Premium and Luxury Cars in the United Kingdom

2020 IMPACT

COVID-19 has had a dramatic impact and while the industry has shown itself to be resilient the future remains uncertain

In line with the wider automotive industry, the premium and luxury car segment has been severely impacted by the COVID-19 crisis since March 2020. Dealerships were forced to shut their doors in March as a nationwide lockdown came into force, effectively turning off the taps on customer orders.

UK now technically out of Europe but absence of trade agreement presents a threat to the industry

The dominance of COVID-19 in the news may have pushed the UK’s departure from the European Union to the back of consumers’ minds, but for premium and luxury car manufacturers the risk of the UK exiting the transition period without a trade deal in place remains very much top of mind. With eight out of every 10 cars produced in the UK exported, the prospect of tariffs and higher import taxes would not only have severe consequences for exports (the EU alone accounts for almost 55% of UK car exports) but would also heavily disrupt the ability of local manufacturers to operate in an industry made up of complex and tightly integrated global supply chains.

Electric vehicles claim the spotlight while hybrid electric vehicles continue to expand across manufacturer line-ups

Strong demand for electric vehicles has continued to drive the segment despite the challenges brought on by the COVID-19 pandemic. In September 2020, hybrid and electric vehicles all posted impressive year-to-date (YTD) growth of registered vehicles in contrast to the heavy decline in the overall car industry.

RECOVERY AND OPPORTUNITIES

Electric vehicles will continue to offer strong opportunities for innovation and environmental solutions

Electric vehicles (including the various hybrid variants) will continue to present considerable growth opportunities for manufacturers as they continue to supplant the traditional combustion models as manufacturers continue in their drive to offer innovative and environmentally-friendly solutions to meet increasing consumer demand for such vehicles while also meeting increasing government environmental regulations. The UK have introduced a hard target for such vehicles with their plans to ban all petrol and diesel vehicles from sale from 2030.

Technology is taking an increasingly important role in how vehicles are evaluated and compared

In line with the growth of electric vehicles, technological advances are another key area for premium and luxury car manufacturers to win consumers who are increasingly demanding their vehicles to play a more connected and integral role in their lives. No longer simply a means of transport, vehicles are now expected to act as a mobile extension of the home.

COVID-19 has forced manufacturers to rethink how they sell, leading to strong opportunities for the future

One important thing the pandemic has shown is that manufacturers can no longer rely on the traditional business model of retail showrooms to attract customers and sell vehicles. During the height of the lockdown when physical retail was shut down, car sales were effectively brought to a standstill without any other channels for customers to shop in.