Rising inequality on our roads?

Sales of new cars in Northern Ireland fell last year by the steepest amount in six years.  The 5.2% decrease followed broadly flat sales in 2015 and 2016. Showrooms’ sales volumes are now 21% below where they were a decade ago.


What lies beneath? – The falling overall market conceals diverging performance at a brand level. Indeed, sales of premium brand cars (Audi, BMW, Jaguar, Land Rover, Lexus, Mercedes Benz, Porsche & Volvo) hit a record high of close to 10,700 vehicles.  This represents the sixth successive annual rise in premium car sales, albeit the weakest rise (+1.5% y/y) in the sequence. The premium market now accounts for 1 in 5 of all new cars sold in Northern Ireland (UK = 28%). Conversely, sales of non-premium brands saw the pace of decline accelerate last year by almost 7% to a five-year low.

Premier league 2017 was a record year for Audi (+4% y/y), Land Rover (+4% y/y), Mercedes Benz (+6% y/y) and Volvo (+1% y/y). Porsche saw sales rise 4% y/y to 228 new cars – just ten fewer than 2007’s peak. Jaguar posted its best sales figures since 2004.  BMW (-4% y/y) and Lexus (-9% y/y) were the only two premium brands to experience falling sales volumes last year.

Battle of the brands – Since Northern Ireland new car sales hit their post-recession low in 2011 the premium and non-premium brands have experienced vastly different recoveries. Overall sales in 2017 were 15% higher than the 2011 low.  However, sales of premium and non-premium brands have witnessed growth of 53% and just 9% respectively.

Non-premium brands – Not all non-premium brands have missed out on a ‘premium-style’ recovery. 2017 represented a record year for SEAT (+18% y/y) and Skoda (+10% y/y) dealers.  These two brands alongside Alfa Romeo (+39%), Citroen (+13%) and Toyota (+13% y/y) all recorded double-digit growth last year. Some non-premium brands posted hefty double-digit declines last year, these include: Subaru (-38%), JEEP (-37%), Renault (-25%), Smart (-23%), Vauxhall (-21%), Mini & Dacia (-17%), Fiat & Peugeot (-16%) and Nissan (-14%).

New comers stealing market share Kia (+267%), Skoda (+101%) and Hyundai (+98%) have been the standout non-premium brands over the last decade. Their impressive rates of growth in sales contrast starkly with a 26% decline in non-premium brand sales. Kia, Skoda and Hyundai have seen their share of the overall new car market increase from 5% (2007) to almost 15% (2017).

Lost decade for some brands – While some non-premium brands have performed strongly since 2007, other established brands have seen their sales plummet. Peugeot, Renault and Vauxhall have seen their sales fall by 54%, 58% and 62% respectively. Sales of Peugeot & Vauxhall cars hit a series low last year (data from 1999). Furthermore, the combined marked share of these brands has almost halved from 28% in 2007 to <15% in 2017. Japanese brands have also lost out to their Korean and Eastern European rivals with Mazda, Toyota and Honda sales down 42%, 49% and 54% respectively since 2007.

Start your engines! – We’re not all in this together – Meanwhile some of the ‘super car’ brands recorded the fastest rates of growth last year.  Sales of Aston Martins trebled to 27 last year but are still below 2007’s peak of 45. Maserati sales accelerated to a record high of 81 in 2017, more than doubling relative to 2016. Bentley sales jumped 52% y/y to an 11yr high. Ferrari sales rose by over one-quarter to 19 in 2017, two shy of 2015’s high. Unlike in 2016, there were no sales of Rolls Royce or Lamborghini’s in 2017.

Size can be everything – Overall, the new car market illustrates that even if a market if falling overall there are always winners and losers irrespective of market conditions. Furthermore, there are always markets within markets e.g. premium brand versus non-premium brands.  The success of the premium brands can be attributed to quickly responding to consumer tastes (e.g. preference for SUVs) and providing quality, affordable products for a range of budgets. Following the recession and cost of living squeeze, it was noted that SUVs got smaller to appeal to those with more limited budgets. In addition, premium car brands have targeted the lucrative Motability market. Conversely, many of the non-premium brands that have experienced the steepest fall in sales were slow to respond with SUV models.

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