Growth in the automotive industry

In recent years, the automotive industry has been operating under an air of uncertainty. A number of factors have had an effect on this, but perhaps the most notable of these is the Brexit vote.

Despite the two years of uncertainty that have passed since the vote, the economic forecasts are no surer now than they were in 2016.

The fears of what could happen in the event of a no-deal Brexit remain, however the industry seems to be performing well, with further consolidation in the motor retail sector through acquisition and investment in property portfolios.

In October 2016, only four months after the referendum, Nissan announced plans to build two of its new models and invest in the Sunderland plant.

The X-Trail, previously built in Japan, and the new Qashqai, one of the bestselling cars in the UK, will be constructed in the North East.

Whether it be a demonstration of the UK’s manufacturing ability whilst a part of the EU, or a business-as-usual attitude, the announcement shows a vote in confidence from Nissan.

That confidence in the market has also translated into the performance of Lookers and the brands it represents.

In 2017, Lookers sold over 220,000 new, used and light commercial vehicles. In turn, that business led to a 15% increase in revenue on 2016, up to £4.7 billion.

The number of new cars sold in the UK each year has fluctuated between 2.26m and 2.69m in recent years, and in 2017 Lookers’ share of that market was just over 6%. This was also an increase on the 5.5% figure achieved the previous year.

Motivated by the company’s philosophy of putting the customer first, Lookers has a clear focus in navigating through the industry’s uncertainty.

By acquiring and developing dealerships that are best responding to the market’s demands, Lookers is putting itself in a great position to respond to upcoming changes in the sector.

One trend at the moment is the decline in new registrations of diesel cars. Between 2001 and 2006 the decline of petrol registrations and increase in diesel was almost mirrored, with the latter being pushed as a more economical alternative.

One trend at the moment is the deadline in new registrations of diesel cars. Between 2001 and 2006, petrol’s dominance was shortened by diesel and its improved fuel economy.

More recently, however, diesel sales have dropped and so petrol registrations are again on the incline.

Petrol engines are also becoming even more economic, which is further support for that trend.

Ultra-low emissions vehicles (ULEVs) are another vehicle type on the rise – such as hybrid and electric models. And it’s believed that the uptake in these could potentially go some way to making up for the drop in diesel registrations.

In 2013, the government reported that less than 5,000 ULEVs were first registered in the UK, however in 2017 that number rose to over 53,000.

Despite making only a small fraction of the first time registrations in the UK at the moment, a report published this year found that there could be over a million electric vehicles on UK roads within the next two years.

More on the history, and potential future of electric vehicles can be found on the Lookers blog, in a two-part series that looks into low emissions technology.

Another movement in the market seems to show a shift towards the used car market. And Lookers in particular have identified that trend, giving customers the choice of new or used when buying.

Recognising that shift has yielded positive results, with half year results showing a 12% increase in used car turnover.

The political landscape looks uncertain, but the automotive industry is adapting well to changing markets and conditions.

Ultimately, the demand for vehicles – be it petrol, diesel or electric – will remain. The real challenge is identifying current trends within those vehicle types and responding to them.

You can find more on how Lookers is performing, with stats and figures, in the Lookers Annual Report for 2017.