The global passenger vehicle market is still on track for growth: only Western Europe is expected to post a loss in 2012

Global new registrations will once again set a new record in 2012, growing by almost 7% over 2011. In general, expectations have been revised slightly higher (up 0.3%) relative to the month before. Significant downward revisions were made for Argentina (down 110,000 units) as a result of economic problems in that country. On the other hand, the forecast was raised in India (up 300,000 units), where the weakness in demand seems to have finally been overcome. The outlook is also somewhat better now for Russia, the US (up 50,000 units each) and Japan (up 70,000 units).

The Asia/Pacific will be up almost 12% from the year before in 2012. This is attributable to the aforementioned situation in the Japanese passenger vehicle market and the continuing growth in China. Only in South Korea is a slight decline expected.

The NAFTA region is expected to continue to recover, although its former levels will remain out of range. Nevertheless, new registrations will exceed the 16 million mark by a significant margin. Eastern Europe will grow by more than 8% in 2012 thanks to the good conditions in Russia.

Western European passenger vehicle demand will be down again in 2012 (by 5%), as was the case in 2010 and 2011. New registrations are expected to fall in every country except Germany. Germany has been only slightly affected by the crisis so far, and its outlook for the current year is very good, especially in the job market. As a result, the German economy is expected to remain stagnant at the least, and will perhaps even manage to post slight growth.

Source: R. L. Polk & Co. 

The global profile of the 2012 Sewells Group study tour to the NADA US Convention was greatly enhanced by the welcome inclusion of two dealer group owners from India. Francis Paul Kuttukaran and Naveen Philip, two of three Directors of the family-owned Popular Vehicles and Services Ltd based largely in Kerala and Chennai, flew to Las Vegas to join the 30-member party which included 15 dealer principals from across South Africa, two from Angola and one each from Kenya and Zambia.

A subsidiary of the Popular Group which traces its history to 1939, the retail automotive arm was established 26 years ago and was among the first batch of Maruti Udyog dealers appointed in India. Including numerous individual multi-franchise new car showrooms (representing mainly Suzuki but including other brands such as Land Rover and Jaguar), the Popular organisation employs around 6000 people and also operates a wide network of service workshops, True-Value used car outlets and strategically placed Maruti Driving Schools.

Speaking with BenchMarker after his return from NADA US, Francis said the automotive operation had sold 50000 cars in a highly competitive year of 2011. He said that India’s equivalent of NADA (the relatively new Federation of Automobile Dealers’ Associations – FADA where he plays a prominent role) has successfully already held bi-annual local conferences in conjunction with the Auto Expo in New Delhi. Naveen told BenchMarker he had worked energetically to attend as many workshops at the Convention as possible, and was pleased to have also experienced exposure to some truck and transport inputs which were a new inclusion at NADA this year. His most interesting workshop session was titled ’22 lifelines to profit’.

Global new vehicle sales are growing at a much faster pace than this time last year, according to new industry data.  In February, global demand for passenger vehicles was up 15%* over the year before. All regions except for Western Europe and Latin America posted clear gains, which were in the double digits in some cases.

The Asia/Pacific region was up by 40% from the year before in February, according to preliminary estimates. Japan was up a good 30% over February 2012. In addition to the dynamic rebound in these markets, it is apparent that new incentives are beginning to bear fruit. Extraordinary growth is expected in China as well compared to a very weak February 2011 given the typically strong performance of that market, as well as the fact that the Chinese spring festival was celebrated in January this year.

In Eastern Europe (up 14%), the growth continued in February 2012 with double-digit gains, as Russian growth has not let up following expiration of the scrappage scheme. Latin America was down 10% from the year before in February, as that regions economic problems have started to leave their mark.

New registrations were once again down in Western Europe (down 10%). This trend has been driven primarily by the Southern European markets, which have suffered the most from the current financial crisis.

*based on data which is preliminary in some cases

Vehicle sales volume performance continues to provide the talking point in both Australia and New Zealand. In Australia, the “magic million” is now the minimum market performance benchmark and certainly from our perspective this will be the case for the foreseeable future. In New Zealand the push to achieve 100,000 units will be the challenge with performance geared to a high 80K and early 90K result again for the foreseeable future.

So if the market place so to speak is not radically changing, volumetrically, so what? Shouldn’t we be happy?

For those counting vehicles, registering them and such, sure but the real issue is around brand and in particular individual dealer performance.

Both country markets are inundated with brands, models and price points and with the maturity of the prospective buyer and the knowledge that the market is flat(ish), then the fight by brands for those all important market share points will in fact be the fight over fractions of points. Excellent for buyers, but what of the impact on the retailer dealer?

As independent business operations, dealers must be and operate smarter seeking ways to grow and retain both customers and staff. Reliance on their brand partners will not be enough. This is well accepted but not necessarily adopted and we at SGA have a range of support and performance improvement initiatives that we have proven working with many dealers that will enhance the retail performance of dealers and brands alike.

This year will be no bigger a challenge than the last, it will just be different and every automotive operator must ask – what am I going to have to do to make sure we get to where we need to be?

For the answer, look further into our services and information or make direct contact with us.

We know we can improve your performance.

China, being the biggest automotive market in the world since 2010, with more than 50 brands and 12 million annual car sales, is in fact a very young market. The dealership business structure started at the end of last century and only has slightly more than 10 years of development till now. But, the speed of growth for this market is very high, consistently in double digits for the last 10 years, especially in 2007 to 2009.

With such young market but huge market size environment, the critical success factor for each dealership is definitely relied on the Human Resources issues – knowledge, skill-set, capabilities and of course, the training/development processes which can be provided to them.

Sewells China was established in Shanghai, China 2 years ago. And since, it has experienced a tremendous growth of its operations and business activities in this short span of time. The operation now is managing a training resource pool of 100 excellent and highly skilled trainers/facilitators/developers. Also in this short period since incorporations, with the excellence in project management, training delivery and the best capable training resources in the industry, the Company is believed to be one of the top automotive consulting firms in China – highly sought after by many auto makers for servicing their dealer development needs.

Gaining from our vast exposure and overseas successful experience, we are bringing into China one of our unique approaches – Business Management (“BM”) and Performance Consulting (“PC”) Tools. This BM & PC approach is known as the best tool to assist/working with dealers to improve their financial returns and enhance their performance in all areas of a dealership operation. BM & PC can also provide benchmarking (comparisons) between dealers; zones; city tiers; brands and even between countries – for example, comparing one particular brand’s network performance for all the countries that it is operating in Asia Pacific.

Our mission in China is to become the market leader of providing the industry benchmarks on all brands dealership Business Management data to the market, assisted by our state-of-the-art Business Management System, eSOS.

“BenchMarker” – a quarterly publication by Sewells Group globally is also one of the latest products & services in Sewells to provide some information and guidance on dealer profitability and performance enhancement opportunities.

Please stay tune with us on our website or “BenchMarker” publication for more information. And please look further into our products and services information or make direct contact with us.