The Automotive Retail Sector – Impact of the Recession - Key
Findings*
July 2009
Recession
•
The UK economy officially entered recession at the end of 2008 and there is some
evidence of its impact on the automotive retail sector.
Vehicle Manufacturers
•
UK car production has continued to be hard hit by the recession.
•
Production figures showed a year on year decrease of 55.3% in April 2009.
•
July saw some signs that the government scrappage scheme has had an impact on
new car sales. Figures from the Society of Motor Manufacturers & Traders saw a 2.4%
increase in car sales in July compared with the same month last year.
Vehicle Sales
•
In May 2009, new car registrations were down 24.8% compared with the same month
in 2008.
•
Year on year UK van and truck registrations were also down significantly compared
with May 2008 (down 49.2%).
•
There has been a similar drop in new car registrations across Europe. In Western
Europe only Germany saw a year on year increase in April 2009 (19.4%). Year on
registrations in France and Italy fell by 7.1% and 7.5% respectively.
Used Car Market
•
Sales of used cars have been less affected by the recession.
•
Full year volumes in 2008 were down 4.4% on the previous year compared to a fall of
11.3% in new car sales.
Maintenance and Repair
•
There is a general view that both the light and heavy vehicle maintenance and repair
sub-sectors have seen a negative impact of the recession.
•
Independent garages, which rely on word of mouth recommendation for business
rather than advertising/marketing, seem to have been less affected than other garages.
•
Anecdotal evidence suggests consumers are increasingly getting only essential
maintenance and repairs carried out. Non-PAS 125 registered accident repair centres
are seeing decreased levels of business in line with the decline in non-essential repair
work.
•
PAS 125 registered businesses have seen less of a decrease in business as insurance
work levels remain constant.
Parts Distribution and Supply
•
The recession’s impact on the parts distribution sub-sector has been mixed with some
businesses reporting that demand has gone down and others reporting the sector is
buoyant.
Vehicle Rental and Leasing
•
Rental and leasing has so far not been hit as hard by the recession. The leisure side of
the rental market business has increased as people are reportedly renting cars for
short periods of time instead of buying their own vehicles. However, the commercial
leasing side has seen a slight dip in business. There has been a general decline in
business travel meaning fewer requirements for hiring cars.
Roadside Assistance
•
Roadside assistance and recovery has been affected to some extent by the recession.
Larger employers report a slight negative impact of the recession on the whole and
medium and smaller employers in this sub-sector have reported large decreases in
work over the last 18 months which they attribute mainly to decreased road traffic.
Training
•
The training picture is mixed. Apprentices and young people have been negatively
affected by the recession. There is evidence of employers not planning to take on new
apprentices, or having to make existing apprentices redundant in the coming year due
to the recession..
•
There appear to be two groups of employers emerging, employers who believe that
‘now is the time to train’ as business is slower and those employers who view training
in skills as an unnecessary spend at this time of recession.
Employment in the Automotive Retail Sector
•
There is extensive anecdotal evidence that many businesses in the sector are making
widespread redundancies and are not replacing staff who leave their employ. Official
data sources show that workforce levels in the sector are declining.
Redundancy
•
Since 2007, as the economic downturn began to have an impact on the economy, there
has been a sharp increase in the redundancy rate within the automotive retail sector
from 25.7 to 39.9.
•
Skilled trades, which make up a third of occupations within the sector (34.2%), account
for a disproportionately high number of redundancies (45.5%) suggesting that, during
the recession, businesses in the sector are not able to hold onto their skilled staff. If this
trend continues it could potentially have a substantial impact on the sector’s ability to
come through the recession and capitalise on future opportunities
Unemployment
•
Having declined through much of 2007 and to mid 2008 the number of people seeking
unemployment benefit within occupations covered by the automotive retail sector has
increased significantly since July 2008.
Vacancies
•
For April 2009, the number of vacancies for jobs in the sector is down 65% to 1,993
compared with 5,755 in April 2008.
•
In percentage terms total number of live unfilled vacancies was 70% lower in April 2009
compared with the same month a year previously.
*Sources
This paper was produced from data included in the IDBR, ABI an LFS nationally published datasets. The IDBR records VAT
and PAYE registered companies from the Inland Revenue and Companies House, Dun & Bradstreet and the ONS. The ABI is
based upon the IDBR but is a single snapshot and excludes Northern Ireland. The LFS is a quarterly survey of households that
presents data by SIC code but does combine 50.50 sale of automotive fuel with the SIC codes of the automotive retail sector.
All vehicle sales, registration and production figures are sourced from SMMT.