Competition from Chinese new entrants is impacting Japanese carmakers the most, according to a global automotive consultancy.
Michael Dunne, chief executive officer at Dunne Insights, told delegates at the Vehicle Remarketing Association (VRA) conference that the impact of Chinese manufacturers' global export push is “proving to be enormous and raising a lot of questions”.
Addressing more than 180 attendees at the annual event, held at The Slate, Warwick University, on Wednesday (November 19), Dunne explained: “China has exported almost eight million vehicles this year, up from just one million in 2020.
“Dealers want to know who will be the Chinese Hyundai to pick the right retail partner, legacy manufacturers are a little shell shocked and searching for how to respond, and investors want to know where to place their bets.
“For the moment, at least, European and US manufacturers, especially premium brands, are in less danger and several are forming partnerships with Chinese manufacturers to develop their capabilities.”
Instead, Dunne says it’s the Japanese who are paying the price. “Nissan and even Honda are losing ground in a way that we’d never have predicted a few years ago,” he added.
“If you talk to dealers selling Chinese new entrants, they are making conquest sales from Japanese manufacturers not just in the UK but comparable markets.
“Japanese companies are stunned by how quickly customer loyalty is evaporating. The one exception so far is Toyota, who are holding their own.”
The event started with a presentation from Glynn Jones, Bank of England deputy agent for the West Midlands and Oxfordshire, on general economic prospects.
He told the conference that the Bank’s projections show inflation should fall to around 3% early next year and 2% in 2027.
However, he said: “Businesses, including those in the remarketing sector, continue to face cost pressures on a number of fronts.
“They can manage these through a number of channels including investment, employment, productivity, margins and prices. To the extent they are passed through primarily in price, it could contribute to more persistent inflationary pressures in this scenario.”
Chris Bond, business tax partner and head of motor retail at BDO, looked at the possible contents of next week’s Budget.
He said: “We believe there will be a variety of measures affecting remarketing businesses. Especially, we’re waiting to see how employee car ownership schemes will change following intensive industry lobbying and the outcome could impact directly on dealer recruitment.
“Also, the pence-per-mile EV road tax has been widely trailed and could affect both new and used sales.
“On a wider basis, there’s likely to be a freezing in income allowances, bringing more people into higher tax brackets as wages rise.
“Also, pensions are likely to be an easy target for raising additional revenue, including restrictions on salary sacrifice.”
Other speakers included Jacqui Barker, global OEM strategy director at Keyloop; Grainne van Berkum, president of Openlane Europe; Craig Ford, head of sales at Motability Operations; Vicky Hart, head of marketing and digital, Waylands; Martin Wilson, VP partnerships, Privacy4Cars; and Bruno Miradoli, European account director, Keyloop and Anthony Brennan, business development director at MTC. Also, Nikolaus Mayerhofer, chief technology officer, Aviloo provided a live battery health check demonstration.
Philip Nothard, VRA chair, said: “This was a superb event with our highest attendance ever, showing its growing reputation within the automotive industry calendar.”
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Gareth has more than 20 years’ experience as a journalist having started his career in local newspapers in the 1990s. Prior to joining Fleet News in 2008, he worked in the public sector as a media advisor and is currently news editor at Fleet News.
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