The data also showed a bias towards EVs within this mix, supporting the narrative that the EV is becoming more sought after. Although the top 10 selling vehicles (on a year-to-date basis) contained only one dedicated EV derivative (Tesla Model Y), the December 2022 data for the month showed both the Tesla Model 3 and Model Y to be the highest ‘registered’ cars in the month of December.
So, is this the start of the domination of Tesla in the UK marketplace, the first month on the incline of the hockey stick sales curve? I don’t think so….
There has been a legacy within the automotive retail industry for many years, where manufacturers would ‘push’ new cars to retailers, who would then look to discount or ‘pre-register’ and then dispose of these to a canny customer, who were typically less concerned on specification and the ability to factory order ‘their car’ in lieu of a cracking discount.
Obviously, this had working capital issues for the dealers, and it could paint an artificial picture of the value of a nearly new car. However, some retailers did very well from this process (some models just were not attractive at their ‘list price’) allowing a degree of flexibility on how they would trade.
The SMMT data has struggled to demonstrate the impact of pre-registration, not by any fault of theirs, more that the pre-registration was done by the dealer, so the true ‘pre-registration’ data which showed the units registered by the manufacturer was always some way from the real world position.
Amazingly if you ever get the chance to look at the daily registration data, in some months over 50% of the registrations happened in the last 2 or 3 working days of the month (as registrations were made to hit target).
In the case of Tesla, they don’t have a dealer network to act as the ‘buffer’ in this market dynamic, over the last 2 years and up until very recently, the UK retail automotive market, has certainly been supply constrained, rather than oversupplied and short of demand (the Dec 22 pre-registration statistics will be released towards the end of Jan 2023), and then we will surely see the level of the pre-registration impact on the Tesla numbers.
Certainly, industry guides are already starting to demonstrate a softening on the used Tesla market residual values, and several other similar EV derivatives in general, not as a direct result of the potential oversupply, but more the real-world value proposition of some EV’s.
If we cast out minds back 5 or 6 years, to when the average Brit would use the term ‘Pandemic’ about as often as they changed their car, the market was achieving registrations (no doubt including pre-registration activity) of 2.69m.
In the motor retail world, use of the term ‘Agency’ has followed a similar trend to ‘Pandemic’, very seldom used, but now prevalent. The shift to an agency model is a complex dynamic, and it is one we have written about in our outlook reports (and will no doubt include expert commentary in the 2023 release), but the one positive to the shift (if it happens on a significant basis) is that the pre-registration activity of the market should be more transparent.
For those manufacturers who move towards the agency arrangement, it will certainly be a fascinating balancing act, on registration quotas if the dealer network cannot act as the buffer to the retail environment.
The next step
For any queries regarding this blog please contact Ian McMahon or your usual UHY adviser.
