Barry Hott's predictions for 2025

1. Battle of the brands: part one

Last year, Barry predicted that a number of small brands would leave the UK market as they had insufficient sales to make a return for their manufacturers or their retail network. This year, Barry is doubling down on this prediction. Any non-premium heritage brand that has less than 0.5% market share must surely be at risk. Heritage manufacturers, especially Europeans, are facing an existential crisis, and their primary solution will be to rationalise and cut costs. If you were in the Stellantis boardroom, why would you bother building right-hand Alfa Romeos and DS’s?

Looking at Society of Motor Manufacturers and Traders (SMMT) data with a market share of less than 0.5% in the year to November, some the brands look extremely vulnerable:

Source: Data from Society of Motor Manufacturers and Traders (SMMT)

One has to question what Genesis stands for and how long before it goes the way of Infiniti? Can KGM (ex SSangyong), through a rebrand, really build market share? Especially with the recent changes in personal tax rates for trucks, which is an important segment for the brand?

This year, the gossip in the trade will be a form of top-trump speculation as to which brands will be here at the end of 2025.

2. The future is used

Barry believes that 2025 will be the year of used car retailing.

Now that the Labour government has shown its spots, consumers are going to be sensitive to their personal balance sheets. New cars have become too expensive, especially as we no longer have cheap money to drive affordable finance deals. As used cars are much more reliable, consumers will look to the 2 to 5-year market to get a better deal both in terms of price and monthly payments. The 2 to 5-year parc will provide a sweet spot for retailers, but it will be challenging due to the continued supply constraints.

The winner in this segment will be the larger dealer groups who will have better access to used trade-ins via their network and fleet departments. This will provide them with the stock required to make sure they keep their margins. The small dealers who only have one or two network points will struggle, especially if they represent small brands. They will not necessarily get the trade-ins and will be forced to source stock via expensive third-party channels which will reduce their margins.

3. Battle of the brands: part two

If 2025 sees the heritage brands battle for survival, the Chinese brands will battle for arrival! In the next five years, the new Chinese entrants will be significant players within the UK market. However, the challenge is that many new entrants are coming, and they will struggle to gain significant market share in the early years. This means that dealers who decide to represent a Chinese brand need to be extra careful about which brand(s) they support. This will be especially important if they replace a failing heritage brand within their dealership.

For the new entrants, initially they can only offer their networks two revenue streams – new sales and the margin from trade-ins. The challenge will be getting their networks to profitability as quickly as possible. BYD and Omoda may have got off to a flying start in 2024, but can they rapidly build their market share to keep their network satisfied? Looking at GWM ORA as an example, to date in 2024, they have sold 1,144 vehicles across their network, averaging c.29 cars per dealer. Assuming a £1,500 margin, each dealer will have made a gross margin of c.£43,000 for the year. Is this contribution sufficient for retailers over a medium (3 to 5 years) term when they will start to see meaningful revenue from servicing and parts?

There is no doubt that the future is Chinese, but the challenge is that so many brands are entering the market at one time. It’s like the Grand National, with lots of runners and riders and choosing who will win is going to be difficult.

Much of the Chinese product is fantastic in terms of product at an ‘affordable premium’ price, but there are too many who have announced they will here by the end of 2025. Here are some of the runners and riders since 2024 and coming in 2025:

BYD, Ora, Omoda, Jaecoo, Haval, Leapmotor, Skywell, Maxus, Seres, Nio, Xpeng, IM, Airways, Deepal, Exceed, Firefly, HiPhi, Lyk & Co, Zeekr.

All brands I have no doubt you are familiar with! However, as a dealer, who would you back?

When the Japanese and Koreans entered the UK they did it with far fewer brands and over a much longer timeframe. Furthermore, as many of the new brands will be leading with electric offerings, this will contain their natural market share due to electric vehicles still being sub-20% of the overall market.

The danger is that so many Chinese brands will enter the market next year, they will have no chance of success, causing consumer mistrust across all Chinese brands. Are we seeing a China Crisis in the making?

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Have a great 2025 and looking forward to seeing and making new friends in the trade this year.