What Car? Insight weekly update – week twelve
Covid-19 and electrification – an unlikely consequence?
This is the latest report in a series of weekly updates for industry colleagues from Rachael Prasher, managing director of What Car? and Haymarket Automotive. Quoted poll data is from more than 6300 whatcar.com users.
There is a term in economics called an externality – roughly described as a ‘spillover’ effect from a policy, event or natural occurrence on a sector.
An apt example is to think along the lines of vaccinating against diseases; the immediate benefit is on the individual vaccinated, but the rest of the society benefits by now having a lower probability of the infection spreading.
Covid-19 is set to have many spillovers in the coming months and years, but one of the unexpected ones is looking likely to be its contribution to electrified vehicles. Of more than 6300 respondents this week, 34.3% tell us that when they buy their next new car, they are now more likely to consider an electric or hybrid vehicle because of the pandemic.
Whether that’s because it has caused them to consider ways of improving things like air pollution, or whether it’s motivated by potential cost savings, needs further investigation, but the impact is evident.
Our Target Price mystery shopper data also shows us that dealers have already been taking proactive action to take advantage of this interest – albeit driven by either a need to meet customer demand or to hit emissions targets.
Discounts on electrified vehicles have gradually increased throughout 2020 and in June, are at their highest level for the year. We’re now seeing the average cash offer on a new electric car standing at £1614, or 4.16% off list, while plug-in hybrids are offered with savings of more than £4034, or 7.44%.
Threat of switching brands even higher for EVs with long waiting lists
I’ve previously spoken about the need to capitalise on early leads and ensure you have enough vehicle stock to satisfy demand. Our latest data shows that consumer patience continues to run low.
Nearly 40% of prospective new car buyers tell us they aren’t willing to wait more than four weeks for their next car, with 16% switching to another brand if their waiting time cannot be met. Importantly, 28% of buyers also tell us that if the exact model they want can’t be found, they’ll switch to another brand, rather than wait for stock to arrive.
This is going to be a key battleground when it comes to electrified vehicles, given the challenges around availability.
It was only last year that our Car of the Year, the Kia e-Niro, completely sold out in the UK, with a 3000-strong waiting list emerging. While building up demand worked for Kia 12 months ago, buyers are unlikely to be as patient now.
In other words, those with stock in hand will gain, while those with restrictions on numbers will lose out.
Covid-19 and the demand for government purchase incentives
Still we wait on whether the Government will launch any incentives to encourage people to buy new cars, be it via a VAT reduction, a scrappage incentive or something else.
What we can see is that the delay in announcing anything is increasingly holding back purchase decisions. Our data shows us that 45% of new car buyers and 26% of leasing buyers are now delaying their purchase in the hope of a scheme being given the green light.
Ironically, given they might be able to receive better savings, buyers of electrified cars are less likely to delay – although more than one in eight still say they are waiting.
Top 10 sales enquiries to What Car? New Car Buying platform
Enquiries ranking / Make and model
While enquiry levels to our New Car Buying platform have reduced since the record-breaking surge in the week dealerships in the UK were allowed to reopen, they are still running at more than 140% of our 2020 average and more than 40% up year on year. In other words, the pent-up demand is still there, as is a greater willingness to start a buying journey online.
There is a strong mix of enquiries, with the influence of winning our Car of the Year evident (Volvo XC40 and Kia e-Niro), as well as the desirability of premium badges and SUVs.
Top 10 reviews on What Car? by page views
Enquiries ranking / Make and model
Page views to our reviews section rose by almost 30% last week – the biggest week-on-week growth since lockdown eased, also taking us well above our year-on-year levels and up to the numbers we were seeing in late February and early March.
This implies a strong level of research around new car purchasing. While no one can be certain how long this will last, it does indicate that there is a strong window of opportunity for car makers to sway decisions and seal deals at present.
Numbers were also boosted by the first UK drive of the new Skoda Octavia – a perennial What Car? award winner and reader favourite for its blend of capability and value. It caps another excellent week for Skoda, which again has three cars in the top 10.
New Car Buying: now free to use until the end of September
We have extended our free offer to franchised dealers and OEMs to use our New Car Buying platform and lead management service until the end of September – with no tie-ins for new users, meaning there is no risk.
We recognise that our business can only thrive when retail is thriving again, and that is why we are offering leads from our in-market audience for free.
Current users include Ford Retail, JCT 600, Hendy Group, Marshall Motor Group, Snows, Vertu Motors, Vindis and Waylands Automotive.
If you’re interested in taking advantage, you can contact our support team on 020 8267 4138 or email us at email@example.com.
Managing director, What Car? and Haymarket Automotive