Further headwinds as sector faces uncertain 12 months
Philip Nothard, Insight and Strategy Director,
Welcome to issue 5 of AutoFocus.
Welcome to issue five of AutoFocus – Cox Automotive’s quarterly insight magazine, covering the key market trends you should know about.
The sector has had a tough time in recent months. However, industry experts – Cox Automotive included – were optimistic for a slow but steady recovery throughout the year, with supply returning and price rises settling down. Still, as we learned with COVID-19 and now the distressing conflict in Ukraine, you can never truly predict what’s going to happen.
Setting geopolitical issues aside, the first quarter of 2022 has shown that vehicle volumes will not return to pre-pandemic levels any time soon as semiconductor and raw material shortages continue to grip manufacturers worldwide. As a result, forecasts for the year are being downgraded, as you’ll see in our new and used market sections.
And even if supply improved, would the consumer demand be there? The rising cost of living is having a profound effect on millions of people across the UK, with rising inflation, energy prices, and interest rates creating a perfect storm that will leave most households with less money to spend.
"While market dynamics have shifted massively, it’s clear that there is profitability available at all levels within the automotive sector, from the manufacturer right through to the end retailer."
Philip Nothard, Insight and Strategy Director, Cox Automotive
In the last issue of AutoFocus, I spoke about how we should all get used to VUCA (volatility, uncertainty, complexity, and ambiguity), and it’s clear that the automotive industry still faces a bumpy road ahead. Continual headwinds are testing the resilience of the entire global automotive sector.
Notwithstanding the challenges faced in the automotive sector and the broader economy, we should recognise that we are in a period of change, and the market we left behind pre-pandemic will never return. The volumes of vehicles, the fuel types, the channels to market, and consumer behaviours are evolving, and as an industry, we need to ensure we continue to react.
But as the last two years have proved, change doesn’t always mean doom and gloom; it can also present opportunities. While market dynamics have shifted massively, it’s clear that there is profitability available at all levels within the automotive sector, from the manufacturer right through to the end retailer.
At Cox Automotive, we are firm believers that businesses must be well informed of the market dynamics in order to make the best decisions for the future. That’s why we’re committed to bringing you the insight found in outputs such as AutoFocus and the Insight Report. I also would like to thank Grant Thornton, Regit, and the ICDP for their great contributions to this issue.
I hope you find this edition of AutoFocus insightful and that it provides context to the challenges you are facing right now. If there is anything you want to learn more about or see in future issues, then please do not hesitate to contact me, but for now, enjoy.