Consumer confidence in the UK: Automotive
The Deloitte Consumer Tracker Q3 2019
The Deloitte consumer confidence index fell to -9 per cent in Q3 2019, one point lower than in the previous quarter and two points lower compared to the same period a year ago. Confidence is now at a level last seen in Q4 2018 and below the Deloitte Consumer Tracker’s long-running average.
Meanwhile, the UK new car market fell by 2.5 per cent in the first three quarters of the year, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Overall sales this year are lagging behind the rest of Europe and are actually at their lowest level since 2013.
Consumer preferences and government legislation are changing the shape of the market
The overall shape of the car market is changing with consumers increasingly switching from diesel to petrol and from hybrid to fully electric. The long-term decline of diesel car sales means that problems are accelerating for manufacturers and their partners.
Our survey data indicates that the prospects of a turnaround are slim, with less than four per cent of consumers planning to purchase a car in the next three months. This figure is the lowest recorded since the Tracker began and points to mounting difficulties for the automotive sector.
In addition to a fall in new car sales, there are a number of potential headwinds for the automotive industry. For example, the long-term decline in diesel car sales means that the industry is faced with a surplus stock of new and used cars. Meanwhile, the value of sterling against the euro has fallen by 12 per cent since the EU referendum. So far, consumers have been shielded from price rises associated with currency fluctuation, but if the pound continues to fall, manufacturers may be forced to pass on the costs to consumers. The affordability of car financing is also under increasing scrutiny with the Financial Conduct Authority recommending a more responsible approach to affordability checks. According to our analysis, while the majority of consumers who own a car on finance are comfortable with the repayments they make (57 per cent), 13 per cent would be willing to downgrade their car or end their lease to reduce their monthly costs.