear that there is great stability in pricing:-

Whole-Market-BEV-Retail-Pricing-Movement-by-Market-Sector-7-Day-Period-0104-against-Period-2503

Data powered by Cazana

Where last week’s BEV data that reported on newly listed adverts showed some significant volatility it is clear that the market as a whole has a great deal of consistency. At an average price of £29,035 across the market, movements here can reflect a large pound note difference. The A sector or Supermini shift of 5.6% downwards means a change of £615 although this will be across a small number of cars.

This BEV position is not a surprise given the low volumes of total vehicles in the market and the volatility seen beforehand was symptomatic of small quantities of very different individual cars coming new to the market. This will be an important sector to watch post lockdown as there are conflicting anecdotal reports of a wide variance in retail consumer interest.

In conclusion, retail pricing is still moving, and it is vital to remember that whilst actual sales are largely paused, there is no need to be turning the position into a “race to the bottom”. Retail consumers still search for cars and the indications from the reopening Chinese market are that sales will pick up swiftly post lockdown. Therefore, watching competitor shifts in retail price are imperative over the coming weeks to ensure a quick return to trading profitably.

-Ends-

Vehicle Pricing and Valuation in the Modern Auto Retail Industry

For many years vehicle valuation methods in the automotive industry have remained largely similar relying on looking at small volumes of historical data overlaid with a human element of subjective editing to effectively create short and long term forecast data. The frequency of valuation has depended on the asset type, and in some markets, this meant a valuation of the asset every three months. This methodology was considered fit for purpose for many years and taking wholesale data as the start point the industry worldwide had created a measuring point for historical, current and future valuation and forecast activity that has been relied on by anybody involved in the production, sale, rental, financing and insurance of vehicles.

Cazana came to the market in late 2017 as a disruptor to the industry and have revolutionised the way that vehicles are valued, priced and forecasted bringing the industry standard right up to date.

Vehicle Pricing and Valuation in the Modern Auto Retail IndustryUsing the largest available data set, the retail market, up to the moment in house developed technology looks at the whole market not individual advertising platforms to ascertain retail asking prices by individual VRM and specific model and range impulses.

In today’s commercial environment where technology and automation can assist, it is no longer acceptable to look at anything other than whole market data. Using retail back methodology Cazana acknowledges and replicates the way in which the industry now works. What’s more the Cazana technology is operational twenty-four seven to ensure that the very latest pricing is used on a real-time basis to bring the best, most accurate insight to the industry and the growing database of Cazana customers.

Using this technology means that Cazana see over 20 million pricing points during the course of each year, more than anyone else, helping to understand where cars are advertised, their pricing journey to the point of sale and identifying exactly what price attracted the buyer of each car to the dealership. The pricing data is put through a rigorous and self-testing data science and modelling process to ensure that all pricing influencers are accounted for before the pricing and market insight is compiled and then incorporated into award winning SAAS based products and API’s ready for use by todays automotive industry professional.

In today’s environment where COVID-19 has halted wholesale operations and reduced used car sales activity to just online reservations and transactions, our competitors have had to cease provision of their pricing insight as they have no information on which to base their market assessment. However, retail pricing is still moving as dealers jostle to ensure that their online shop window remains operational and their vehicle pricing in line with commercial strategies ready for the cessation of the lockdown and the resumption of trading.

This means that whatever sector of the automotive industry you operate in, unless you have Cazana data you are at risk. With no transparent and fact based view of pricing movements dealers cannot be sure of their position in the market, finance companies will be unaware of the changing risk level of their asset registers and current future forecasts on which they base their HP and PCP products whilst insurance companies will be unclear of vehicle values for both the proposal and accident valuation procedures.

COVID-19 has significantly changed the way in which society interacts and, in the process highlighted the danger for the automotive industry of reliance on limited data sets with manual valuation and forecasting procedures. When the lockdown is over and used cars sales restart, Cazana customers will already know where their pricing sits in the market and what their stock and asset risk levels are like and will ultimately be ready to embrace the opportunity that post lockdown trading will present quicker than some others from day one.

Cazana Weekly Retail Price Watch

March 2020 – Weeks 3 and 4

After a week of lockdown, the country is beginning to get used to the restricted movement enforced on most of the population with keyworkers such as the NHS and transport industry the only ones permitted to travel due to the essential nature of their work. However, the automotive industry whilst closed in the majority for the time being is still active. Senior management teams are working at new sales operations strategies and some pricing teams are keeping prices moving to remain competitive in the market.

With no wholesale activity currently taking place, other valuation providers are prevented from seeing what is currently happening in the market. However, with limited online used car sales activity and constant pricing realignment Cazana remain in a position to keep the UK automotive industry abreast of market shifts during these complex weeks.

The data displayed in first chart looks at average pricing performance for petrol cars by market sector for new retail adverts placed between week 3 and week 4:-

Petrol-Retail-Pricing-Movement-for-New-Listings-by-Market-Sector-March-2020-Weeks-3-to-4

 

Data powered by Cazana

The chart shows that for new petrol car adverts prices have been on the move. Unfortunately, this is a downward shift of on average 2.8% although the chart highlights the sectors facing the greatest challenges. There are marked declines in the lower volume higher-priced S or Sports sector with a perhaps surprising 6.6% dip for the D or Large car sector and also a noticeable 9.2% drop for new retail adverts for the J or SUV sector.

Looking by diesel propulsion and the retail pricing movements have shifted since last week’s data with an average drop of 6.2% across the sector. This drop has largely been impacted by a large drop in the J or SUV sector pricing which is a similar position to the petrol retail pricing. However, it is interesting to note that all sectors other than A sector Superminis cars have recorded a downward movement as seen in the next chart: –

Diesel-Retail-Pricing-Movement-for-New-Listings-by-Market-Sector-March-2020-Weeks-3-to-4

Data powered by Cazana

It is wise to remember that the A sector accounts for just 0.02% of the total market and the J sector 15.6% down by 2.59% from the previous weeks data.

Data for Hybrid propelled vehicle by sector is lower in volume by far, although the following charts give a view of what is happening in the market. These fuel types do not have representation in all market sectors and particularly not when looking at new retail adverts on a week by week basis:-Petrol-Hybrid-Retail-Pricing-Movement-for-New-Listings-by-Market-Sector-March-2020-Weeks-3-to-4

Data powered by Cazana

The average retail price movement for this sector is a drop of 5.8% over the previous weeks new listings. Once more one of the biggest shifts has come from the J or SUV sector with a drop of 6.9% and in this fuel category, this accounts for 0.74% of the total market. It is important to note that this is the largest market sector for newly listed petrol hybrid cars.

For the BEV market, the volume of data is also an issue as can be evidenced by the performance in the J Sector in the chart below:-

Data powered by Cazana

This data BEV is very volatile and with new retail advert listings reducing this should not come as a surprise. Although it is of note that once again the J or SUV sector has been the biggest mover in terms of the drop in retail price. This may well be a common trend in the coming weeks and will need to be monitored. This sector includes the compact 4×4 or crossover SUV sub-sector and there have been concerns and warnings over what has been happening in volume terms for some time.

In conclusion, retail pricing is still moving for the reasons outlined in the opening paragraph as businesses jostle for the most competitive online presence for the myriad of retail consumers currently confined to their homes and relying on the internet to research new and used cars. This position will continue and the need to understand what is happening with retail pricing will be a critical part of the current market.

It is vital to remember that whilst the market is paused, there is no need to be turning the position into a “race to the bottom”. Retail consumers are still there and watching what is happening. Arguably they will have money to spend once the lockdown is relaxed as they will have been trapped at home not spending much for a sustained period of time. Once the market reopens there is a genuine opportunity to move swiftly into selling more cars and with a very limited wholesale expected for several weeks it is possible retail pricing will in fact increase for some cars.

Cazana’s Dealer Survival Guide

1. Stay Safe

Abide by the Government rules and close your dealership to help stop the spread of COVID-19 and keep your staff and customers safe. Exceptional circumstances permit the service department to open and help key workers remain mobile so, where this is absolutely necessary to maintain social distancing and help keep those that will care for us mobile. Remember that the government have pledged support for the economy and specifically for the industry, so take time to see how they will help your business through this unprecedented national emergency.

2. Plan Ahead for the Future

With enforced shutdown there is an opportunity to strategize for the coming months. Consumer buying patterns will be different and social distancing is likely to require different operational procedures to keep the business running and the economy moving. Make sure you are ready for when the lockdown is lifted and focus on your online presence and online selling capability.

3. Keep in Touch with Your Customers

Right now, there are millions of people that are trapped at home and in some cases unable to work. The need for something to do is going to increase and for many, they will turn to the internet to keep themselves occupied. People are likely to be looking for something to reward themselves with after the pandemic has subsided such as a holiday or leisure goods and also a new car. Make sure that you are tailoring your digital marketing and social media messaging to stay in front of those past and future customers with messages of support, hope and deals for the post lockdown market.

4. Keep Pricing Competitive

With showrooms closed your shop window is the internet. Sales will have stopped but the market will come back and in the interim, it is essential to maintain your shop window and keep your vehicles priced right for the market. There is no need to slash pricing as there is no stock to replace what you have and when the lockdown ends used car supply will take several weeks to recover as supply chains ramp up. However, there is a need to maintain awareness of how your product is placed in the market and what level pricing needs to be at post lockdown. Keep ahead of the game and be ready.

5. Use the Best Insight and Pricing Data Available

It is vital to use the best and most relevant pricing and insight available to be ready for the new market. Cazana works with live realtime retail driven insight to ensure stock is priced in line with retail prices. Most valuation providers supply trade driven manually edited values that are sometimes enhanced by a low level of historic retail information. To be clear, the auctions are closed and therefore competitor data will be based solely on subjective edits. Cazana data is based on what is happening to retail pricing every day direct from the market. A successful business in today’s market needs fact-based insight and pricing.

COVID-19 Brings Time for Reflection and Online Strategy

With the UK in the early stages of the COVID-19 pandemic, the country is experiencing unprecedented changes to daily life. The shifts in the way that the population can sustain themselves and lead their daily lives are having a profound effect on the economy as a whole and the retail sector in particular as social interaction has been changed to prevent the spread of the Coronavirus. The move to a national lockdown has been anticipated for some days and as such the coming weeks will be very difficult as the country monitors the spread of the virus both at home and abroad.

The automotive industry will be significantly impacted, although life does continue albeit with significant changes to how people and businesses can interact. One of the key challenges is understanding what is happening in the automotive market and being able to react to market changes swiftly and effectively. Cazana is in the unique position of being able to help the industry, and specifically the dealer sector, to identify shifts in retail demand by providing market-wide insight based on the true market driver – retail pricing. With auctions now closed and the trade transactions used by many vehicle valuation data providers no longer available, the vulnerability of basing stock values and finance books on subjectively created pricing data is greater than ever.

The chart below gives an indication of how newly listed vehicles have seen pricing change for the petrol powered sector of the market over a week long period: –

With the UK in the early stages of the COVID-19 pandemic, the country is experiencing unprecedented changes to daily life. The shifts in the way that the population can sustain themselves and lead their daily lives are having a profound effect on the economy as a whole and the retail sector in particular as social interaction has been changed to prevent the spread of the Coronavirus. The move to a national lockdown has been anticipated for some days and as such the coming weeks will be very difficult as the country monitors the spread of the virus both at home and abroad. The automotive industry will be significantly impacted, although life does continue albeit with significant changes to how people and businesses can interact. One of the key challenges is understanding what is happening in the automotive market and being able to react to market changes swiftly and effectively. Cazana is in the unique position of being able to help the industry, and specifically the dealer sector, to identify shifts in retail demand by providing market-wide insight based on the true market driver – retail pricing. With auctions now closed and the trade transactions used by many vehicle valuation data providers no longer available, the vulnerability of basing stock values and finance books on subjectively created pricing data is greater than ever. The chart below gives an indication of how newly listed vehicles have seen pricing change for the petrol powered sector of the market over a week long period: -

Data Powered by Cazana

Whilst this chart is just a snapshot of retail pricing in the consumer market, it highlights that generally speaking, retail pricing is on a downward trend as buyers have restricted their mobility as the crisis has worsened. In fact, between weeks 2 and 3 of March retail pricing dropped by 6.6% overall as dealers sought to entice buyers to the forecourts.

However, the enforced lockdown is a gamechanger and dealers will have now closed their physical sites, and operations will be curtailed for an expected three-week period. On a positive note this provides an opportunity for strategic planning and preparation for when the country begins its journey towards normality.

The most important thing is for the dealers to remain focussed on communicating with their current and future customers. Whilst marketing spend may need to be reduced, it is wise to remember that many people will be stuck at home with just the internet for company. Some will be looking forward and seeking inspiration and reward for the end of the lockdown period and for many that will mean a new car, so ensuring that pricing is consistently right and the marketing messaging on point is essential.

This period should also be used to consider the short to mid term future of car retailing and there has already been a great deal of discussion in the past few months about the entry of the likes of Cazoo, Heycar and Carzam to the market. Where this type of online car sales operation failed in the past and even major brands such as Tesco, Virgin and Autoquake could not make it work a decade ago, the retail market has been shifting slowly towards online car buying. There is no doubt that even when the lockdown is rescinded the public will still need to practice an element of safe distancing and therefore online retailing is likely to see a more pronounced growth.

The key is to be ready to embrace this potential market upturn and be part of the movement rather than sitting on the side-lines. Transparency on the vehicle description, condition, delivery and post-sale customer service are essential to gain customer confidence on what is often the second-largest purchase a consumer will ever make. But above all, pricing is the crucial driver that will bring customers to view your online presence. Online retailing is all about getting the eyes of the customer and making sure dealer stock matches retail market demand. The car must be advertised at the right retail price to attract the customer in the first instance and that is what will make the difference between selling a car or not.

As such whilst the next few weeks will be quiet, this period must be treated as an opportunity to shine in the coming months. This is the chance to use realtime data to watch the market and prepare for the resumption of sales although the route to market will need to be different, safe and enticing at the same time.

Cazana Weekly Retail Pricing Insights

With the UK in the early stages of the COVID-19 pandemic, the need for greater understanding is critical whether this is from a business or personal perspective. As Cazana is the only automotive data supplier capable of looking at full market retail-driven pricing data on a realtime basis, this is the first of a weekly insight delivery designed to help our industry understand what is happening in the retail market and therefore how the wholesale sector and trade pricing will respond.

The data displayed in the first chart below looks at average pricing performance for petrol cars by market sector, for new adverts placed between week 2 (week commencing 9/3/20) and week 3 (week commencing 16/3/2020) :-

Petrol-Pricing-Movement-for-New-Listings-by-Market-Sector-March-2020-Weeks-2-to-3

Data powered by Cazana

The chart is clearly showing that petrol pricing across all market sectors has declined. The biggest move has been for the F Sector or Luxury car segment which may not come as a surprise as these buyers can be fickle and sometimes the first to require incentivisation to buy, although a retail price dip of 16.96% seems very significant. The second largest move is for the E Sector or Executive sector and at 7.33% it is still a significant move although with a similar buyer demographic. The third largest mover is the A Sector which is the Supermini cars and at 5.87% is a more direct reflection of the market consensus.

It is worth noting that the volume of cars for all three of the heavily affected sectors has not increased and total market sector representation for these has dropped by less than half a percentage point on the previous week. It is the small car market or B Sector that has shown the greatest stability with pricing down by a touch over 1 percentage point whilst there has been a half a per cent increase in the market share.

Looking at diesel propulsion and the pattern is very different. The following chart shows how the retail pricing for diesel cars moved from weeks 2 to 3 of March 2020. The first thing to note from this chart is that retail pricing for newly advertised diesel products has increased in all sectors except the Lower Medium C Sector. This is an interesting trend given the perceived negative perception of the fuel type, and the current COVID-19 induced trading position: –

Diesel-Pricing-Movement-for-New-Listings-by-Market-Sector-March-2020-Weeks-2-to-3

Data powered by Cazana

The A Sector or Supermini segment shows the biggest positive uplift at 24.71% in retail pricing terms which is an enormous move. It is wise to acknowledge that diesel power accounts for just 0.05% of the newly advertised vehicles from a market share perspective where petrol powered cars dominate and as such the volume is very low.

The other significant movement comes from the F Sector or luxury car segment which shows the second largest positive uplift at 11.3% in retail pricing terms and as such the opposite of petrol-powered car performance in this segment. This suggests that perhaps volume has a part to play in this outcome, although from a volume perspective this would appear not to be the case as market penetration is resting at just 0.35 percentage points over the previous week. Therefore, it is likely that the profile of the stock being newly advertised has changed.

Data for Hybrid propelled vehicle by sector is lower in volume by far, although the following charts give a view of what is happening in the market. These fuel types do not have representation in all market sectors and particularly not when looking at new retail adverts on a week by week basis:-

Petrol-Hybrid-Pricing-Movement-for-New-Listings-by-Market-Sector-March-2020-Weeks-2-to-3

Data powered by Cazana

Looking by market sector at Petrol Hybrids and it is evident that there is perhaps more retail pricing stability than with other fuel types. This is encouraging and likely to be due to the lower volume of cars in the market matching demand more closely. For this fuel type, market penetration runs no higher than 1.26% for the J Sector SUV vehicles. The F Sector – Luxury cars and S Sector – Sports Coupes have a market penetration of less than 0.04% and as such large shifts in the data are to be expected.

For the BEV market the volume of data is also an issue as can be evidenced by the performance in the D Sector in the chart below where retail pricing has moved by 144% week on week.

BEV-Retail-Pricing-Movement-for-New-Listings-by-Market-sector-March-2020-Weeks-2-to-3

Data powered by Cazana

However, it would appear that generally speaking the trend is downwards which is interesting as this could imply that demand is falling overall. This would be considered a disappointment given the need to transition to this propulsion type although perhaps a refection that to embrace this technology takes research and time with the dealer and the car to understand how it will suite the retail customer, an approach not conducive to social distancing.

In summary, the market has seen a big reduction in the number of customers coming into the dealership. Dealerships will have to reach out in a different way and this will be key to keeping sales moving in a difficult market. Transparent understanding of what is happening in the retail market as swiftly as possible will be a critical lifeline. In overall terms, Retail Pricing for newly listed cars has dropped by 6.6% between the second and third week of March representing a dip of on average £1491 per vehicle where the average price of a used car across all sectors was £22,832 and now rests at £21,341.

 

Cazana’s Used Car Market Update for February 2020

February 2020 was a month of conflicting views and challenging events that have brought varied levels of discussion and performance across both the new and used car sectors. Essentially, new cars were moved into the market in one way or another, and the used sector has benefitted from a shortage of stock for certain older vehicles that had seen wholesale buyers struggling to find the right cars to meet consumer demand.

The February new car market registration data revealed a disappointing month with figures declining by 2.9% over the same period in 2019, taking the year to date figure to 5.8% behind 2019. This may have been a bit of a surprise to some but perhaps reflected the fact that last year some manufacturers were pushing new car activity harder than they were this year. The private market was the slowest sector with registration volumes down 7.4 percentage points whilst the fleet market showed a nominal increase of just 0.1 of a percentage point. There was an expectation that business car sales would have been stronger, given that there is some pent-up demand and that new car availability of key fleet models is better than it has been for some time.

In both sectors, the new car market performance is contradictory to the recently published economic confidence levels shown in the chart below :-

Consumer Confidence

Consumer Confidence

 

Data Courtesy of Trading Economics

This chart shows consumer confidence at its highest level since the third quarter of 2017, and this would suggest that registrations should probably have been better than they were. However, the reality has been interesting, and some are keen to point out that the slower sales rate could well be due to the COVID-19 concerns, although at this point it is more than likely because of the number of pre-registered and late plate cars in the market. The pricing advantage these have over new cars is thought to have drawn retail consumers away from the new market.

With new car activity lower than expected, the used car market and pricing perspective in the chart below shows the performance of retail pricing as a percentage of original cost new at key age and mileage profiles during February against the same period over the last three years: –

Full-Retail Market Performance

Data Powered by Cazana

It is important to note that pricing performance has been particularly stable across all profiles with a minimal 1 percentage drop across all sectors. This is reassuring to say the least and confirms that there is strength in the used car market and more in line with the consumer confidence data. There is qualification that across most sectors 2019 was the strongest year, and this will be an interesting trend to monitor over the course of the year and a position that as the months pass is likely to change. The chart also highlights that the ex-fleet profile appears to have been most stable over the last 2 years.

The fleet market is also going to be an interesting area to watch over the coming months, and this is because of the underlying need to change business cars that had their contracts extended during the period of economic uncertainty in 2019. There is little doubt that new car sales will move upwards which will inevitably bring more used examples back to the market, and the remarketing of similar product over the coming months will become more challenging as a result. Given that this is the area of potential concern at the moment, the next chart looks at the performance of ex fleet product over the last 12 months: –

Ex Fleet Retail Pricing Performance as a of Original Cost New for the Last 12 Months

Data powered by cazana.com

The data shown reflects the stability of the ex-fleet product over the course of the last year. Most obvious is the fact that the retail pricing trend has been almost exactly the same for both age and mileage profiles. Both profiles show a market low point in August 2019 and this might have been due to an influx of used cars coming to the retail market. However, new fleet car registrations were down in both July and August 2019, and Cazana used car market data shows that the volume of used cars in the market was down 28 percentage points so perhaps the drop was due to seasonal demand, although political influences are probably the root cause.

The chart also shows that the 4-year-old ex-fleet car has been marginally more stable over the course of the year with a consistent 38% of original cost new maintained from February 2019 to February 2020. The more prevalent 3-year-old profile saw a 1 percentage point decline over the same period resulting in a slight compression on pricing profile performance.

Last month, Cazana pricing data revealed that the late plate 12-month-old sub 12k profile had seen some potentially worrying pricing movements for petrol cars. It was established that this was largely due to the volume of cars that had been forced into the dealer networks as part of a concerted pre-registration activity. Many of these were petrol powered and these cars were in part excess stock pushed to the UK by OEM’s who believed, and may still do so, that the UK consumer is fixed on buying petrol models.

This fixation on the shift to petrol is worrying as it potentially shows a lack of understanding of current market demand coupled in all likelihood with the inability to produce enough hybrid and electric vehicles, which as widely publicised is being pushed as the future by government commitments to climate change. With VED changes, CAFE target management and changing emission legislation, this year may well see some challenging monthly retail pricing movements, thus highlighting the need for real-time pricing insight.

The chart below looks at performance of the sub 12 month and 12k profile over the course of the last year split by the dominant fuel types:-

Petrol and Diesel Retail Price Performance as a of Original Cost New

Data powered by cazana.com

This chart clearly highlights two periods of retail price fluctuation with the January 2020 dip some 3 percentage points less severe than in September 2019. Monitoring this market behaviour will be key to ensure market saturation does not adversely impact on margin, and that dealers are empowered to make the right decisions when pricing cars for the retail consumer.

Therefore, it is clear that the February market was not as calm and straightforward as would have been liked or indeed as anticipated. Retail buyers were there and the used car market was for many more important than anticipated. As March unfolds, the country is facing a potential pandemic and all the social and economic difficulties this rare event brings. The latest support in the form of a drop in the bank base rate may not be the solution that the population need in terms of halting the spread of COVID-19, but it could help to try and maintain a stable economy.

Cazana’s truly live retail-driven data is unique in providing up to the moment market insight and intelligence being driven from over 25,000 websites each day in the UK alone. Seeking more focused information relating to specific market sectors or time periods ensures maximum vision and the most comprehensive insight required to maximise profit, ROI and asset management. With market conditions continuing to change by the day, top quality, up to the minute, commercial data identifies market variations quicker than any other data provider and are vital to ensure modern automotive organisations are in a position to make the most effective strategic decisions.

Cazana 2020 Market Forecast

With 2019 a fast receding memory, the automotive industry is looking forward to a more balanced year. Despite a decline in new car registrations, many consider the 2.4% drop to have been a fairly good result given the backdrop of political, social and economic factors that challenged every sector of the industry and made planning and forecasting difficult whilst also pressuring margins harder than some had anticipated.

The drivers behind the 2019 performance were very clear, and concerns over Brexit and the performance of the government during the 12-month period were key to the overall economy and specifically, the industry performance. If there is any consolation to be had, then it has to be recognition that the UK automotive sector out-performed other retail sectors. Where consumers fought shy of spending money on other big-ticket items, buying a replacement car whether new or used, appeared to be less of a concern to Joe Public. This decision-making process was largely driven by enticing finance offers and the fact that many buyers whether private or fleet had been holding off changing their cars for some time and felt that they needed to make the change.

However, it was not an easy ride and it rapidly became clear that whatever the business focus, the need to look at big data to understand real market conditions is essential. As a disruptor to the market and providing factual, unedited science-driven insight, Cazana have been right in the centre of what can only be described as the beginning of a paradigm shift, where all parts of the industry acknowledge that basing their commercial strategy and vehicle pricing on manually edited data referenced on historical information, is just not good enough to stay ahead of the consumer and maximise profit opportunities.

When contemplating the coming year, the first thing to consider is the confidence levels for 2020. These will give an indication of how both consumers and businesses anticipate the journey through the coming months. The chart below shows Business Confidence from 2017 through until 2021.

Business Confidence Forecast

Business Confidence Forecast

Data Courtesy of Trading Economics

This is an important indicator for the coming year and illustrates the rising confidence in the latter part of 2019 which came as a result of the election and the subsequent knowledge that the UK would indeed complete Brexit. An interesting aspect of this chart is that confidence is set to drop again as we near the end of the year. This is due to concerns over exactly how well the government will manage to negotiate new trade deals with our European neighbours. There is also scepticism over the speed with which other world trading agreements may be negotiated.

The chart below shows the pattern of Consumer Confidence from the beginning of 2019 through until the end of 2020:-

Consumer Confidence Forecast

Consumer Confidence Forecast

Data Courtesy of Trading Economics

This chart shows a slightly different picture. After an eventful 2019, the first half of the year is likely to see confidence stabilise before it dips and then refreshingly rises again through to the beginning of 2021. This is a different viewpoint to the business sector and may come as a surprise to some, although it clearly shows that 2020 might well be a good year in the eye of the consumer. As such, it would be sensible to create a plan to capitalise on this sentiment, especially in the early part of the year in case predictions shift to replicate the business sector forecast as the year progresses.

It is also important to understand that despite positive forecasts, registrations and sales can only be achieved if there is the right supply of cars. 2019 saw peaks and troughs in new car supply predominantly driven by legislative requirements and the influence of European demand. 2020 looks to be a more stable year, although, this will be dependent on future legislation in the form of clean air zones and perhaps taxation, as the Prime Minister begins to push for cleaner air for all. However, the used car market is likely to have a greater supply of cars as a result of the short-term PCP and PCH activity over the last 3 years or so, which is why used car sales are likely to improve during the course of the year. Used car finance products will continue to evolve and more accurate science-based forecasting will facilitate higher future RV’s and therefore better lower monthly costs. This will be necessary to keep the market moving.

The push towards the ban on the sale of fossil fuel powered cars from 2035 certainly took the industry by surprise, and later comments from the transport secretary hinting that this may come closer still have worried the industry as a whole. Whilst CAFE regulations will continue to encourage OEMs to manufacture cleaner cars in fear of financial penalty, and hybrid models become more prevalent, the real push must be towards BEVs and therein lies the problem. Expect 2020 to be packed full of new hybrid model launches but remember this is a transitionary phase and these cars will swiftly be replaced by more efficient models that give better electric driving ranges. This is great but the desirability, and as such pricing of these hybrid vehicles in the used market, will fall quickly as the new technology improves and that will begin to become problematic as the reality that these cars do not meet the expectations of the consumer in the real world also hits home.

The pressure to develop better BEVs and ramp up production to provide a sustainable growth plan to meet the 2035 target, will also be a big part of 2020. However, this activity is already causing problems. Whilst building cleaner vehicles is an important goal, there has been a limited acknowledgement of the damage and pollution required to source the raw materials. In addition, the fabrication of the actual battery is not a fast process and there are already reports of a lack of the Lithium required to build them at a rapid pace. At this early stage of the adoption of the BEVs, this is not a good position to be in. The direct impact on the new car market is likely to be a shortage of product which could drive new car pricing even higher. This impact on pricing will then feed the used car market and as consumer demand improves during 2020 there is an expectation that retail and therefore trade pricing will rise for those propulsion types.

The chart below shows pricing movements for hybrid and electric cars over the last year:-

Data powered by Cazana

The chart confirms that retail and therefore wholesale pricing is on the up for all ages of hybrid vehicles, whilst only the newest BEVs are increasing. Expect this to change during 2020 with greater demand for the newer BEVs, whilst hybrid pricing may start to fall as supply exceeds demand.

The other issue facing BEVs is the lack of a charging structure to support the volume of cars required to meet the 2035 goal. Indeed, looking more deeply, there is also the concern that the power providers will not have enough capacity to address the increase in electricity required to keep all these new BEVs charged and on the road, but for 2020 the infrastructure will see a significant increase in the number of charging points. This is essential and will prove quite difficult in urban areas, and as yet there is no real solution for the 30% or so households that have, and will not be able to have viable access to road or kerbside charging points.

Focusing a little more closely on the used car market and there are a couple of specific areas of concern for the coming 12 months. New car registrations have been falling but as part of the drive to keep momentum in the market and cars on the road by way of the explosion of PCP finance penetration in recent years, these cars may be about to bite back. Specific activity in 2017 and 2018 from most of the OEMs means that in 2020 a significant number of ex PCP cars will be heading for the used car forecourts. It is crucial to not only be aware of the impending increase in returns but also to understand that there was a significant push on certain types of cars. Therefore, in 2020, expect to see an increase in the number of Crossover SUVs and small cars at 2 and 3 years of age. Given that the new car market will be more of a challenge, there will be more used car buyers but whether they want these types of cars remains to be seen. Working with realtime retail driven data is the best way to understand how the market is shifting, to ensure the buying and retailing processes are aligned and focused on keeping stock moving as swiftly as possible with the best return. There may be some pricing soft spots in the next year!

Whilst on the subject of pricing, the last few years have seen a good level of stability, with strong used car demand keeping pricing steady. That said, at times last year, the excessive pre-registration activity required to move new car stock did result in some downward pressure on late and low mileage cars. This in itself was uncomfortable but it did impact on pricing further down the age range for a short period in September and October particularly on petrol powered cars. Should volumes of certain ages increase noticeably, then there is the danger that pricing will compress where the stock is prevalent and push downwards, thus narrowing the gap for cars on different registration plates. This is of particular concern for petrol powered cars that have already shown a period of pricing weakness in 2019. Therefore, it is important to be aware that this is likely to be a problem in 2020.

To summarise, it looks as though 2020 will be another challenging year although the rewards will be there for those who work with the latest tools and data. Working with realtime market wide insight in tandem with individual performance data is the best way to understand what the market is doing, when it is happening and how it will impact on the bottom-line performance. New cars sales will fall by 1.5% and there may be periods of uncomfortable pre-registration, particularly towards the end of the year. Used car sales will increase by 2.5%, but further development of enticing used car finance propositions will be key to success and using factual rather than subjectively edited data will give the edge required to bring the best options for the consumer to the market.

Cazana are ideally placed to help every sector of the UK Automotive industry by providing high quality realtime retail driven insight that will help improve the return on investment, increase awareness and improve profits. 2020 will be another exciting and innovative year for all.

The Complexity of Valuing Battery Electric Vehicles

The fuel type debate is gathering serious pace and both the retail consumer and the business user are beginning to understand the nature and ease of use of the battery electric vehicle for everyday travelling. Although this has been a while coming, the progress is exactly what the industry needs in the face of rising CO2 levels and in the overall output of BEVs currently in production by the OEMs. SMMT data shows that the UK new car fleet average emission level rose in 2019 for the third consecutive year and now stands at 127.9g/km. With CAFE regulations setting a target of 95g/km, some serious progress needs to be made in the coming twelve months. The latest announcement that the sale of all new petrol, diesel and hybrid vehicles will be stopped 5 years earlier in 2035 is another reminder that the need for change is accelerating.

Whilst the adoption of BEVs will be preceded by the growth of the Hybrid market and a myriad of legislation to pressure the manufacturers into shifting towards emission free motoring at a greater pace, the question of vehicle valuation becomes more important than ever. Some valuation providers base their pricing partly on the subjective feel of what is going to happen in the market in the short term, yet modern pricing needs to be based on factual information and proven data science on a realtime basis to ensure vendors stay in tune with consumer demands.

However, there is a growing problem relating to how the market will keep abreast of the pace of technological change. Given that the industry is already struggling to cope with the speed of technological advancement with both Hybrids and BEVs, there is at least the security that the identification of the exact vehicle is straightforward. As the industry moves towards cloud-based, over-the-air updates to engine, motor and battery management systems, it will become more difficult to understand the true power output and range of tomorrow’s cars as they may well differ from the original factory specification. Tesla already offer cloud-driven updates to their vehicles, and this will become common practice going forward and as such finding a reliable method of identifying range and power output is essential.

This is both impressive and laudable but understanding exactly what vehicle you actually have could mean an enhanced or reduced ROI at the time of wholesale and retail sale. For example, take two identical BEVs in an auction hall from different vendors, one has been on a full maintenance contract and the other has not. The former has always been looked after by the franchised dealer and the other, on a non-maintenance contract, has been serviced and maintained elsewhere. At a franchised dealer, the first BEV may well have been given or received engine and battery management updates that the other car has not. This could mean that this individual vehicle has a further 50-mile range and a shorter battery charge time, thus enhancing the desirability and value of the car, whereas the other has not had the same maintenance advantages. As a vendor, making sure a wholesale buyer was aware of this would mean a higher ROI. Similarly, a consumer would also prefer to buy a vehicle this well cared for in preference to the other.

The temptation is to believe that this will not make a difference, but the example below shows the importance in value terms of enhanced bhp in today’s market:-

Data from Cazana Companion

The screenshots show two cars valued from realtime retail driven insight available in the Cazana Companion pricing tool. Both cars were registered in the same month, are the same spec level and use the same engine. However, the second car in the bottom chart has a lower power output. Although the larger output engine has Quattro drive and the colours are different, it is key to note that the retail price differential at a Franchised Dealer is significant at £4,573. Therefore, and with all things considered, it is clear that power output makes a marked difference in price and although this figure is at the high level of power differential price enhancement, it serves well as an example.

The point here is that as technology moves forward and auto software updates change power outputs, there is no discernible way of identifying this enhancement from the original factory specification. For the consumer, this highlights the importance of ensuring they are aware of current vehicle battery specifications and in-car software. This stands for the vendors too on the basis that declaring that a BEV is completely up to date with OEM updates means they will be likely to increase the sale value and therefore improve stock turn and profit too.

This is all very well but the question at hand is how to easily identify what status a vehicle is at? There is currently no consistently reliable answer and therefore in both the consumer and retail markets, buyers will sway to the side of caution and bid at a lower level “just in case”. The solution will be found in technology, and realtime data-science based pricing insight will be the best way to ensure the market picture on the day is true and accurate, guaranteeing maximisation of profit opportunities.