The auto sector has been accused of “kicking the road” rather than dealing with the long-term implications of new car specification changes.
Retailers currently trying to appease car buyers missing thousands of pounds of technology from their vehicles due to component shortages could become the victims of costly storage headaches when under-equipped vehicles re-enter the industry as than used cars, it was claimed.
And the confusion and potential conflicts with discerning car buyers could linger for years. A survey conducted by Parkers, on behalf of AM, found that 14.2% of new vehicles delivered in 2022 had elements of their expected specifications missing.
Among the missing items were: wireless phone chargers; infotainment screens; head-up displays; navigation; ambient lighting and electric seat adjustment.
But Autorola sales director Jon Mitchell (pictured) suggested the true scale of the missing spec problem could be far greater. “I suspect a lot of issues go under the radar,” he said.
“One of the main issues is that the vehicles arrive and the missing parts are not even discussed.
“In some cases, customers are told there have been omissions in their vehicle, but if they don’t want the car, another customer is waiting… it’s your choice, take it or leave it. the.
“The quirks of these vehicles will be very difficult to detect when they come back to market. It’s a huge problem that won’t fully appear until 2024 or beyond.
“For now, it looks like a problem that is being thrown out on the road.”
Phillip Nothard, director of insight and strategy at Cox Automotive, echoed Mitchell’s concerns and stories of new car customers receiving ultimatums when delivering under-equipped vehicles after a potentially long wait. With global production likely to be down 40 million units in the three years to the end of 2022 – due to COVID-19 and supply issues – many franchise automotive retailers have entered the second half with a 12-month backlog of orders for some brands and eager customers waiting to pick up unwanted orders, he said.
AM’s Parkers survey found that 13% of new car buyers had waited seven months or more for their vehicle, with delivery taking more than a year for 2%. The largest share of respondents (27%) received their car in four to six months, while 19% said it took two to three months and 17% had their order fulfilled in less than a month.
The results also laid bare the market advantage tapped by retailers and OEMs still able to offer ready stock, with 25% of respondents saying they were able to take immediate delivery.
More than a third (35%) said they had renegotiated the purchase price of their vehicle, or the terms of their financing contract, between the order and the delivery.
Nothard said he knew of a car buyer who had accepted delivery of a vehicle missing more than £3,000 worth of technology to avoid an extra long wait.
“That’s a problem for car dealerships who need to communicate extremely well and appease their customers today, but there are potentially even bigger issues in store for the future,” Nothard said.
“Franchise retailers able to connect to OEM systems will likely be able to see a car’s exact specs when remarketing, but independents tend to rely on OEM data, inspections and knowledge. DVLA industry to be sure of what they are buying.
“An increasing number of dealers will be caught off guard in the future due to the volume of specification changes we are seeing now and it could cost them dearly.”
Tom Marley, Aston Barclay Group Chief Executive, told AM: “This promises to bring real valuation headaches and challenges in the future. Currently we are asking our leasing company suppliers to Document vehicle specifications They must create their own file when they come to remarket.
“As an industry, we are more dependent on data than ever. Does this mean that we are ready to detect these data discrepancies in the future? I suspect not.
In a report on component shortages in the automotive sector, however, Cap HPI said: “We can see from our live data feeds that there is variation, with some manufacturers changing their offerings significantly more than others as they modify the specifications available on their range. .”
He added: “Our new vehicle data shows that electric vehicles from all manufacturers are less impacted than ICEs (internal combustion engines). Given the surge in interest in electric vehicles and the recent fuel shortage crisis caused by panic buying, consumers’ positive view of electric vehicles has certainly been accelerated and cemented the manufacturer’s opinion that this remains the correct course of action.
Mitchell said he suspected many OEMs were also prioritizing technology in vehicles purchased from individuals over those for fleet users at a time when higher-margin sales were sought.
Vehicle data editor Christopher Wingate said some OEMs had modified their model lines and changed cap IDs to accommodate specification changes caused by component shortages, but admitted that “many didn’t do it.”
He played down the impact of this on residual values and the used sector, however, saying: “If you ask the average punter on the street what a 2020 Focus Zetec spec is vs the 2021 model, they won’t won’t know.”
Nothard (pictured) said poorly described used vehicles threatened the ‘trust’ and ‘transparency’ now prized by car retailers increasingly operating online. “Customers do their research online and will expect certain things from a vehicle upon delivery,” he said. “If the first time they identify missing specs is after taking remote, door-to-door delivery, that presents real problems for used-car retailers going forward.”
Mazda’s UK sales manager Peter Allibon told AM about the steps he has taken to protect customers and residual values as he was affected by component shortages. “We did displease a few aspects, but I think the key is communication,” he said.
“We want to make sure that residual values are reflected there and that prices are reflected where they can be. In fact, we generated completely new derivatives just so that, in the short term, we would be able to maintain supply.
Allibon said problems with the Bose amplifiers on CX-5 Sport had led to the creation of a Bose-less Sport edition, adding: “It gives the customer the choice to pick up a car with some certainty on item-free delivery. particular or choose the original spec car with a little less certainty about when they actually get it.
“We’ve seen the former in most cases because they want that certainty and it’s not fundamental things about how the car drives.”
Luke Broad, brand director at Dacia UK, said wireless Apple CarPlay had disappeared from its cars in recent months, describing the problem as “really quite painful”.
He said, “You don’t want it to be a traumatic experience as far as transference goes. If we had to take something away, we will always give something to the customer to acknowledge that we have taken value out of a car.
Arbury Motor Group chief executive Ben Archer said his staff had worked hard to help customers caught off guard by specification changes.
He said: “We are aware of cars coming in with Cap IDs that do not match the vehicle specification and we have manufacturers now sending cars that are on order for a customer and they are changing the specification before. it lands.
“It can be a huge problem. If you think of a Motability customer who ordered an automatic tailgate because they have a wheelchair (a real scenario we encountered) and they pass without, that’s a huge problem from an customer experience but also from a Cap ID and perspective of future values. It’s not extremely prolific, but it’s more prolific than six months ago.
Archer added: “I’m not sure what will happen in two or three years. It’s going to be a problem.
IMDA founder and Specialist Cars owner Umesh Samani suggested car traders will need to be mindful when stocking their forecourts two or three years from now.
“The problem is, it’s a constant thing. It’s going on now, but it’s only going to get worse,” he said. “Some dealerships aren’t trained, they rely on data these days- here, but they’re going to have to go back to basics.”