Automotive is entering a period of opportunity with 2023’s “significant change and shortening lead times” paving the way to new horizons, according to Cox Automotive.
While the automotive services giant suggested that this year would bring a tentative, despite prolonged disruption to new vehicle supplies and the arrival of new car brands into the UK market being among the key influences.
Cox Automotive insight and strategy director, Philip Nothard, said: “It has been debated whether our industry has arrived at a Valley of Death regarding manufacturing. It would be correct that overall sales (and therefore production) have dropped off a cliff compared to pre-pandemic levels, but we should not be so pessimistic. Instead, we should look at the opportunities presented to us within the automotive industry and the forced development resulting from COVID-19.
“We are in a situation where it is no longer viable to attempt to maintain the success of the pre-pandemic automotive industry.
“But, as well as uncertainty, plenty of opportunities come afoot with this. We need to have a glass-half-full mentality. We’re in a valley of opportunity, and 2023 could be a critical year for reaching new horizons.”
Among its observations of the evolving shape of the new car market in 2023, Cox noted that higher interest rates and the UK’s cost-of-living crisis represent important obstacles likely to trigger a continued preference towards affordable used cars as new vehicles become out of reach for many.
In a trend that is currently contributing to a decline in used EV values, Cox believes automotive brands will continue prioritising the productions of zero-emission cars, despite dampening consumer confidence and rising raw material costs.
Cap HPI director of valuations, Derren Martin, revealed today (January 16) that used EVs are currently depreciating four times faster than their diesel counterparts.
Cox said: “Against a backdrop of pressing Net Zero carbon reduction targets, the outright ban of new petrol and diesel car sales from 2030 in the UK and 2035 across the EU, and considering the looming threat of fines and sanctions, the pace of change is only going to increase.”
Car buyers searching for value in a fast-evolving new EV market are likely to trigger a period of shifting ownership and brand affiliation where affordability will precede desirability, according to Cox.
Recent franchise appointments signalled the arrival of Great Wall Motors’ Ora EV brand and, soon, BYD into the UK. NIO and Lynk&Co are among the other imminent expected arrivals.
Cox said: “As newer brands from China look to gain a foothold in the global market, the sector can expect to see Chinese manufacturers fill market gaps left by established OEMs as they step away from affordable but ultimately unprofitable legacy models.”
A shift towards direct-to-consumer agency model car retail could also accelerate in 2023, according to Cox.
Despite Stellantis’ move to put back its implementation of the new distribution model to the start of 2024, it said: “Mercedes is going live with its agency model in agreement with retailers this year, and Cox Automotive predicts this will be a catalyst for many others to follow suit.”