An explosion in the number of new vehicles available in the UK has improved choice for car buyers, but has also made the task of selecting a new model and pricing a used one much more of a challenge, according to Glass’s Information Services.
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Over the last five years there has been a 24% increase in the number of vehicle model ranges. In addition, there has been a marked increase in the number of individual models that are available within each range.
In September 1997 new car customers had the choice of 3,200 models to choose from, but by September 2002 this number had escalated to over 4,600 models, a rise of more than 46%.
The main reason for this trend is that, in an increasingly competitive market, vehicle manufacturers are finding they need to maximise the opportunities for a sale from every customer enquiry. “However, car makers now need to work harder and spend more on every model launch in order to attract the attention of prospective buyers,” said Glass’s managing editor Adrian Rushmore
“As well as competition from rival manufacturers, individual models also face competition from within the marque. For example, a car maker’s hatchback, compact MPV [minivan], estate [wagon] and saloon may all compete for the attention of the same buyer.
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By GlobalData“What aggravates this problem further is the huge choice of options and trim combinations that were not available five years ago,” Rushmore added.
“All of this means that a positive brand identity has become more crucial than ever. Offering the widest choice of models and options counts for very little if the customer’s perception of the brand is poor.”
The knock-on effects are also being felt in the used car market, Glass’s claims.
More and more dealers find themselves being presented with unfamiliar models to appraise and value.
In the short term at least, this problem will only get worse because most of the expanding number of new models sold in the last two years have yet to reach the used market.
The franchised networks are better able to identify models and specifications because staff will have the knowledge from selling them when they were new.
However, when the facts are unknown, the used car trade often places a value equal to that of a lower specification vehicle that they may already be more familiar with.
With 4,600 models currently available to the new car buyer, has the UK reached market saturation?
“Assuming that the number of models is related to market growth and that the market is expected to go into retreat from next year, we would expect the rate of increase to at least slow,” said Rushmore.
“The final decision rests with customers. If they want more choice then manufacturers are sure to oblige.”
Responding to the Glass’s Guide claims, David Miles, press and public relations manager of the UK Mitsubishi importer, which has this year rolled out numerous special edition models, said: “This year the UK market has been extremely tactical.
“Customers are looking for fresh added-value models so we all need to keep ringing the changes – fresh specification, fresh model name, fresh finance offer and added value specification.
“It is a buyer’s market following the “Rip-off- Britain campaign. Customers shop around.”
Miles said he thought Glass’s was over-stating their case.
“At the end of the day the customer gets a cheaper car, better spec, added value, low finance or free servicing, all reasons to buy. The fact that it might lose a little more at the back end in residual values has yet to be proved and is unlikely.
“A good value car is always a good buy. What does determine poor residual values is the ‘forcing’ of the market by manufacturers [who offer huge discounts] to keep up their market share.
“Over supply means pile ’em high and sell ’em cheap and over supply means lower residual values long-term. By carefully choosing a new car customers having nothing to fear.
“Heavily discounted new cars mean very poor residual values.”
