Here, Motor Finance will be collating all of the latest news coming out of the industry with regards to the impact of coronavirus (COVID-19):
Volkswagen urges ECB to accelerate emergency lending
Volkswagen has urged the European Central Bank to accelerate emergency lending plans to help businesses cope with the effects of the coronavirus, according to the Financial Times.
Last week, the bank announced a €750bn package of extra asset purchases to support businesses, pledging to make non-financial commercial paper “eligible for purchase” under its quantitive easing programme.
However, the scheme has not yet been launched as the ECB continues to sort the technical and legal details for companies buying non-financial commercial paper.
Frank Witter, chief financial officer of VW, said: “There is a lot of pressure on the incoming money flow. We have different diversified funding sources available, but not all of them are as liquid as they were.
“Providing funding opportunities is something essential in this crisis. The earlier, the better.”
FTA calls for Brexit transition extension
British logistics association, FTA (Freight Transport Association) is asking for an extension to the Brexit transition period as Europe remains resolutely fixed on fighting the coronavirus pandemic.
The challenges posed by the Covid-19 virus will make the effective implementation of any new legislation impossible in the short term, says the FTA.
As a result, the industry is petitioning government urgently to seek an extension to the current transition period for leaving the European Union, as well as suspending other planned domestic legislation which will impact the logistics sector.
“This is not about the relative merits of Brexit, or any trading arrangements which our industry will need to adopt,” said FTA policy director, Elizabeth de Jong. “This is purely and simply so the businesses tasked with keeping the UK’s supply chain intact can concentrate on the serious issues which the Covid-19 pandemic is placing on the industry.
“Logistics is facing unprecedented challenges, both in terms of keeping the UK economy supplied with all the goods it needs to function, as well as coping with the increased disruption to staffing levels caused by sickness and self-isolation and concerns about the viability of their businesses.
“Our first priority is always to deliver for our customers and there is simply not enough capacity available to plan the major structural changes needed to implement a successful departure from the EU, as well as the myriad other planned legislation changes on the horizon [and] dealing with unprecedented pressures caused by Covid-19.
“Logistics is a flexible industry, but such significant change cannot happen overnight, and there is simply not the capacity for planning and delivery of new legislation at present within the system.
“Covid-19 has created a once-in-a-lifetime emergency situation which needs the full attention of the whole sector – adding in a host of new legislation would place untold, unnecessary pressure on a supply chain that is already stretched. Our industry needs the support of government, not to be broken by it.”
Volkswagen extends suspension of production in Germany
Volkswagen is to extend the production suspension at its German plants for a further four days until 9 April. The suspension includes its assembly and component making plants. Volkswagen said it is responding to the ‘fall in demand on the automobile market and the challenges faced by the supply chain’ but hopes to start making vehicles again ‘soon’.
In a statement, VW said an application for an extension of short-time working for a total of 80,000 employees of Volkswagen AG has been submitted. It is planned to end short-time working with the night shift of April 9 to 10. The plants affected are Dresden, Emden, Osnabrück, Wolfsburg and Zwickau as well as the Volkswagen Commercial Vehicles plant in Hanover, the plants of Volkswagen Group Components at Brunswick, Kassel, Salzgitter, Chemnitz and Hanover and the German plants of SITECH.
At the same time, VW said it is ‘preparing intensively for the resumption of production’.
Andreas Tostmann, Member of the Volkswagen brand Board of Management responsible for Production and Logistics, said: “The health of our employees has the highest priority. We will ensure that they can return to safe workplaces when production and logistics activities are resumed. In our task force, we are working on a comprehensive package of measures.
“In this context, we are also incorporating our experience in China where almost all our plants have now resumed production and the market seems to be gradually returning to normal. To date, there has not been a single case of corona among our employees in China.”
US vehicle market ‘heading for 35.5% March decrease’
Analysts at Edmunds say that March will see a much reduced US vehicle market in the wake of the COVID-19 coronavirus crisis, with overall sales down by a forecast 35.5% and the SAAR down at a depleted 11.9 million units.
Edmunds estimates that 1,044,805 new cars and trucks will be sold in the US for an estimated seasonally adjusted annual rate (SAAR) of 11.9 million. This reflects a 35.5% decrease in sales from March 2019 and a 23.4% decrease from February 2019.
Edmunds experts note that the downturn in March will also lead to a drop in quarterly sales, forecasting that 3,546,415 new cars and trucks will be sold in the first quarter of 2020, which reflects an 11.8% decrease from the first quarter of 2019.
“The first two months of the year started off at a healthy sales pace, but the market took a dramatic turn in mid-March as more cities and states began to implement stay-at-home policies due to the coronavirus crisis, and consumers understandably shifted their focus to other things,” said Jessica Caldwell, Edmunds’ executive director of insights. “The whole world is turned upside down right now, and the auto industry is unfortunately not immune to the wide-ranging economic impacts of this unprecedented pandemic.”
Edmunds analysts note that the nationwide shutdown of auto manufacturing facilities and limited inventory mean that automakers aren’t currently pressured to offer attractive incentives on new vehicles, but that will likely change as the COVID-19 crisis continues to evolve.
“Automakers can count on capturing some deferred demand once we get past the worst of this pandemic, but since they’ll be competing with so many other companies for consumer spending at that point, they’re really going to need to create incentives to spur some sales,” said Caldwell.
“Things might look a bit bleak as automakers are taking a hit right now across the board, but the massive stimulus package deal that was just announced is an encouraging update. History has shown us that this industry can survive through almost any financial or natural disaster, and we’re confident that they’re going to come out of this tough period on the other side.”
Some analysts say that sales over the past week are more than 80% down in areas of the US in stay-at-home mode.
MG Motor UK supplies 100 EVs to NHS agencies
MG Motor UK is supplying up to 100 fully-electric MG ZS cars to NHS agencies across the UK for use by NHS staff, as the government intensifies the battle against COVID-19.
The cars will be supplied via MG’s nationwide dealer network for up to six months, completely free of charge, to support the national effort to overcome COVID-19. By providing additional transport capacity with low running costs to the NHS, MG and its dealers are doing their bit to support the national effort in these unprecedented times.
The first six cars have already been supplied to Lancashire and South Cumbria NHS Trust by MG dealer Chorley Group.
Daniel Gregorious, head of sales and marketing at MG Motor UK, said: “As a proud British brand, MG is more than just a car manufacturer. Together with our dealer network, we want to do our bit to help the country to come through this uncertain time.
“By providing 100 electric cars to our NHS heroes, we hope that we will help to keep healthcare moving so that as many people as possible can receive the support they need. It’s also our way of saying thank you to those selfless people who work so hard to keep us all safe.”
Aston Martin suspends operations at UK manufacturing sites
Aston Martin has temporarily suspended all manufacturing at its UK plants in line with the latest UK government instructions on the fight against COVID-19.
“The business has taken this difficult but appropriate action in its determination to fully support the UK government’s measures on slowing the spread of COVID-19 and, crucially, to protect the health and safety of its workforce, its suppliers, and their families,” the luxury sportscar maker said in a statement.
“The period of manufacturing suspension is initially planned to Monday 20 April 2020, however, the business will continue to review the situation and will look to resume operations as soon as it is reasonable to do so.”
Aston Martin Lagonda president and Group CEO, Andy Palmer, said: “It is our responsibility to ensure we do all we can to support the government’s efforts in slowing the spread of COVID-19 over the coming weeks and, with the health of our amazing workforce front and centre of our minds, we have taken the tough decision to temporarily suspend operations at our sites around the UK.
“I hope and believe that our national fight against this dreadful virus will be successful and, as soon as we have the ability, we will, of course, return to normal operations. In the meantime, I would like to wish everyone associated with this great company good luck, and good health.”
Medium-term rentals ‘remain consistent’ heading into lockdown
Demand for medium-term rental stayed consistent in the days leading up to the coronavirus lockdown and there are already signs that future bookings will continue to be made during the crisis, according to Meridian Vehicle Solutions.
Phil Jerome, managing director of Meridian, said that the situation was creating what he described as a “two-speed fleet economy” where some sectors were seeing considerably-increased demand while others had effectively closed down.
“The parts of the economy that are staying open are very busy, whether that be food retailers or workers directly involved in the fight against coronavirus. There is a need for immediate transport for some people and we are helping to satisfy that.
“On the other hand, there are many parts of the industry that have effectively closed for business, and new orders have fallen to almost zero in those sectors.
“It’s very much a two-speed fleet economy but the fact that we remain relatively optimistic means that, even in the last few days, we have ordered almost 100 additional cars for our fleet. We’re expecting ongoing demand.”
Jerome added that because car rental was classified as an exempt business, it remained effectively the only form of vehicle provision available to many private and public organisations while car dealerships remained closed.
“There are reports that daily rental levels have increased for some suppliers in recent weeks. While that is a different market to ours, what we can say is that we are seeing consistent demand and are still taking orders.
“The main issue that we face is that, because the majority of our cars are delivered new from dealers, whether we can get them all safely processed and sent out but we are dealing with this on a case-by-case basis.”
INDICATA analyses impact of COVID-19 on automotive industry
As COVID-19 looks set to stay and affect the global automotive industry for a sustained period of time, INDICATA has published a report on the extent of impact and offers advice on how different sectors can survive.
For leasing companies, INDICATA said the challenge will be to manage the current volatility in the market while respecting the fact that there may be no short-term recovery in RVs. The report noted that in 2008/09 many leasing companies extended contract and ran on vehicles.
“With the risk that used vehicle prices are suppressed for an extended period of time, an immediate run on vehicles may not be ideal. Even so, vehicles will still need to be remarketed over the downturn.”
heycar: online demand remains strong among car buyers
There is still strong online interest from UK car buyers, despite the coronavirus lockdown, according to heycar.
According to the online car marketplace, dealers should be pivoting to accommodate digital customers, continuing to make sales now or maintaining interest for when the outbreak has passed.
Data from heycar, which has more than 3,500 dealerships nationwide using it, shows that in the weeks leading up to the start of the crisis, a strong pipeline of customer leads had been established.
And heycar chief commercial officer, Karen Hilton, believes it is the nurturing of these prospective customers in the medium term that will be key to the industry emerging from the coronavirus crisis in the best shape possible.
Hilton said: “Everyone knows inbound leads are going to continue to drop as the government has implemented further measures to halt the spread of the virus and keep our community safe.
“However, this situation WILL change and when it does dealers must be ready to build again. That’s why it is particularly interesting to look at the numbers of people continuing to show interest in changing their cars. This suggests there are good pipelines of existing customers to nurture and develop in order to tide dealers over the next few months.
“Our site data shows that before the start of the initial government measures on social distancing, demand in the market was still showing normal seasonal increases. Top of the funnel site traffic and car views were at seasonal highs and these are still high now as people spend more time at home and online.”
The numbers using heycar’s onsite ‘value my car’ tool have also remained strong since the introduction of social distancing, indicating that people are still planning for a car change – as long as it is safe to do so.
Manheim suspends all physical auction programmes
Manheim UK, part of Cox Automotive UK, has immediately suspended all of its physical auction programmes to comply the with latest Government restrictions on business (issued 23 March 2020). They will remain closed whilst these Government restrictions are in place.
All other Cox Automotive UK physical locations are also in the process of being closed, with only a security presence remaining on site thereafter. The planned auctions on Simulcast for today (Tuesday 24th) will not go ahead whilst we make the preparations for closure.
Customers are advised that Manheim UK sites will only accept arrivals today and the removal of any purchased and paid for vehicles needs to take place immediately. We will not charge buyers for storage for vehicles remaining on site during any lockdown period (currently expected to last at least 3 weeks).
Martin Forbes, chief executive of Cox Automotive UK, said: “The government’s instructions are very clear. We are legally and morally obliged to cease auctions with immediate effect. The health and well-being of our employees as well as our customers and business partners are top priority. We are working closely with customers and supporting them as much as possible during this challenging time. Together we will get through this.”
FCA to produce protective face masks
Fiat Chrysler Automobiles (FCA) says it manufacturing and donating more than one million protective face masks for emergency workers per month.
Production capacity is being installed this week and the company will start manufacturing face masks in the coming weeks with initial distribution across the United States, Canada and Mexico.
The face masks are to be donated by FCA to police, EMTs and firefighters, as well as to workers in hospitals and health care clinics. This action is the first of a multifaceted global program being developed by the company through applying manufacturing, supply chain and engineering expertise to support the global fight against the Coronavirus pandemic.
Commenting on this initiative, FCA CEO Mike Manley said: “Protecting our first responders and health care workers has never been more important. In addition to the support we are giving to increase the production of ventilators, we canvassed our contacts across the healthcare industry and it was very clear that there is an urgent and critical need for face masks. We’ve marshalled the resources of the FCA Group to focus immediately on installing production capacity for making masks and supporting those most in need on the front line of this pandemic.”
FCA will be working through national, regional and city authorities to ensure that the donated face masks are being directed to the people and facilities in the most immediate need. The company will disclose further actions related to the fight against the Coronavirus in the coming days.
Lookers temporarily closes UK dealership network
Car dealership group Lookers has announced it will be temporarily closing all of its trading locations in the UK until further notice.
In a statement, the company said: “The board is incredibly grateful to our brilliant employees who have been working hard to continue to serve our customers and the community safely in difficult circumstances.
“However, the board has carefully considered the impact of COVID-19 and the current advice of the UK Government. The board’s priority is to support the welfare of our colleagues and customers and to play our part in the national effort to reduce the further spread of the virus.
“Over the past 48 hours it has become clear that maintaining safe social distancing measures whilst continuing to operate car dealerships has become increasingly difficult.
“Against this background and with the support of our OEM brand partners, the group is temporarily closing all of its trading locations with immediate effect. This decision has not been taken lightly, however, the board is clear that the priority during these unprecedented times is the safety and welfare of our people and our customers.”
Chief executive Mark Raban added: “On behalf of everyone at Lookers, our first thoughts are for those impacted by the virus and their families. The group’s key priority is to protect its employees and customers and do everything possible to prevent the further spread of the virus. I want to particularly thank our colleagues and our OEM partners for their decisive support during this challenging time.”
FleetCheck add coronavirus symptoms to fit-to-drive declaration
FleetCheck has added coronavirus symptoms to the fit-to-drive declaration included in its Vehicle Inspection app.
The Vehicle Inspection app is designed to increase fleet safety for cars, vans, HGVs, buses and coaches and is widely used, having been used to complete 2m checks.
Peter Golding, managing director at FleetCheck, said: “The fit-to-drive declaration is an essential part of the app as well as fundamental fleet risk management itself. It means that a driver is making a declaration each day that they consider themselves OK to work.
“Clearly, when we’re all dealing with something as contagious as coronavirus, this takes on a whole new dimension, especially as many of the fleets still working on a daily basis are home delivery companies that are dealing with the public.
“The new, coronavirus-based declaration that we have written and made available to our customers provides a simple and easy reminder for drivers of the symptoms that they are likely to be experiencing if infected.
“Last week, as an example, 170,000 checks were undertaken using the app so it is no exaggeration to say that the fit-to-drive declaration could help to play a useful part in stopping the spread of the virus among and by drivers.”
Shutdowns ‘to cost European auto industry £29bn’
Sweeping announcements by the region’s automakers mean that over one million vehicles will be lost from production in the period up to the week beginning 27 April, according to GlobalData estimates.
The COVID-19 coronavirus is cutting a swathe through the economic and social fabric of the world and bringing incalculable human cost. Indeed, it is presenting an economic crisis few expected to see again in their lifetimes after the 2007/8 global financial crisis.
Once again, the automotive sector, as one of the most powerful economic multipliers, is at the forefront of the economic crisis. Hardly an hour has gone by in the past few days without an announcement by an automaker that it was stopping production. A multitude of reasons are given for the stoppages – be it supply chain disruption, softening demand or a need to protect the safety of workforces – but all have the coronavirus pandemic at their core. Thus far, 95 out of 103 light vehicle production plants in Europe have announced production stoppages to some degree.
The cost of the stoppages to the OEMs and their suppliers is huge, but what sort of numbers are we looking at?
Taking GlobalData’s latest European light vehicle production forecast sheds some light on this question. According to our assessment, in the six-week period from the beginning of March to 26 April over 1.3m light vehicles will be removed from production. That’s the equivalent of what four average-sized car plants would expect to manufacture in a year. Or taking the average value of a new car at some £22,000 it amounts to £29.3bn in lost revenues.
These are just the short term costs to the industry over a six week period. This crisis is a negative sum game across all industrial and consumer sectors and walks of life and the numbers could be set to become a whole lot worse before they become any better.
VW chief: expect plant closures to be extended
Volkswagen Group chief executive Herbert Diess has warned that VW Group temporary plant closures will likely last longer than the periods so far announced.
In a LinkedIn post, Diess noted that most of VW Group’s factories in Europe have said they will close for close for two or three weeks. But he warned that it is “likely that the measures will take longer. The spread of the virus is unlikely to have stopped in several weeks. So we have to be prepared to live with the threat for a long time – until effective medication or vaccination becomes available.”
Some health sector experts have warned that a COVID-19 vaccination ready for widespread use could be a year away, although tests for the coronavirus anti-bodies and immunity could be available sooner.
Diess also said that Volkswagen is working closely with government ministries and administrations. At the beginning of the outbreak, it said it had donated protective masks to China and that it is “building up production capacity for protective masks in China and helping to support the German health care system with temperature measuring devices, respiratory masks, disinfectants and diagnostic devices”.
“We are trying to bring in our global presence, logistics chains and resources to deal with this global crisis,” he said.
In the social media post, he also said VW is acting to secure liquidity and ensure the ability to deliver, for spare parts or the continuation of critical vehicle projects, such as the ID.3 start-up and the supply of battery cells.
On a positive note, Diess also said that over 100,000 Volkswagen employees in China are starting up their business activities again. “The sanitary and organisational measures are being continued there with great discipline – exemplary in my view – in order to keep the spread of the virus under control even after acute containment,” he said.
Jaguar Land Rover confirms UK plant shutdowns
Tata-owned Jaguar Land Rover (JLR) has confirmed that it will temporarily suspend production at its UK manufacturing facilities. The company’s intention is to resume in the week of 20 April, subject to review.
Jaguar Land Rover said in a statement that it is operating in line with advice from the NHS and Public Health England to minimise the spread of the coronavirus, whilst implementing plans to safeguard its business continuity. The company will “work towards an orderly return to production once conditions permit” it said.
Currently, Jaguar Land Rover’s manufacturing plants in Brazil and India continue operating. The company’s joint venture plant in China reopened in the week of 24 February, as “life begins to get back to normal in the country”.
JLR said the company’s thoughts are with those directly affected by COVID-19 and with the healthcare professionals, whose role in combating this virus is appreciated by all.
Motorpoint launches free home delivery service
Independent car retailer Motorpoint has launched a free home delivery service for customers in light of the current coronavirus outbreak.
The service, which is now live, is available seven days a week and free to customers within a 100 mile radius of their nearest Motorpoint branch. Customers over 100 miles would incur a charge. Furthermore, staff delivering vehicles will observe recommended ‘social-distancing’ measures at all times during the handover of the vehicle.
Mark Carpenter, chief executive of Motorpoint, explained: “These are challenging times and to help minimise the disruption to our customers’ lives Motorpoint is rolling out a home delivery service with immediate effect to those people who aren’t in a position to physically collect their vehicle from our branch network.
“You can already search, find and reserve any one of our 6,000 plus cars from your home via our website. From today you also have the option for your car to be delivered to your door on a date and at a time that suits you courtesy of Motorpoint.”
BCA goes online only from Thursday 26 March
BCA will be moving all of its sales processes online from Thursday 26 March as the company prioritises the well-being of customers in relation to the ongoing COVID-19 situation.
All BCA sales will only be accessible through BCA Live Online and the BCA Buyer app, with no physical buyer attendance at sales anywhere in the BCA network. This is introduced as a temporary measure and will be reviewed regularly.
BCA will continue to run the full programme of sales nationwide, with all centres selling digitally. The full programme of online-only auction sales, Bid Now and Buy Now sales will continue as normal.
Stuart Pearson, chief operating officer of BCA UK Remarketing, said: “BCA has continued to operate normally for as long as possible to support our customers, but we have decided that from Thursday 26 March all BCA sales will only be accessible online.”
“We remain committed to providing customers with access to our market leading remarketing services, offering buyers the best choice of stock and sellers a range of remarketing platforms to meet their needs. In the current circumstances, we believe this will be best done digitally to prioritise the well-being of customers and our people alike.”
Customers can still pay for vehicles at their local BCA auction centre. Alternatively, BCA can email the invoice with payment instructions to pay online.
Buyers can continue to collect vehicles from their local auction centre, with BCA advising customers to contact the auction centre in advance to check the arrangements. BCA can also organise delivery for customers, with online booking available.
Tesla and Toyota top vehicle maker rankings after COVID-19 review
A ranking of top vehicle manufacturing companies worldwide compiled by data and analytics company GlobalData shows the impact of the COVID-19 coronavirus crisis will be strongly adverse across the industry this year, with all major companies impacted.
The GlobalData ranking – which takes into account factors impacting company performance such as positioning for disruptive megatrends, as well as the impact of the COVID-19 coronavirus crisis – shows Tesla and Toyota leading the 32-strong field of automotive companies.
The COVID-19 theme has been newly introduced to the GlobalData ‘thematic’ scorecards and it stands out as the number one short-term theme for the automotive sector. However, themes such as electric vehicles are just as important for medium- to long-term prospects – which partly drives Tesla’s position at the top of the pile.
Attention this year will be firmly focused on the impacts on the sector coming from the COVID-19 crisis that is forcing temporary manufacturing plant shutdowns of uncertain duration.
“The COVID-19 crisis is hitting automotive companies hard on both the supply- and demand-side this year,” says GlobalData analyst Calum MacRae. “Supply chains are being disrupted and market demand has suddenly plummeted across the major regions of the world during March. It looks like the market demand crisis and loss of volume for companies will extend into the second quarter before some stabilisation and recovery thereafter.”
However, MacRae also notes that the sector was under pressure before the coronavirus crisis hit. “This crisis is rather unhelpfully layered on top of already rapidly growing pressures on company bottom lines arising from the need for increased investment in costly advanced technologies such as electrification and automated drive systems. In Europe, manufacturers were also facing challenging new CO2 averages that European companies said impeded their global competitiveness.
“The industry is now clearly facing even tougher conditions and headwinds this year.”
Codeweavers offers three months free use of services
In response to the restrictions put in place due to the spread of coronavirus, Codeweavers is offering retailers three months of free access to some of its services.
“Codeweavers is acutely aware of the stresses that many businesses are under at the moment,” said Roland Schaack, chief executive of Codeweavers. “It’s clear that face-to-face contact is going to be severely restricted for a long time to come and so it’s going to be critical to be able to facilitate remote/online sales.
“Because of this, we have decided to offer retailers who do not have access to similar tools from their web providers three months free use of some of our newest online and showroom digital commerce tools.”
Retailers will now have free access to the online Checkout and Remote Apply services on Codeweavers. Checkout enables customers to buy and finance vehicles online and arrange collection or delivery, while Remote Apply lets retailers generate vehicle and finance offers to send to customers.
As many customers begin to self-isolate and quarantine, there will likely be a significant drop in showroom footfall, said Codeweavers. As a result, companies need to be able to provide their customers with the ability to find, finance and take possession of their vehicle through their websites and other digital channels.
Roland continued: “Here at Codeweavers, we have a clear, well-defined plan that will enable us to provide continued support for our services throughout the crisis.”
Auto Trader waives April fees to support motor dealers
Auto Trader has revealed that it will be waiving all fees during April and deferring March payments by 30 days, to support customers as they deal with the effects of the coronavirus.
A statement on the company website read: “We have chosen this approach not in response to immediate pressures on our business, but rather to continue to support an industry that we have supported for the past 40 years, and one which has supported us.”
Nathan Coe, Auto Trader Group’s chief executive officer, commented: “In these unprecedented times, we have made this decision because it is the right thing to do for our industry, for our customers, and for our business.
“It remains important for retailers to advertise their stock online as people are still buying cars and if they can’t see those cars, it will be even harder for retailers to make sales.
“It is equally important that we continue to prioritise the wellbeing and safety of our people, and we are taking all necessary action to ensure that they are receiving the support they need to continue to serve our customers.”
Auto Trader account managers are now working from home but are still on the phone and fully available to support our customers through this time.
carwow launches remote buying in response to COVID-19
Vehicle comparison site carwow has launched ‘Delivered & Disinfected’ remote buying to assist customers preferring not to visit showrooms.
Dealers on the platform will now be able to facilitate home test drives, offer vehicle video tours and the ability to purchase 100% remotely.
carwow partner dealers can commit to ‘Delivery & Disinfection’, where the delivery driver will spray and wipe down the interior, keys and door handles. The driver will also drop documents through the customer’s letter box, leading to a zero contact buying experience.
“Speaking to dealerships over recent days it’s evident that there is, understandably, social interaction concern among consumers. That’s reinforced by our survey which highlights that almost a third of consumers would now welcome a home delivered test drive vehicle with sanitised touch points,” said James Hind, chief executive of carwow.
“It’s our job to address these concerns and help facilitate dealers and the automotive industry as a whole to keep the economic wheels turning at this unprecedented time. That’s why we’ve worked quickly to add functionality to our website so buyers can now easily identify which dealers are remotely supporting the search-to-purchase journey, helping them buy with confidence from the security of their own home, if they choose.”
A carwow survey of 1,000 UK motorists indicated that despite the coronavirus, a strong appetite from motorists to change their cars still exists, with 54% still intending to change their car in the not too distance future. That figure jumps to 70% in Greater London.
However, the survey confirms that social interaction and exposure fears are a barrier, so dealers need to be quick to adapt their sales processes to make it easier for consumers to buy with confidence. Nearly 30% of people surveyed called for home delivered test drives and 28% would like a home delivery service for their purchased car.
GM and FCA join Ford in NA plant closures
General Motors and Fiat Chrysler (FCA) have joined Ford in shutting their North American manufacturing plants through March 30 in response to the deepening COVID-19 coronavirus crisis.
The US ‘Big 3’ have all coordinated their initial response to the crisis, working with the UAW.
GM said it will begin a systematic orderly suspension of manufacturing operations in North America due to market conditions, to deep clean facilities and continue to protect people. The suspension will last until at least March 30. Production status will be reevaluated week-to-week after that, the company said.
“GM and the UAW have always put the health and safety of the people entering GM plants first, and we have agreed to a systematic, orderly suspension of production to aid in fighting COVID-19/coronavirus,” said GM Chairman and CEO Mary Barra.
“We have been taking extraordinary precautions around the world to keep our plant environments safe and recent developments in North America make it clear this is the right thing to do now. I appreciate the teamwork of UAW President Rory Gamble, UAW Vice President Terry Dittes and local leadership as we take this unprecedented step.”
“UAW members, their families and our communities will benefit from today’s announcement with the certainty that we are doing all that we can to protect our health and safety during this pandemic,” said UAW President Rory Gamble. “This will give us time to review best practices and to prevent the spread of this disease. We appreciate General Motors’ actions today and will continue to work with them on health and safety plans to be implemented when we resume production.”
To ensure that production stops in a safe and orderly fashion, GM plants will suspend operations in a ‘cadence’, with each facility receiving specific instructions from manufacturing leadership.
Manheim UK goes digital-only in response to virus
Manheim UK, part of Cox Automotive, has taken the decision to temporarily move all physical auctions online via its Simulcast platform.
From Monday 23 March, neither account holders or members of the public will be permitted on site to view or bid on vehicles. The Simulcast platform, which broadcasts every Manheim auction, is open to Manheim account holders, trade buyers and sellers only.
Martin Forbes, chief executive of Cox Automotive UK, commented: “These are unprecedented times. We believe that this change is the right thing to do [as a temporary measure] to ensure the health, safety and well-being of our employees, customers and partners.
“Like all businesses, we are trying to navigate our way through the challenges presented by COVID-19. We are monitoring the advice from the UK Government, and following their recommended actions. We are also working closely with customers and communicating our plans to help them keep trading with us in a safe manner.”
Effective from 19 March, the additional Simulcast buyer fee has also been waived by Manheim to make the transition to digital as easy as possible for customers. This concession also applies to any vehicles acquired from Manheim Online.
Forbes added: “All our auction centres remain open in accordance with current UK Government advice. We will continue with the scheduled programme of auctions at each of our UK locations. Vehicles will be driven through the auction lanes as usual and there will be a live auctioneer on the rostrum, but no buyers permitted in the auction hall.”
At each auction centre, there will be a controlled “handover” location for any physical paperwork/payment exchange and for vehicle collection. In addition to the physical auction programme, Manheim is running more “virtual’ auctions and online only events to increase the amount of stock available to purchase.
BMW expects pre-tax profits and vehicle deliveries to drop significantly
The BMW Group has said it expects the spread of coronavirus and required containment measures to have a significant impact on delivery volumes and pre-tax profits.
The carmaker also said it is preparing to suspend operations at factories in Europe and South Africa until 19 April – in response to lower demand and a measure to combat the spread of the virus. The plants will be closed by the end of the week.
In a statement, BMW said: “The current uncertainty regarding the further global spread and the effects of coronavirus makes it difficult to provide an accurate forecast of the BMW Group’s business performance for the financial year 2020.
“Accordingly, a negative effect on the EBIT margin of the Automotive segment for the full twelve-month period is expected to be in the region of 4 percentage point. Based on the latest forecast, the EBIT margin of the Automotive segment is therefore expected to lie within a range of between 2 and 4%.
“In the Financial Services segment, the number of new contracts is expected to decrease and the risk provisioning expense to increase. As a result, the return on equity is forecast to be slightly below the previous year’s level.”
Pendragon takes protective measures against coronavirus
To combat the effects of coronavirus, car dealership group Pendragon has taken some additional protective measures.
These include deferring commitments in its capital expenditure programme, increasing the flexibility in marketing spend, closely monitoring inventory levels and developing alternating work schedules and home-working options for employees.
Pendragon said it is has seen minimal impact on business due to the virus, but is closely monitoring the evolution of COVID-19.
The group noted that its new vehicles are predominantly sourced from the EU and UK. Although some manufacturers have announced short-term shutdowns to their production facilities, Pendragon understands that most OEMs have inventory buffers of several months. Therefore, the group does not anticipate its supply of new vehicles to be significantly disrupted before autumn 2020.
Pendragon also acknowledged the potential impact on consumer shopping habits in the UK. “Most of our new car sales and a substantial proportion of used car sales are made through a Purchase Car Plan or similar arrangement which provides an incentive to customers to change their vehicle at the expiry of the arrangement.
“Consumers can purchase both new and used cars with associated finance over the telephone or internet without visiting dealerships. We also offer vehicle delivery to the customer’s chosen destination. This provides underpinning for vehicle sales, although if the situation worsens, we anticipate there may be some level of deferral.”
The company said it has modelled the impact of a severe reduction in vehicle sales over a sustained period on our financial covenants and bank facility limits and remains comfortable that it is well-positioned, with mitigants available in the more severe scenarios where headroom becomes more limited.
Bill Berman, chief executive of Pendragon, said: “2019 was a year of transition for the Group that played out against challenging market conditions, however, we returned to profitable growth in the second half and this provides us with a solid platform for the coming year. At the moment, we are closely monitoring the impact of COVID-19 on the economy as the situation continues to develop.”
Government announces £330bn loan package for UK businesses
Chancellor Rishi Sunak has committed £330bn, equivalent to 15% of UK GDP, of government loans to UK businesses to combat the effects of coronavirus.
“The government will stand behind businesses, small and large,” said the Chancellor in a speech. “Any business that needs access to cash to pay their rent, their salaries, suppliers, or purchase stock, will be able to access a government loan or credit on attractive terms.
“If demand is greater than the initial £330bn I’m making available today, I will go further and provide as much capacity as required.”
The support will be offered through two main schemes: to support liquidity among larger firms, there will be a new lender facility with the Bank of England, providing low-cost, accessible commercial paper.
For small and medium-sized businesses, the government is extending the business interruption loan scheme, announced in the Budget last week. Rather than loans of £1.2m, the scheme will now provide loans of up to £5m with no interest due for the first six months.
Both of these schemes will be available from the start of next week.
Commenting on the new measures, Mike Hawes, chief executive of the SMMT, said: “We welcome the additional and significant emergency support for business announced by the Chancellor today. The UK automotive industry is inherently strong and globally competitive but now stands on the precipice and will urgently need extraordinary measures such as these to avoid falling over the edge.
“We are already seeing plant closures as global demand falls and supply chains are stretched. The continued success of this industry is critical not just to the country’s economic performance but also to the hundreds of thousands of people across the country who rely on the sector for their livelihoods.”
Government seeks automakers’ help with health equipment production
The UK government has asked manufacturers, including automakers Ford and Honda plus aircraft jet engine maker Rolls Royce, to help make health equipment including ventilators to cope with the coronavirus outbreak.
It has also asked British construction equipment maker JCB if it could transfer some of its skills to ventilator production as the coronavirus pandemic increasingly concentrates European governments’ minds
According to Reuters, the British government announced it was ramping up its battle against the coronavirus outbreak, shutting down social life and ordering the most vulnerable to isolate themselves for 12 weeks.
Prime minister Boris Johnson had spoken to over 60 manufacturing businesses and organisations to ask them to help step up the production of “vital medical equipment” such as ventilators for the National Health Service, a spokeswoman for his Downing Street office told Reuters.
“The prime minister made clear responding to coronavirus and reducing the spread of the peak requires a national effort,” the spokeswoman told the news agency.
“He asked manufacturers to rise to this immediate challenge by offering skills and expertise as well as manufacturing the components themselves. Businesses can get involved in any part of the process: design, procurement, assembly, testing, and shipping.”
Hotels will be used as emergency hospitals, retired doctors are being asked to come back to work and some elective surgery is being canceled.
Health Secretary Matt Hancock said there had been an enthusiastic response to the call for British ventilator production.
“We will buy as many ventilators as are made,” he later told parliament, Reuters reported. “It is not a question of putting a target on it, we are just going after as many as we possibly can.”
NFDA urges government support for automotive retailers
The National Franchised Dealers Association (NFDA) has written a letter to Chancellor of the Exchequer Rishi Sunak to urge the government to support franchised retailers during the outbreak of coronavirus.
The NFDA is concerned that government support is currently only targeting one group of businesses – SMEs. Franchised vehicle retailers pay very high levels of business rates and operate on much tighter margins than most SMEs, with an inherent high fixed cost exposure including rent, business rates, VAT and wages.
As a result, NFDA recommends that:
- Temporary business rates relief be extended to all retail businesses, regardless of their rate bill
- The British Business Bank be authorised to extend the Coronavirus Business Interruption Loan Scheme to any retail business, regardless of size
- Statutory Sick Pay (due to Coronavirus) relief should be provided for the first two weeks to all retail businesses, regardless of size.
Sue Robinson, director of the NFDA, said: “The retail automotive sector employs 590,000 people in the UK and businesses must be protected through supportive fiscal measures during the outbreak of the Coronavirus.
“The impact of the virus is going to be felt across every part of the economy and especially in the retail sector. Revenues from vehicle sales and services will not only be impacted by the introduction of social distancing measures, but also by the widespread shutdown of European car and parts manufacturing.
“There is a real danger that if the Government is only targeting support at one group of businesses (SMEs), some big businesses will fail, causing business interruption in any case for SMEs that contract with them. The automotive retail sector needs to be protected regardless of size.”
Volkswagen to suspend production at European plants
Volkswagen Group has outlined plans to suspend production at its manufacturing plants in Italy, Portugal, Slovakia and Spain this week.
Other VW factories around Europe are also preparing to shut down due to the spread of coronavirus. The company said in a statement that it is uncertain how long the coronavirus will affect the group, and “it is almost impossible to make a reliable forecast”.
Herbert Diess, chief executive of VW, said: “Given the present significant deterioration in the sales situation and the heightened uncertainty regarding parts supplies to our plants, production is to be suspended in the near future at factories operated by group brands.
“2020 will be a very difficult year. The corona pandemic presents us with unknown operational and financial challenges. At the same time, there are concerns about sustained economic impacts.”
Motor dealers facing ‘rent crisis’ in face of COVID-19
Car dealers are facing a rent crisis as the coronavirus continues to spread around the world, with automotive consultant Accendia advising dealers to engage with their landlords over potential rent arrears.
“Dealer groups and OEMs need to implement an emergency rental strategy now to mitigate the impact of coronavirus as consumers are put off unnecessary purchases,” said Accendia.
“Buying a new car will be among the first retail casualties as consumers follow government advice to stay home and limit social contact. For a sector already grappling with falling registrations and lean margins, the effect could be catastrophic for smaller groups and single-site operators.”
UK dealerships should engage with landlords as soon as possible to structure a temporary agreement in respect of forthcoming rental obligations, said Accendia.
Richard Adams, director of Accendia, added: “Several retail clients have approached us to ask what can be done to keep cash in the business and it seems to us that early intervention, by approaching landlords immediately, would be prudent. Many landlords will be expecting an approach and should recognise that properly constructed solutions will benefit landlord and tenant alike.”
General Motors offers 0% financing to spur sales
In the US, General Motors and Ford Motor have launched a range of new vehicle financing options to encourage sales amid the outbreak of coronavirus.
Through the company’s GM Financial arm, General Motors is offers 0% financing for seven years, and four months deferred payments for those with an A+ credit rating.
“We wanted to reassure customers that we’re here for them and our dealers are here for them,” said GM spokesperson Jim Cain. “We’ve never done this combination before.”
Such measures could soon be deployed in the UK, as COVID-19 looks set to severely impact consumer confidence and dealer footfall.
Groupe PSA closes European plants
French car manufacturer Groupe PSA, owner of Peugeot and Vauxhall, will be closing its plants across Europe yo prevent the spread of coronavirus.
A statement from the company read:
“Due to the acceleration observed in recent days of serious COVID-19 cases close to certain production sites, supply disruptions from major suppliers, as well as the sudden decline in the automobile markets, the Chairman of the Executive Board with the members of the crisis unit, decided the principle of the closure of the vehicle production sites, according to the following schedule and until March 27.
March 16: Mulhouse (France), Madrid (Spain)
March 17: Poissy, Rennes, Sochaux (France), Zaragoza (Spain), Eisenach, Rüsselsheim (Germany), Ellesmere Port (United Kingdom), Gliwice (Poland)
March 18: Hordain (France), Vigo (Spain), Mangualde (Portugal)
March 19: Luton (United Kingdom), Trnava (Slovakia)
“Groupe PSA remind that until then, compliance with the barrier measures, going beyond the recommendations of the health authorities on the sites, are the best protection to prevent the spread of the virus.”
Online sales could be ‘lifeline to disrupted dealers’
Online sales could provide a lifeline to car, van and motorcycle dealers whose business will be disrupted by coronavirus, according to iVendi.
James Tew, chief executive officer, said that online could still provide an effective route to market in the event of consumers avoiding showrooms. “We’re raising this subject with all due sensitivity, but, in the event that footfall to dealerships falls dramatically, businesses need to find a way to keep functioning as normally as possible. Moving more sales online is a potential solution.
“There is a potential parallel to the existing situation. We know that when people are sitting at home for extended periods, they shop online. Every year, across Christmas and New Year, usage of our platforms increases dramatically.
“Now, we’re not glibly suggesting that a pandemic is the same as a public holiday. It’s not. But there are lessons to draw. People with money to spend may well want to shop for a car, van or motorcycle at the most unlikely times.”
Step one for dealers would be to maximise their online presence, said Tew, while step two would be to consider how the fulfilment side of the business would work.
“Really, this is the time to ensure that, in terms of the online motor retail facilities that you offer, you have your house fully in order. Effectively, you need to be able to allow the customer to choose and finance their car online as a minimum.
“Then, you have to look at which aspects of the deal can be handled remotely that are currently undertaken on a human level. For example, can you put a process in place where someone can show you their part exchange via their mobile phone – for example, through a Facetime call?”
Tew added that he was confident that iVendi would continue to operate on a business-as-usual basis while the coronavirus situation followed its course.
“Effectively, we were designed from our launch a decade ago to be a 21st century mobile business, so in the event of any restriction on movement of people by the government, our entire team will be able to work from home and there should be no disruption to any aspect of our service provision to dealers and other customers.
“In the meantime, we are following all official advice in terms of personal and office hygiene, keeping an eye on staff for signs of coronavirus and also minimising travel where necessary. It is about putting the health of people first.”
Car market forecasts likely to be revised as public health crisis deepens
Following news that car sales in China plunged 80% in February due to the impact of measures to tackle the coronavirus (Covid-19);
David Leggett, automotive editor at GlobalData, offers his view: “There are signs that attention in the auto industry is shifting away from tackling immediate supply chain disruption towards the prospect of much lower demand through 2020.
“China’s 80% market decline in February is a stark warning of the potential for lost sales in the global automotive market in the months ahead. Forecasts for car markets are likely to be revised down as the public health crisis deepens – especially in Europe and North America.
“Vehicle manufacturers and suppliers alike will be anxious over the duration of the expected coronavirus impacted market downturn and the speed of recovery later in the year. Even without the added impact of the Covid-19 pandemic, the global vehicle market was heading for a decline of around 2% this year with the US, China and European markets flat or slightly declining.
“The demand outlook has now deteriorated further.
“If the global vehicle market decline in 2020 is nearer 10%, that will inevitably result in much lower earnings for automotive companies, many of whom are experiencing rising cost pressures formed by the necessity to invest in expensive technologies such as electrification. Indeed, the new stronger headwinds on the global car market come as they face the burden of much tighter regulatory hurdles on CO2, especially in Europe.
“While welcome signs of a nascent recovery to activity have been evident in China in recent weeks, the rest of the world is still very much heading into an economic downturn of uncertain depth and duration. Automotive companies will be especially nervous.”
Budget 2020: industry reaction
Paul Burgess, chief executive of Startline Motor Finance, said: “It’s extremely welcome that the Government has unveiled a range of measures designed to protect the economy but really, the used car market over the next few months will depend very much on the spread of coronavirus in the UK and how the public react.
“It is noteworthy that the Government is now saying that the impact on the country will be ‘significant’. Certainly, it seems probable that people who are working from home and generally curbing their travel are probably going to be less likely to change their car, whatever steps are taken to protect businesses. There are simply a lot of unknowns.
“However, the longer-term investments that the Government are making are to be welcomed, especially in roads and EVs. Coming out of the other end of the coronavirus crisis, the economy will need boosting in the medium-long term, especially as we settle into a post-Brexit scenario, and it looks as though borrowing will be taking place to make that happen.”
Phil Jerome, managing director of Meridian Vehicle Solutions, said: “The shadow of coronavirus looms large over this Budget. It is probably not the financial plan that the Government planned to deliver even a few weeks ago but they have shown, with the wide range of mitigating measures that have been introduced, that they are taking the economic aspect of the threat of epidemic seriously.”
Mike Hawes, chief executive of the SMMT, said: “Unprecedented situations call for unprecedented measures so today’s emergency funding and wider measures to support businesses and workers in managing the likely effects of coronavirus is very welcome.”