MotorTorque expert: 2012 predictions
I’d like to say that next year’s going to be much better for the automotive industry, that we’re over the worst and pre-recession profit margins and production volumes are back – but they’re not and 2012 looks just as bleak as 2011.
Consumers are more cautious than ever with their money and while the economic climate continues that trend isn’t likely to change. That means the market is going to stay the same at best; unfortunately it’s becoming increasingly more likely that it will get tougher.
The problem boils down to monthly budgets. While salaries remain stagnant and every other cost is seemingly growing, there is less and less spare cash floating around – particularly for expensive purchases like cars – so it’s unlikely that the market will see a surge in new car buyers.
Proactive not reactive, this time round
The only advantage consumers, manufacturers and dealers have this time when compared to 2008 is the fact that it won’t come as a surprise when the dreaded double dip arrives.
In 2008, the industry was forced to become reactive which resulted in knee-jerk reactions like the scrappage scheme – an incentive that artificially inflated new car sales figures and stripped the UK of older cars - arguably doing the industry more harm than good.
This time, dealers, manufacturers and consumers are prepared.
Dealers will have arranged deals, manufacturers will have reorganised their production and sales strategies and the consumer has become weary about big money spends and new car purchases.
Whilst that’s not so good for dealers and manufacturers, it should spell good news for the consumer.
Big ticket purchases are not likely to be high on the agenda of most people but, if you take the decision to plunge into the market, there should be some brilliant deals available as manufacturers and dealers look to stimulate sales.
Overcrowded, under populated
The market is overcrowded – there are too many manufacturers in competition, selling the same thing and while they all survived when the market was booming and almost anyone was able to buy a car, this time round the buyers just aren’t there.
That’s undoubtedly why we’ve seen the likes of Daihatsu, Maybach and Saab sink - unless the market picks up over the next 24 months other manufacturers will go the same way.
That’s why 2012 and 2013 will be important for a lot of manufacturers as their long-term prospects become clearer and that’s true for Renault more than most.
The French manufacturer has taken the sensible, if regrettable, decision of re-organising its business because it was haemorrhaging money on two things – its model line-up and dealership network - that were too big to finance in a marketplace that lacks buyers.
Something had to give so it scrapped 55 dealerships and ditched some of its oldest models, including the Laguna and the Espace. Bizarrely though, it has also made the decision to build a lot of electric vehicles (EVs).
Electric avenues?
Renault’s focus on EVs over the coming months is a risk, with the launch of the Twizy, Fluence and Zoe EVs all scheduled in 2012.
Renault really needs them to sell; if not it will find itself spending money on deadwood and relying on stalwarts like the Clio and Megane to keep a massive company afloat.
But I just can’t see EVs taking off, no matter what the green brigade tells us, because they still make no commercial sense to motorists.
They’re expensive, unproven and lack the kind of real-world infrastructure and usability to ever truly make an impact. That’s also exasperated by more frugal diesel and petrol engines which are flooding into the market place at half the price and none of the concerns that surround EVs.
To survive in the pinching economic climate, manufacturers are either going to have to build a brilliant car that people don’t mind paying more for or offer something cheap to pull buyers in.
As ever, the MT Expert's views don't necessarily represent our views...