Diesels down but AFVs up as car market declined in 2017

Published:  05 January, 2018

Car sales were down 5.7% in 2017, with diesel vehicles seeing one of the biggest drops according to annual sales figures from the Society of Motor Manufacturers and Traders (SMMT).).

Annual registrations fell for the first time in six years, reaching a total of 2,540,617 for the year. Despite the drop, 2017 still had the third highest car sales of any year in the last decade. December’s sales were   14.4% down compared with the same month in 2016. This was the ninth consecutive month of negative growth.

 Demand for petrol cars rose in the year by 2.7%. However, this was not enough to offset a 17.1% decline in diesel registrations.

Meanwhile, Sales of alternatively fuelled vehicles grew by 34.8%. A record number of hybrid, plug-in hybrid, battery electric and hydrogen fuel cell cars were registered – resulting in the sector’s highest-ever annual market share of 4.7%. 

The top selling car in the UK during 2017 was the Ford Fiesta, which sold 94,533 units. Second was the Volkswagen Golf with 74,605 sold during the year. Ford was also in third place with the Focus which sold 69,903 in 2017.

2017 car sales figures breakdown SMMT

Commenting on 2017’s sales figures, SMMT chief executive Mike Hawes said: “The decline in the new car market is concerning but it’s important to remember demand remains at historically high levels. More than 2.5 million people drove away in a new car last year, benefitting from the latest, safest, cleanest and most fuel efficient technology.”

Despite the overall decline, new car registrations remain high, with the market still the second biggest in the EU, behind Germany.

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  • Don’t join the gold rush, sell shovels  

    Futurologists have predicted it for years, but now, it’s actually starting to happen. The impact of the sharing economy on the automotive industry has upended the status quo and companies are scrambling to gain first-mover advantage within a radically reconfigured marketplace.

    In the US, in March 2018 alone, an Ohio dealership launched a monthly subscription package that allows customers to switch between different brands of luxury cars, and GM announced a plan to allow their customers to rent their cars directly to each other. Meanwhile, ride-hailing is rapidly taking share from traditional car rental in Certify customers’ business travel expenses.
    In the UK, a Mobility as a Service (MaaS) App called Whim is in trial in the Midlands, offering unlimited public transport, hire cars and short taxi rides for a fixed monthly payment of £440. Meanwhile, personal contract purchase (PCP) deals – essentially car rental, with the option to pay off the rest of the car’s value after three years – have already become the preferred method of new vehicle purchase.
        
    The problem is that hundreds of companies in the automotive world have set their sights on the same goal: To be the go-to choice for consumers. That’s fine if you have billions to invest in marketing, but if you’re not at the level of Ford, Uber or Google, that fight is going to get ugly. Rental agencies, dealerships, and business leasing providers – all of whom are used to owning customer relationships in the pre-mobility world – are among those who are going to be out-gunned.

    The good news is that there are two clear ways for businesses to thrive in this new marketplace in a way that won’t be disrupted by technological advances. Both strategies involve selling to businesses rather than consumers, which means they can deliver sustainably higher margins without requiring a huge spend on marketing and customer acquisition.

    Strategy one: Sell a service to the dominant platforms
    The most obvious low-risk, high-reward model is to provide an indispensable service to enable the mobility being sold by others. This would involve contracting with whatever mobility platforms dominate, be it Ford, Uber or Waymo, Alphabet’s self-driving car unit. A business might decide to become the leading company that deliver services around.
     

  • Put the pedal to the metal 

    I have spent most of my life repairing things that are broken and the rest of it trying to prevent it happening in the first place. This year, June to be precise, will be my 50th year in the automotive industry; I have witnesses and have embraced incredible advances in technology.
     
    This article may appear somewhat negative, perhaps even misinformed and out of touch. Have I lost the plot? Before judging my motives let me explain how I think and react to change. I think I have already proved my ability to embrace technical evolution. Fixing a problem for me should be a well thought out long term positive step forward; Understanding the immediate challenges whilst focusing on the cause and not reacting to the symptoms. I would like to think of myself as a thinking engineer.

    Developments
    I am referring to current automotive developments, specifically autonomous and battery powered vehicles. We have just witnessed the first death by an automonous vehicle, the litigation should be interesting. Who is responsible? The driver? He was in full autonomous mode! The vehicle manufacturer? How about Microsoft? and we have all just witnessed how software companies respond to problems! Back to the driver then.

    If you genuinely believe this is a step forward ask your self this question; would you take your family on holiday with no pilot in the cockpit? After all, aircraft have some of the most comprehensive and competent automonous systems.
    Second on my list are battery powered vehicles. Let me present facts that support my position. The problem- pollution of the atmosphere. The cause- hydrocarbon fuelled vehicles. Battery powered vehicles will drastically increase the requirement on electricity generation, with most countries using hydrocarbon fuelled power stations! Limited distance and the uncertainty of charging port availability, notwithstanding the unwelcomed journey delays, is in my opinion
    not a sensible answer to flexible mass transport.
     
    The UK has marginal spare capacity in power generation, imagine if 25% or more of the UK car parc plugged in at 6pm. The national grid does have strategies for sudden increases in demand. These include bringing old standby stations online and increasing imported supplies. I accept these considerations are partly personal
    and emotional. However, look at a more interesting set of problems facing the vehicle manufacturers,
    such as lithium reserves and the geo-physical locations.
     
    Currently the average energy consumption of battery vehicles is 65kw/hr. This requires 10kg of lithium per battery. Tesla expects to produce 500,000 vehicles by 2020. This would require 5,000,000 kg or 5,000 metric tons, per year, of refined lithium. Discussions are under way for production of reduced performance vehicles requiring less lithium.
    Research estimates global reserves of 365 years assuming the current 37,000 metric tons production per year. Current lithium demands are split 30/30% with battery and ceramic production. However, it is also predicted that around 100 mega capacity battery plants, like Tesla will be required to meet demand globally.  Global EV estimates of 100,000,000 vehicles by 2040 would require 800,000 metric tons of lithium per year. Divide this by the estimated 40,000,000 metric tons global reserves leaves a timeline of 18 years.

    Demand
    Demand is a variable that cannot be accurately predicted. For example, China’s population of 1.3. billion, already has 50% of the vehicle ownership of the USA. With India and other emerging economies coming on-stream, vehicle growth could exceed all predictive estimates.

    Where is the electricity going to come from? Greece for example has a EU emission get-out clause as all its energy production comes from vast open cast coal mines.

    Recycling cost is around five times  that of new production cost, with around a 20:1 lithium recovery ratio.
    The lithium atomic symbol Li is the third lightest solid in the periodic tables. Highly flammable, it is also used as solid fuel rocket boosters and torpedoes. It is also used as an initiator for triggering nuclear weapons. With more down to earth requirements, lithium is used in heat resistant glass, grease, ceramics, and iron steel production. These requirements exclude all other uses of lithium, from your mobile phone battery to those nice kitchen tiles your wife has chosen. So back to my proposition, dealing with the problem and not the symptoms! Batteries are not the answer. I’m no physicist, but I see the hydrogen cell as the only current hope on the horizon for flexible mass transport.

    A much-improved public transport infrastructure, a more realistic vehicle operating tax structure will all play a part in vehicle ownership within the developed economies. We cannot expect emerging nations such as China and India, with around two billion people, to follow suit any time soon.

    As a keen cyclist from the age of 15, with a mild asthmatic condition I’m as focused as anyone on reducing global emissions. Judging by the way so many motorists still drive their vehicles, the reality shock of what’s coming cannot be far away.


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