New entrants shake-up established order but cheaper BEVs are coming (video)

With BYD, Great Wall Motors (GWM) and Omoda now selling cars in the UK, and Leapmotor and Changan scheduled to join them next year, fleet and leasing companies have a rapidly expanding choice of electric cars to consider adding to their user-chooser lists.

So far this year, BYD has registered 5,260 cars (up 367% on 2023), and GWM Ora 1,072 (up 18%), while in its first two months on sale, Chery-owned Omoda UK has already registered 1,127 units, although almost half are as demonstrators.

Added to that total are the established Chinese-owned brands such as SAIC’s MG and Maxus, and Geely’s Volvo and Polestar, underlining the significant impact they are already having on the UK landscape.

Buoyed by strong marketing campaigns, including BYD’s sponsorship of the UEFA Euro 2024, awareness is growing, according to data from Auto Trader, with customer engagement levels also strengthening.

Speaking on episode four of the Fleet News Quarterly Market Insight sponsored by Auto Trader, director of automotive finance Rachael Jones said: “12 months ago, awareness was 4% for these brands, and now they’re up at 16%.”

BYD is generating the highest level of interest, more than Ora and Omoda combined

“With these new brands, in terms of kind of what learnings we're seeing, one thing is certainly around customer loyalty,” Jones said, pointing to greater extremes with electric vehicles versus ICE.

“When we ask consumers about the next car you're going to buy, what brand will it be, around a third tend to say, I'm going to stick with the same brand I've got. That's not the case for EVs; it's much smaller, less than a fifth.”

She added: “The other learning is China has the capability, the product, the patience to disrupt internationally. They've got 150 brands, 100 of which are selling EVs already. So, the market is producing a vast amount of batteries for the globe, I think 75%.

“The price and quality of the vehicles is very good. They're not compromising on quality, because they've got a very solid supply chain. And the average price of an EV is 14% less than an ICE vehicle. That's not the same over here; it’s about 35% up on prices.”

The tide shows no signs of turning back as demonstrated by the number of manufacturers exhibiting at Paris Motor Show. None seem particularly distracted by EU tariffs.

“Five or 10 of them were actively expressing that they're going to be launching into Europe next year, which just shows that flow of more brands coming into market,” Jones said.

“Even the potential of tariffs being imposed, I don't think that's going to stop them coming, because they can look to absorb that cost, or potentially even look to open up factories in Europe as well.”

Leapmotor, a joint venture with Stellantis, has already announced plans to make its entry level T03 city car at its partner’s plant in Poland.

“When we look at UK specifically, we're a favourable market for new entrants,” Jones explained. “There's no sight of tariffs at the moment, and the new entrants have already developed, or are developing, right-hand drive versions. They've got Thailand on their doorstep that they already produce for so there’s knowledge and products available to ship out.”

One key takeaway from the Paris Motor Show was the proliferation of smaller, cheaper electric vehicles from the European manufacturers. This could open up the addressable market, while recent price reductions in the cost of lithium batteries will also enable more competitive pricing.

Manufacturers recognise, and are reacting to, the threat from new entrants, but they also have the challenge of meeting the ZEV Mandate in the UK and the EU emissions targets in Europe.

“The pressure just keeps ramping up,” said Jones. “Even 22% this year has been tough, and we are likely to see some more action in the final few months to get there, so 28% (in 2025) for some brands is going to be very hard.

“OEMs are going to be looking at all the sales channels to work out their best route to market in an efficient, affordable way for fleet and leasing. It will be a huge focus because if you look at the SMMT stats, 75% of EV sales have been through fleet and leasing channels.

“The level of discount available from OEMs is going to be a big topic of conversation.”

Push discounts too hard and it could further unsettle a used car market which has suffered persistent falls in residual values over the past 18 months, particularly for electric vehicles.

However, there are nuances with older values starting to harden and retail process generally quite stable, performing in line with seasonal norms, according to Auto Trader data.

In September, stock levels were down just over 5% while demand was up 8% on the Auto Trader platform, resulting in a healthier balance from an RV perspective.

“We've been tracking pricing since 2011 and on average, in September, prices tend to go back around 0.6%; this September, they only went back 0.3% so it feels quite good at the moment,” Jones said.

“Looking ahead to next year, we don't see any sign of these dynamics changing massively. We map out the car parc and look at the cycles of change and what supply is coming back into market from new car and so on.

“We don't see the supply side changing too much. And there's no reason for demand to drop off a cliff either. So, we think pricing should remain pretty stable.”

However, Jones added a note of caution: “That's dependent, of course, on everyone playing sensibly. Last year, we saw a massive change in the market on a pricing perspective, when the market moved to follow the wholesale trends in markets. If that doesn't happen, then we'll be in more stable place.”