Aftermarket February 2023

recent terms finally pops? On the face of it, you could certainly make an argument that this could be the case but then the market has continually exceeded expectations since the pandemic. Certainly, while stock supply remains low, as looks set to be the case, it is likely that sales will continue to be relatively solid. What we do expect to see is a renewed accent on cost reduction on the part of dealers and lenders, and further moves to extract as much value as possible from each unit sold, and we expect the benefits of digitalisation to play a part in this process.” Early stage of adoption Paul Hollick, Chair at the Association of Fleet Professionals said: “We have been strongly expressing that the position of EVs in the UK fleet sector remains at a relatively early stage of adoption and the increases in company car taxation, of 1% year, seems well-judged to us at first glance. Crucially, they will allow fleet decision makers to plan for the second half of the decade as they continue the process of electrification. This is something for which we have been campaigning in conjunction with BVRLA and it is to be welcomed. Against this backdrop, the VED equalisation with ICE – something that will apply to the vast majority of EVs from 2025/26 – is disappointing but perhaps not unexpected. It does feel a little as though the government has given with one hand and taken some back with the other.” Paul Burgess, CEO at Startline Motor Finance, said: “With inflation hitting 11% and further Bank of England interest rate rises likely in the coming months, it really does feel as though the measures in this budget are not so much part of economic headwinds as an entire storm. Personal finances are going to come under pressure in a way that we haven’t seen in more than a decade, perhaps initially peaking in Spring next year when support for energy bills is reduced. What can dealers do in the face of this? Well, many are probably examining their cost base and identifying areas where expenditure can be reduced, as well as looking to maximise sales. As part of this, we expect to see some rethinking of propositions, with an increased accent on safety net products such as warranties that help to protect against unexpected costs. Providing value and reassurance will be crucial. For lenders, there may need to be additional measures in place to ensure that existing customers are being supported where necessary. Also, the changing requirements of many new customers need to be considered, especially when it comes to ensuring that monthly payments are affordable in difficult times.” Big Question Philip Nothard, Chair at the Vehicle Remarketing Association (VRA), said: “The end for low electric vehicle taxation has been signalled with their inclusion in Vehicle Excise Duty for the first time. Our experience is that the supply-and-demand situation for EVs in the used sector still remains quite volatile and their low running costs are a key attractor for consumers, so this is probably a retrograde move.” “The big question for remarketing and the wider automotive sector, in addition to the energy crisis and general rising costs, is the risk that the government approach detailed in the fiscal statement will slow consumer spending at a time when the industry is attempting to push forward towards pre-pandemic levels of production. Inevitably, there is a risk of a 'forced' oversupply as a result of halting demand in this way which, if it materialised, would mean an about-turn from the market conditions we have seen in recent years. “Already, recent interest rate rises in conjunction with high purchase prices and low levels of manufacturer support, are resulting in pressure on overall vehicle cost of ownership, and the impact of this is already starting to be seen in the market. From here, the key unknown factor is the degree to which this will affect sales in 2023 and beyond. Certainly, it should also be kept in mind that we are likely to see both further interest rate increases and a reduction in government intervention over energy bills. This is probably not the lowest point in this crisis.” 12 AFTERMARKET FEBRUARY 2023 BIG ISSUE www.aftermarketonline.net “This is another kick in the teeth for electric car owners and sends out completely the wrong message” ”