How will we travel in years to come?
The question of how we might travel in years to come tends to provoke a multitude of fascinating responses depending on the people invited to comment and also the time period in question. There are a variety of pontifications around time travel and vehicles not just bound to the highway, but to those capable of using the air too. On a more realistic note this is fast becoming an important topic for discussion as we embrace new technology and exciting ideas that hitherto may have been designated unfeasible.
Our ability to develop technology continues to increase at quite a pace and right now we find ourselves not only in the midst of adopting and accepting a new method of propulsion, in the form of electric motors that are slowly replacing the combustion engine, but also contemplating handing over direct control of vehicles to a computer. Autonomous vehicles have long been a part of our society in controlled environments such as airport shuttles and trains, but what we are talking about here is relinquishing control of a car or bus that is not contained within measured pathways or confined to rails.
There is a control aspect to almost every human being that immediately finds this a virtually unacceptable suggestion, but the reality is that in certain environments we are already close to allowing this to happen. From a military perspective, the army already uses unmanned drones for reconnaissance purposes, although these are restricted to operating in a restricted airspace. Interestingly, commercial aircraft are also already capable of autonomous operation, although to date we have yet to allow this to happen. In the commercial environment, even under test circumstances, a pilot remains on board to take over should anything happen, but practically speaking if something did go wrong there would be plenty of space and time to avert a major disaster. In terms of a car or bus this is more than likely not going to be the case as it is accepted that the driver assisted solution is less safe.
We already have driverless cars testing on the roads in the UK and this is all part of ensuring that the technology is robust enough to safely allow passengers inside. Indeed, in the grand scheme of things the adoption of driverless cars is going to have an enormous impact on traffic and safety. If the technology can be proven, and there is no reason to suggest that it cannot, then we will see a reduction in accident rates, a better management of traffic flow, a significant reduction in traffic delays and the potential to almost eradicate driving under the influence of alcohol and drugs. It will also provide passengers with a stress free environment in which to travel, communicate and work if required. Therefore this will herald a very big change in transport lifestyle, and almost certainly a huge impact on vehicle ownership.
One of the uncomfortable factors that must be addressed is that of moral responsibility. Somebody somewhere has to write the software that makes ethical decisions in the case of an emergency or the ‘basic rules’ so to speak. Where it is impossible to migrate everyone to Autonomous vehicles in one go, and something that is perhaps unlikely to happen for decades, there will be the need for the Autonomous vehicle to take evasive action as a direct result of a human driven vehicle. This is where as a society we must understand and accept that in certain circumstances there is no good or simple solution to every situation. There will be no easy way to justify the decision to threaten or take human life and we must accept that the technology on which we are likely to rely will make a judgement based on a minimal threat to life and best outcome basis. As such there must be no question of accusation or prosecution of those who develop the ‘basic rules’. If this moral dilemma is not clearly laid out in advance there is a danger that an aura of mistrust may hinder the acceptance of an Autonomous vehicle.
The question therefore moves to how this new technology will affect the car market and specifically from an ownership point of view, bearing in mind that we are already seeing the beginnings of change in purchasing and ownership. It is widely acknowledged that the ‘Direct Debit’ generation have a growing habit of not visiting a showroom until they actually collect their chosen new car. Purchasing decisions are made online and are based heavily on a few key items, including the monthly price, with the view that they will never own the car. As time goes by it is also likely that the first true private owner of this car may not be until the third user.
With an autonomous vehicle it is likely that the ownership model for many will change once again. It may be that the manufacturer retains the ownership through the lifecycle of the car with the urban user or users leasing it either solely or as part of a consortium. It is also highly likely that the vehicle lifecycle will reduce drastically as a result. Whether this product ever comes to a second-hand market is a very debateable subject and that spells big changes. Dwellers in less urban areas may choose to own this type of vehicle having less concern over parking and space and, as a result, we may see a different ownership and usage profile for them. One also has to question whether we will see a complete change in how the automotive sector deals with second hand vehicles. This is a distinct possibility and one thing that is for sure, is that valuing this type of vehicle will be an entirely different process that is just not possible to pre-empt at this stage.
In summary, the UK market has some questions to ask and scenarios to answer when it comes to Autonomous vehicles. With the Government putting £100 million into developing this sector of the market in the latest budget, and Google’s Director of Vehicles adamant that his 11 year old son will not need to get a driving licence, the beginning of the Autonomous car era is clearly not that far away. The key factors here are that the UK automotive industry is part of the change and that the trade is prepared for not only a new propulsion method but also a new control technology.
MARKET TREND
New Car Registrations
The February SMMT figures show a surprising level of increase in registrations at 76,958 units against a figure of 68,763 in February 2014, which means an increase of 12% in the total market. This is particularly commendable when taking into consideration that February is the month before the plate change, and is traditionally slower than normal as buyers tend to wait for the new plate. This increase represents the 36th consecutive month of increasing registrations.
The analysis of market sector activity is of specific interest with significant growth coming in the Fleet sector, which recorded 44,719 registrations in February 2015. This is an increase of 19.9% over the same period last year taking the Fleet sector to 58.1% of the total market. This is something of a surprise as one might expect fleets to hold back for the new plate and suggests there were some pretty impressive incentives in the market. Private registrations have also improved but at a more subdued level rising from 29,887 in February 2014 to 30,899 in February 2015 and therefore taking 40.20% of the total monthly market. The big loser has been the Business sector which recorded just 1340 registrations, a drop of 12.8% on February 2014 however despite being a high percentage figure, this holds little consequence in terms of the shape of the market.
Registrations by fuel type support the large increase in volume in the Fleet sector with Diesel taking a greater share of the total market at 50.1% up from 48.1% in February 2014. The 38,553 registrations were 16.5% ahead of the February 2014 figures and ahead of the 36,553 petrol registered cars that showed a 6.2% increase over last year. Alternative Fuel Vehicles also showed a significant increase as momentum continues to build, as expected in this sector of the market. There were 1852 cars registered in February 2015 up 52.8% on February 2014.
The best-selling models in February 2015 were similar to last year in some respects with Fiesta retaining the top spot with 4,096 cars registered, down 7% on February 2015 but retaining top spot in the year to date picture. The surprising change has come in the form of Golf, which has moved up to 2nd best seller this month with 3,177 registrations from 5th place in February 2014. That is an increase of 95% and takes Golf to the 3rd top selling car year to date, supporting market comments that the model is being pushed hard and subject to high levels of pre-registration. Corsa took third place for the month with registrations of 2,830, down 10% on February 2014 although it retains second place in the year to date top sellers list.
In summary February has shown a surprisingly high level of new car market activity, although there is still plenty of concern as to the prevalence of pre-registration activity. The Fleet sector has clearly been motivated by incentive to take stock in a month in which they would normally avoid taking cars, unless of course sales activity really is that strong and the coming months will be the key to answering that question.
Wholesale Activity
Demand in the wholesale sector of the market started the month at a marginally lower level than many expected but on the basis that the new car market has been so vibrant it should not have come as a great surprise. What has been of note is the fact that, with higher levels of new car sales than generally expected during February, the defleet and remarketing channels that are usually quiet during this period had to function at a normal level. Consequently the level of stock in wholesale channels has been higher than normal during March, giving the trade buyers a level of choice they have not been accustomed too at this particular point of the year.
This has had a direct impact on retail activity, as greater choice has meant increased options for the retail customer. As such, the laws of supply and demand have kicked in resulting in noticeable value dips for some of the more mainstream vehicles that are beginning to clog the trade channels. With trade buyers able to find an ever growing volume of more interesting and varied alternatives, often with a better or more exciting specification, the balance of power in bargaining terms has shifted further in their favour. This particular set of circumstances looks set to continue during April, especially as the General Election is approaching and retail demand looks set to drop in the week leading up to May 7th.
This has meant a change in mentality for vendors on the rostrum who have had to seriously consider the longer term effect of neither setting market appropriate reserves at the outset, nor of taking the first bid offered on certain cars. Although this scenario started last October, recent weeks have seen the financial effects of holding stock exacerbated and this has generally meant bad news for those who are not moving with the market swiftly enough. Advice from professional remarketing specialists, such as the auction houses, cannot be underestimated as although sales volume is king for their business model, they know their buyers better than anyone else!
Keeping stock moving during April is likely to prove to be of critical importance for the rest of the year, as there is going to be a fine balance between supply and demand as 2015 draw to a conclusion. Those that do not heed this warning now may find themselves overstocked for the rest of the year as volume increases kick in. Fighting back in what is a ‘buyers market’ will probably be a costly and painful exercise.
April Guide Values
At the time of writing, trade activity in March has been as many expected and values have begun to soften for certain models as predicted some months ago. This has been as a direct result of increased volume for selected mainstream models. However, there is still evidence of pockets of strength and these have been recognised in this edition of the valuation data. Value movements are therefore in the region of up to 2% downwards with certain variants showing increases of up to 1%.
The time consuming task of revising depreciation curves and differential settings has finally been completed and we are confident that our customers will have seen the benefit of these realignments in terms of both accuracy and consistency. As ever Glass’s are committed to ensuring our customers have the very best data available to assist in their daily business.
As part of this process, we have continued to revise the models shown in the printed guide. Once again our customers may find that certain vehicles have been removed and replaced with a far greater coverage of more relevant later plate cars. For full details of the models that have been removed or added please go to
www.glassbusiness.co.uk/glass-updates/
Rupert Pontin
Head of Valuations
