Has the budget impacted car buyer confidence?

With the dust now settling after the Autumn Budget announcements, we can now start to look at what affect it is having on consumer confidence. 

Last month we considered how macro-economic factors in the lead up to the budget were having a negative impact on car buyers, prompting an earlier than normal seasonal slowdown for car retailers in the final months of the year. 

With Chancellor Rachel Reeves’ first budget including £40bn worth of tax rises, (including an increase in National Insurance Contributions for employers, which will have a massive impact on car retailers), there was a lot to digest. 

Consumer buying plans 

MOTORS, the online used car marketplace, polled the views of 1,000 car buying decision makers to gauge what impact it would have on their purchasing decisions.

Encouragingly, it found nearly two-thirds (64%) had not changed their buying plans because of the budget. Overall, nearly a quarter (24%) plan to buy in the next three months, 33% in the next six months and 50% in the next 12 months. 

As a result of the budget, 20% will now buy a car later than planned, while 16% expect to buy sooner. 

Half said their original plans to buy new, nearly new (under two years old) or used had not changed. For those who had changed their plans, 18% said they are now more likely to buy used, 17% new and 15% nearly new. 

The budget’s treatment of EVs 

Turning to fuel choice the budget clarified the favourable personal tax treatment of fully electric company cars beyond 2028, giving greater certainty to fleet buyers and drivers. 

It also confirmed its manifesto pledge to ban the sale of new internal combustion engine vehicles in 2030.  

For retail buyers incentives to switch to EVs included a £10 first year registration fee which will run from 2025 to 2030, while rates for all new cars emitting more than 76g/km C02 will double. Chancellor Rachel Reeves also committed to investing £200m to accelerate charging points rollout. 

Consumer attitudes to EVs post-Budget 

A consumer poll carried out by JudgeService, the customer review platform, shed light on whether the EV transition was more palatable following the budget. 

Nearly half of the respondents (46%) said they were not more confident about buying an EV, although 23% said they were more confident. 

The budget commitment to invest in an EV charger rollout left 46% not believing the national infrastructure will be adequate by 2030, although 24% believed it would. 

Promoting Neil Addley, managing director of JudgeService to say: “While EV company car drivers will continue to benefit from favourable personal tax rates, our poll shows the budget’s commitment to lower VED rates and investment in the charging network are not enough for retail buyers to make the EV switch.” 

Final thoughts 

After all the speculation, the budget announcements are now in the public domain, removing the uncertainty that had affected many car buyers since the summer.  

What this will ultimately mean to buyer confidence and EV uptake will play out in the coming weeks and months, which is why having systems in place to nurture and action every single customer enquiry is vital as you close the final quarter.    

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Mitigating the seasonal downturn in automotive

Consumer confidence is fragile but there are still opportunities to mitigate the seasonal downturn.

It’s no secret that enquiries can start to slow down in the lead up to Christmas and from conversations with many of our car retailing partners we believe the traditional slowdown may already be underway.

September plate-change

At this time of the year the September plate-change, the second biggest month of the year for new car sales, is a good indicator of retail demand, so how did it fair?

On the face of it September ushered in a positive start to the new 74-plate with car registrations up 1% year-on-year to 275,239 units, according to the Society of Motor Manufacturers and Traders. It was also the strongest September since 2020.

A closer look at the data also reveals some notable trends.

The market was -20% below the pre-Covid level of September 2019. And, continuing an established trend, fleet was the best performing market sector accounting for 54% of all registrations, outpacing retail’s 44% share.

That gap between the sectors is even greater when looking at the year to date figures with fleet taking 59% of all registrations, compared to 39% for retail.

Consumer confidence

The Finance and Leasing Association maintains consumer confidence started to dip in August when new business across all retail sectors dropped by 1%, having hitherto been on a par with 2023.

Commenting on the drop Geraldine Kilkelly, Director of Research and Chief Economist at the FLA said: “The consumer finance market was subdued in August and the recent recovery in consumer confidence appears to have stalled amid concerns over what the Budget at the end of October will bring.”

The Budget was also cited as contributing to a sharp fall in the September GfK Consumer Confidence Barometer, with the data company revealing the lowest level since March, wiping out several months of growth.

Neil Bellamy, Consumer Insights Director at GfK, said: “Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the Budget decisions on 30 October.”

Making every enquiry count

Looking back at the last two years we have identified how enquiry and order counts across our Dealerweb platform were strong for new and used cars in September, remained robust in October before dropping progressively from November into December.

This year’s lead up to Christmas could be more challenging as seasonal trends are compounded by fragile consumer confidence.

However, there are still opportunities to limit the impact on your business by utilising CitNOW Group’s solutions to ensure you remain on top of your customer enquiries and are using management data to ensure no opportunities are missed.

Dealerweb React 

With response times more crucial than ever in a successful sales conversion, Dealerweb React is designed to ensure 100% web-lead capture, followed up by 100% web-lead response, with 0% leakage.

Automating the collation of web-leads from virtually all sources, our software guides sales staff through a professional, consistent and personalised web-lead response process.

Dealerweb React is unique in that it is the only system that provides a business with the option to respond via a fully formatted bespoke HTML email template or with a direct call to the customer using our innovative Click to Call software.

CitNOW Sales 

CitNOW Sales builds on a customer’s initial online experience and takes the showroom to them – digitally. Designed for sales executives, it provides an easy way to film, edit and send personalised videos of new and used vehicles in response to individual enquiries, creating trust and building lasting relationships.

In a competitive environment you need to stand out and be remembered. Use video to individually address enquiries and move the customer from research to buying mode in the click of a play button. Our recent study highlighted there is up to a 15% increase in enquiry conversions when they are followed up with a video.

CitNOW Insights 

Enabling you to stay ahead with data-driven actionable insights and business intelligence.

Designed to effortlessly consolidate all key information into a centralised hub accessible to all business units and locations, CitNOW Insights empowers swift decision-making, boosting profitability and delivering continuous improvement. Gaining instant access to critical data, insights and trends in a matter of seconds all presented consistently to your team.

CitNOW Insights Instock 

Now more than ever, a new and used vehicle stock pricing strategy is essential for a successful automotive retailer. CitNOW Insights Instock empowers you to review your current stock, compare pricing nationally, identify locations that will maximise sales and view vehicles nationwide, so you can get the most from your existing and new vehicle stock.

This tool also enables you to price your stock accurately against national averages, ensuring your prices are always competitive.

CitNOW Insights Insales

New and used car sales performance is key to your showroom success. Being able to track sales team performance, monitor sales leads, have a live view of current activity against sales targets and project future trends, gives you and your sales team the control to ensure you maximise performance.

It can also be used to analyse which digital marketing campaigns have achieved the best results over recent months, enabling you to focus on those that have resonated with customers in the current climate.

Discover more about how Dealerweb React, CitNOW Sales and CitNOW Insights can maximise on opportunities in the lead up to Christmas.

Ensuring your business is in a strong position for Q4

Traditionally, the final quarter presents retailers with an opportunity to focus on ending the calendar year as strongly as possible. This year is no different, although the next three months could pose some challenges.

New car registrations

Cox Automotive, the global automotive services company, warned the new car market will be “extremely challenging” in Q4, prompting it to reforecast its full year total down 2% to 2.01 million units, although that will still be an increase on 2023.

A significant headwind impacting how retailers sell new cars in Q4 will be the effect of the ZEV mandate which will penalise OEMs whose electric vehicles (EVs) sales fall below 22% of their volumes by the end of this year.

Cox Automotive believes the legislation could prompt some carmakers to “prioritise pushing EVs into the market through aggressive fleet and retail price strategies or restrict the availability of ICE (internal combustion engine) and PHEV (plug-in hybrid electric vehicle) derivatives to force EV sales.”

Indeed, Robert Forrester, CEO of Vertu Motors, one of the biggest dealer groups in the UK added his voice to the debate, telling The Telegraph: “In some franchises there’s a restriction on supply of petrol cars and hybrid cars, which is actually where the demand is. It’s almost as if we can’t supply the cars that people want, but we’ve got plenty of the cars that maybe they don’t want.”

Used car sales trends

According to Cox Automotive there are also “significant hurdles” facing used car sales, following growth in Q1 and Q2.3

Its forecast for the remainder of 2024 suggests a slowdown, driven by “tightening wholesale supply and increasing price competition in the new car sector” which it expects to “cool transaction volumes in Q3 and Q4, despite the overall market still showing signs of resilience.”

Despite this it believes 7.4 million used car transactions will be recorded by the end of the year, up 2.7% on 2023.

Retailers will certainly be hoping to boost their forecourts from part-exchanges on the back of the new 74-plate change, with volumes generally gathering momentum from late September.

Although the new retail sales are under pressure, the sector will be encouraged by recent consumer research by JudgeService which found two-thirds of owners prefer to use retailers for part-exchange valuations, rather than specialist online services.

“Our data highlights the under-appreciated role franchised dealers have as the preferred source of part-exchange valuations, despite the noise created by the challenger online car buying services,” said Neil Addley, managing director of JudgeService.

Supercharging your performance in Q4

This time of the year can present challenges after the buzz generated by the plate-change when customers’ minds and budgets inevitably turn to the festive period. We don’t need to tell you every sale counts, and that’s why we’re going to explore the importance of having the right tools in place to support your strategic goals for the quarter:

Vehicle appraisals

TIP: With the September plate change boosting part exchange activity, use CitNOW Appraise to make October a key month for used car sales.

This powerful tool enables you to retain more customers during their purchase journey, delivering fast, accurate and competitive vehicle appraisals through a simple, seamless digital process. Following a simple template, customers simply submit video footage and photos online which you can review remotely. You can then provide fast, accurate, no hassle, first time valuations, avoiding the need for any awkward customer conversations.

Stock imagery

TIP: Ensure all your stock imagery (stills and video) is fully optimised every time a vehicle is posted online. Consistency is crucial.

With CitNOW Imaging, retailers can capture and deliver high quality, consistent assets – super fast. It also helps reduce the amount of unadvertised stock and days in stock, decreases time to web and provides the showroom sales team with a more efficient overall solution to marketing new cars.

Personalised video

TIP: With the sector focused on increasing EV sales, use personalised videos to communicate and educate customers on the cars you have in stock, with trained salespeople positioning themselves as trusted experts.

CitNOW Sales builds on a customer’s initial online experience and takes the showroom to them – digitally. Designed for sales executives, it provides an easy way to film, edit and send personalised videos of new and used vehicles as a response to individual enquiries, creating trust and building lasting relationships.

Customer communications

TIP: Make it easy for customers to engage with you and follow up in the way that suits them.

CitNOW Conversations delivers seamless, multi-channel, two-way, customer communications across your business. Designed for automotive retailers, this powerful communication tool consolidates all mobile based messages and provides a single point of reference for all conversations no matter which messaging channel (Live Chat, WhatsApp, email) is used, ensuring more coordinated and streamlined communication, 24/7.

Managing leads

TIP: Ensure every lead is followed up immediately by automating the process.

With response times more crucial than ever in a successful sales conversion, Dealerweb React has been designed to ensure 100% web-lead capture, followed up by 100% web-lead response, with 0% leakage. By automating the collation of web-leads, our tool guides sales staff through a professional, consistent and personalised response process.

Discover more about how CitNOW Group can maximise your Q4 opportunities.