2. 2 Bank of Ireland
Professor Peter N C Cooke
Professor of Automotive Management
The University of Buckingham
peter.cooke@buckingham.ac.uk
www.buckingham.ac.uk/cam
The Automotive Industry
- Business Recovery – the Way Forward?
3. 3 Bank of Ireland
Objectives
• Review the status of automotive industries in the
Eurozone
• Examine UK automotive market recovery
• Highlight possible issues for the Irish automotive sector
recovery
4. 4 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
5. 5 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
9. 9 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
10. 10 Bank of Ireland
UK/Ireland GDP Growth Best Case Scenario
Source; Bank of Ireland
-3.5
-7.6
-0.2
1.4
0.8
1.4
2.0
2.6 2.8 2.8 2.8
0.6
-4.9
1.8
0.9
-0.2
1.1
1.8
2.3 2.5 2.7 2.8
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% GDP growth year on year
Ireland UK
11. 11 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
12. 12 Bank of Ireland
UK New Car Registrations; 2000 - 2015
Source; SMMT/Buckingham
0
1000
1
Tho
usa
nds
of
cars
0.05
1.05
Mar
ket
shar
e
#REF! #REF!
0
0.2
0.4
0.6
0.8
1
1 .2
1
-3 0
-2 0
-1 0
0
1 0
2 0
3 0
0.0
0.5
1 .0
1 .5
1
0
1
2
1
%
#R E F ! #R E F ! #R E F ! #R E F ! #R E F !
0
2
1
Millio
ns
678
Aver
age
age
#REF! #REF!
0
1
1
2
1
#R E F ! #R E F ! #R E F ! #R E F !
111 .00
0.5
1
1 .5
1
S h a re
0
5
1 0
1 5
2 0
2 5
3 0
3 5
4 0
4 5
5 0
5 5
#R E F ! #R E F ! #R E F ! #R E F ! #R E F ! #R E F !
0.28
0.11
2.10
2.04
2.14
2.582.56
2.46 2.44
2.57
2.40
2.13
1.71 1.92
1.94
2.20
2.22
2.34
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Millionsofcars
New car sales Scrappage deals New car sales forecast
2.03
1.99
14. 14 Bank of Ireland
UK Car Finance; 2012
• Consumer new car finance rose by 36% in 2012 – 662,00
units, £9,408 million
• 71.2% of private new car sales financed through
dealerships
• 788,000 private used cars bought on finance in 2012 -
£7,264 million
• 1.91 million private and business new and used cars were
financed in 2012 compared with 1.67 million units in 2011
15. 15 Bank of Ireland
UK BVRLA Fleet Size by Finance Category; 2011
Source; BVRLA
2,976
24,336
77,002
70,424
1,062
227,006
19,010
26,808
198,964
204,337
233,697
1,319,456
Contract purchase
Finance lease
Rental fleet
Fleet management
Personal contract
Contract hire
LCVs Cars
17. 17 Bank of Ireland
UK New/Used Car Market Volume; 2000 - 2012
6.7
8.6
2.041.92.0
2.4
2.32.4
2.62.62.62.5
2.2 2.1 2.0
6.6
7.1
7.4
7.3
6.8
7.2
6.66.4
6.8 6.7
6.3
8.6
9.4
8.99.0
9.8
9.2
9.7 9.7
9.5
8.8
8.3
1
2
3
4
5
6
7
8
9
10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Millions
New Used Total
Source, SMMT/BCA Used Car Market Report 2012
18. 18 Bank of Ireland
UK New/Used Car Market Value; 2000 - 2011
Source, SMMT/BCA Used Car Market Report 2012
29.0
35.7
28.7
32.4
29.8
27.5
33.5
32.4
28.028.1
33.0
32.4
32.2
35.0
27.3
25.4
28.1
32.0
30.0
32.3
33.9
33.3
32.4
34.2
24
26
28
30
32
34
36
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
£billion
New Used
19. 19 Bank of Ireland
UK Car Parc Average Age of Cars; 2000 - 2015
Source, SMMT/Buckingham
30.4 30.5 30.5 30.7 30.830.130.330.229.929.827.8 28.5 29.0 29.427.2 30.3
7.44
7.59 7.56
6.93
6.79
7.11
6.78
7.01
6.88
6.69 6.70 6.73
7.06
7.25
7.69
7.80
10.0
15.0
20.0
25.0
30.0
35.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Millions
5.00
5.50
6.00
6.50
7.00
7.50
8.00
Averageage
Millions Average age
20. 20 Bank of Ireland
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
1-2 years 3-5 years 6-8 years 9+ years
UK Car Parc by Age Segment; 1990 - 2015
Source; SMMT/Buckingham
2 million fewer 0-5
year-old cars on the
roads than 2007
21. 21 Bank of Ireland
UK 5-year Car Parcs; 2008/2012 vs. 2004/2008
Source; SMMT/Buckingham
-400,000 -300,000 -200,000 -100,000 0 100,000 200,000
Volvo
Volkswagen
Vauxhall
Toyota
Suzuki
Skoda
SEAT
Renault
Peugeot
Nissan
MINI
Mercedes
Mazda
Land Rover
Kia
Jaguar
Hyundai
Honda
Ford
Fiat
Citroen
Chevrolet
BMW
Audi
Alfa Romeo
22. 22 Bank of Ireland
Why is the UK Running Against European Pattern?
• Windfall cash from PPI – c£8 billion – pay off credit
card; buy hot tub/replacement car
• Low interest rate on savings
• New car deals available/low rate finance
• Cars ‘wearing out’
• Improving fuel efficiency with newer cars
• Price of used cars
23. 23 Bank of Ireland
UK New Car Registrations; 2000 - 2015
Source, SMMT/Buckingham
0.28
0.11
2.34
2.22 2.20
1.94
1.921.71
2.13
2.40
2.57
2.442.46
2.56 2.58
2.14
2.04
2.10
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Millionsofcars
0
1000
1
Tho
usa
nds
of
cars
0.05
1.05
Mar
ket
shar
e
#REF! #REF!
0
0.2
0.4
0.6
0.8
1
1 .2
1
-3 0
-2 0
-1 0
0
1 0
2 0
3 0
0.0
0.5
1 .0
1 .5
1
0
1
2
1
%
#R E F ! #R E F ! #R E F ! #R E F ! #R E F !
0
2
1
Millio
ns
678
Aver
age
age
#REF! #REF!
0
1
1
2
1
#R E F ! #R E F ! #R E F ! #R E F !
111 .0
0
0.5
1
1 .5
1
S h a re
0
5
1 0
1 5
2 0
2 53 0
3 5
4 0
4 5
5 0
5 5
#R E F ! #R E F ! #R E F ! #R E F ! #R E F ! #R E F !
New car sales Scrappage deals New car sales forecast
2.03
1.99
Used Car Supply Gap
24. 24 Bank of Ireland
Issues to be Resolved
• Smaller overall volume forecast
• Used car shortage
• Reduced service business
• Customer finance requirements
• Buyers downsizing/moving to used
25. 25 Bank of Ireland
“The challenge for recovering markets will be to generate
profits from smaller, leaner volume with increased
competition in the marketplace”
26. 26 Bank of Ireland
New or
Used Car
Service Agreements
Extended warranties
DailyRental
Carbon footprint reduction
Familyfleet/secondcars
Point of Sale Finance
Manufacturer’s Finance
Point of Sale
Finance/
Commission
Routine
Service
Insurance
Group
Insurance
Tyres
B
atteries
Exhausts
AfterMarket
Fittings
GAP
insurance Payment protection
New or
Used Car
Service Agreements
Extended warranties
DailyRental
Carbon footprint reduction
Familyfleet/secondcars
Service Agreements
Extended warranties
DailyRental
Carbon footprint reduction
Familyfleet/secondcars
Point of Sale Finance
Manufacturer’s Finance
Point of Sale Finance
Manufacturer’s Finance
Point of Sale
Finance/
Commission
Routine
Service
Insurance
Group
Insurance
Tyres
B
atteries
Exhausts
AfterMarket
Fittings
GAP
insurance Payment protection
Point of Sale
Finance/
Commission
Routine
Service
Insurance
Group
Insurance
Tyres
B
atteries
Exhausts
AfterMarket
Fittings
GAP
insurance Payment protection
27. 27 Bank of Ireland
“Moving to a total service concept may require rethinking
overall approach to business”
28. 28 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
29. 29 Bank of Ireland
Ireland New Car Registrations; 2000 - 2012
Source, SIMI
174.2
230.8
164.8
156.1
145.3
154.1
171.7
178.5
186.5
151.6
57.5
88.4 89.9
79.5
0
50
100
150
200
250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousandunits
30. 30 Bank of Ireland
Ireland Used Car Change of Ownership
472.9
556.8
604.8
654.8
709.0
606.1
526.3
566.0
587.6
609.8
100
200
300
400
500
600
700
800
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousandunits
Source, DECL
31. 31 Bank of Ireland
Ireland New Car Supply Gap
174.2
230.8
164.8
156.1
145.3
154.1
171.7
178.5
186.5
151.6
57.5
88.4 89.9
79.5
0
50
100
150
200
250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousandunits
Used Car Supply Gap
Source, SIMI/Buckingham
32. 32 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
33. 33 Bank of Ireland
Market for Recovery
• Requalify prospects – new and used
• Total product mix strategy
• Vehicle sales mix – market needs
• Sustainable used vehicle sourcing
• Role of new and used car sales managers
34. 34 Bank of Ireland
Finance Requirements
• Fleet and private buyer finance
• Deferred added-value finance
• Introduce new methods of finance to meet changing
customer needs
• Positive risk management strategy
35. 35 Bank of Ireland
Business Recovery
• Used vehicle refurbishment
• Absorption review and management
• Revised refurbishment accounting
• Aftermarket service development and retention
• Expanded age and mileage targets
36. 36 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
37. 37 Bank of Ireland
European
Status
UK & Irish
Economies
Business
Recovery
Possible
Actions
UK Business
Recovery
Opportunities
for Ireland
Implications
& Conclusions
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.
Starting with a PBL (Pick-By-Light), PTL (Pick-To-Light), PBV (Pick-By-Voice, when operators use headphones and microphones).I n these systems, the operatives get their picking instructions via, either digital displays, or voice messaging (PBV). Connection to WMS is fundamental to all operation principles.