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.

Average eVHC revenue 14% higher than 2022, but at what cost to customer retention?

Revenue performance in aftersales has been broadly flat over the past 3 months, with small fluctuations in average eVHC values and conversions identified, suggesting that for now at least, price hikes appear to have slowed down.

The small fluctuations however over the few months and even longer have always been in the same direction, with average value of Red work identified creeping up and eVHC Red work conversions falling downward.

For identified Red work this has increased from an average of £263 in January 2023 to £300 in August 2024, a 14% increase. In parallel to that, red work conversions have had the opposite trend, falling downward, where in January 2023 red work conversions sat at 48.2%, today in August 2024 they sit at 45.9% fall of 4.8%.

At a retailer level this fall in conversion is somewhat being masked by the rising prices, being seen on the bottom line as an improvement in aftersales revenue. However, we suspect the longer-term impact on customer retention rates are not being considered.

An average retailer completing 100 eVHCs a week, would in 2022 have generated approximately £313,596 in Red repair revenue annually. The same retailer in 2024 is now generating £358,430 annually, a £44,833 increase in bottom line revenue.

But, this revenue improvement is at a cost.

In 2022, 100 eVHCs per week would have been equal to approximately 2652 jobs being identified with Red work each year. The lower conversion rate now means that a number of these jobs, and the connected customers are being lost, with customers going to fast fits or independents for the work.

The fall in conversion rates from 2022 to 2024 is the equivalent of an average retailer losing 110 customers to competitors each year, and as conversion rates continue to fall this number will only increase. Food for though for retailers looking to sell them their next car or retain them for future service work.

Overall, we have estimated that for every 5% red work value increase, red work conversion falls by 2.5%.

The higher revenue may be good for now, but it does means that retailers are having to work harder to acquire more “new” customers to keep workshops full, as customers look to competitors for repair work to be completed.

If retailers are looking to retain more customers, maybe a review of repair work may be a place to start to prevent leakage to the competition…

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