ExpertEye European Automotive Report Q2 2016 | Page 26

United Kingdom – The uncertainty of Brexit The Brexit announcement on 24th June sent shock waves around the global markets with the European Commission, the IMF and others all announcing cuts in the UK and global growth. Some companies have also been accused as using Brexit as an excuse for cost cutting, with Lloyds Bank the latest to announce further redundancies, but overall the markets have thus far remained relatively calm. Even the IMF has now moved away from its most negative views on the impact of Brexit but there still remains a lot of uncertainty. Private consumption remains the strong driver of growth and whilst the ESI has fallen by 4.4 points since the end of last year this is still less than the drop seen in Spain. Unemployment is already one of the lowest in Europe and it is still falling adding to the generally positive . Economic Forecasts - UK GDP growth (%, yoy) Unemployment (%) many manufacturers are targeting their captive finance divisions with achieving over 60% pull forwards on the existing finance books. European Automotive Report - 2016 Quarter 2 0.0 0.8 1.6 6.1 5.3 1.8 5.0 1.9 4.9 (3.4) (2.4) Current account balance (% of GDP) (5.1) (5.2) (4.9) (4.4) Gross public debt (% of GDP) 125 120 88.2 89.2 89.7 89.1 RV Index: 36 months / 60,000 miles Average UK 115 100 95 90 2010 01 2010 04 2010 07 2010 10 2011 01 2011 04 2011 07 2011 10 2012 01 2012 04 2012 07 2012 10 2013 01 2013 04 2013 07 2013 10 2014 01 2014 04 2014 07 2014 10 2015 01 2015 04 2015 07 2015 10 2016 01 2016 04 loyalty and increase sales. The appeal of pull forwards is now so strong 1.5 2.3 (4.4) 105 forwards/early termination and renewals as a way to retain customer 2017 (5.6) The PCH and especially the PCP market continue to drive significant retail sales, manufacturers and dealers are now targeting pull 2016 Public budget balance (% of GDP) 110 increasingly popular. With PCP now representing over 80% of all new 2015 2.9 Inflation (%, yoy) economic feeling. growth in new car sales with maintenance packages also becoming 2014 Sources: European Commission – Economic Forecasts Experteye AG - RV Index Bowkett Auto Consulting Ltd - Forecast vehicle sales 25