Richard Aucock from Motoring Research considers the continued impact that challenges from Coronavirus, Brexit and new emissions legislation are having on the motoring industry, car manufacturers and, subsequently, the Motability Scheme.
Last year was a tough one for the motor industry. Registrations were down 29 percent, to a level last seen in the 1992 recession. The rate of decline versus 2019 was even more severe – indeed, the last time new car sales fell so steeply was during the Second World War. The global pandemic has affected every aspect of life and the motor industry is no exception.
Undoubtedly, this has limited the supply of cars to dealers. During the first lockdown, many car factories were closed for months. Even when they were able to reopen, social distancing measures placed restrictions on production numbers. Although factories are now operating, despite new lockdown restrictions across Europe, there is a chance that car supply may be squeezed again.
For customers, this could lead to longer delivery times, particularly for those seeking a specific trim variant or paint colour. If you can be flexible with your order, this may help you receive your car sooner. Still, don’t be surprised if the delivery date slips a little.
Don’t worry, though, if you’re already a customer the Motability Scheme will not leave you without a car – and the lease on your existing model will be extended accordingly.
The good news for 2021 is that we have a Brexit trade deal. This has avoided tariffs on cars imported into the UK; many of the Scheme’s best-selling models come from factories in Europe and tariffs could have added up to 10 percent to the transaction price. For Motability Scheme customers, this would have meant higher Advance Payments and potentially a more limited range of cars available on the Scheme.
However, although the UK has a trade deal with the EU, industry insiders have warned there is still additional ‘red tape’ involved. This, they say, could lead to increased costs, due to the extra processes required for car manufacturers. At this stage, it is too early to say what the implications are, but it could mean slightly higher prices in the medium term.
Of course, cars built in the UK should theoretically be unaffected by this. Many popular models are made in Britain, such as the Nissan Juke and Qashqai, Vauxhall Astra, Toyota Corolla and the world-famous Mini (including the exciting new Mini Electric).
This may even lead to British-built cars boasting small advantages: shorter delivery times, more flexibility on colour and spec, slightly more affordable pricing. However, the fact we have a Brexit trade deal means any difference will be minor. The bigger concern is how Brexit impacts the timing of European-built cars coming into the UK, particularly if external factors such as exchange rates start to make Britain less competitive for manufacturers. Brexit is a complicating factor and we’ve avoided the worst effects up to now – but there may be longer-term challenges for the car industry to overcome.
Looking further forward, the Government has announced the phasing out of regular petrol and diesel cars from 2030. Hybrid and plug-in hybrid cars have been given an extension to 2035, but after that, every new car sold in the UK must be purely electric with zero tailpipe emissions.
Right now, there is no pressing need to rush into an electric car. The transition is going to be gradual, which is why the Government has announced it so far ahead of schedule. The aim is to slowly get everyone into the electric car mindset, while also building up the charging infrastructure that will be vital.
Many people are ready now, though – proven by electric car sales growing over 180 percent last year, to almost 110,000. They may have a driveway, with room for an electric car charge point, which is included with every electric car taken on the Motability Scheme. Even those who don’t have off-street parking are supported on the Motability Scheme, with free of charge access to an on-street charging network which is located at motorway service stations, car parks and other convenient locations.
The ease of use and smooth driving characteristics of electric cars will definitely impress, and the downsides will be minimal. The fact there are already several popular mainstream electric vehicles available at nil Advance Payment is certain to see more Motability Scheme customers consider a pure electric vehicle as their next car.
The focus on electric cars is to the continued detriment of diesel. Last year, diesel car sales slipped further, partly due to the fuel’s negative connotations, but also thanks to the ever-improving performance and efficiency of petrol models. For some, the long-distance economy and driving range of diesel is still a draw – and the sheer pulling power of diesel engines in large vehicles takes some beating – but I expect the decline to continue in 2021.
There are positives: we have escaped the worst immediate impact of Brexit, car makers have proven to be innovative and flexible during the pandemic, and there are vaccines on the way. Manufacturers haven’t stopped developing better cars either, ones that are safer, more comfortable and more efficient than ever before.
The challenges of 2020 proved how the motor industry rises to the occasion. I foresee more of the same in 2021. At times, you may have to be flexible, but new cars will arrive, at a price you can afford – and with the full support of the Motability Scheme to back you up if you need it in this ever-changing world.