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Large EV discounts on the way from under-pressure manufacturers

Tony Whitehorn, former UK Chief Executive and President of the South Korean manufacturer Hyundai, said carmakers were facing a number of pressures to do with the electrification of the UK vehicle parc – and that as a result, there were bargains available to buyers.
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14 March 2024

 

AGGRESSSIVE financial incentives of £8,000 on volume-selling EVs could signal the start of brutal discounting as UK car brands try to accelerate the switch to electric, according to one of the leading figures in Britain’s automotive industry.

Tony Whitehorn, former UK Chief Executive and President of the South Korean manufacturer Hyundai, said carmakers were facing a number of pressures to do with the electrification of the UK vehicle parc – and that as a result, there were bargains available to buyers.

Whitehorn was addressing delegates during an e-learning webinar organised by The Lead Agency. The event was the first in a number of such sessions due to be held by the company this year. It was designed to provide attendees with useful information across a range of automotive subjects – with electrification one of the main topics of debate.

He explained that car manufacturers operating in the UK face hefty fines under the Government’s ZEV mandate if they fail to hit certain targets in respect of electric vehicle sales, so need to encourage more people to buy them. Customers, on the other hand, are put off by the higher prices of EVs so are reluctant to make the switch.

This, in turn, means that manufacturers need to offer substantial discounts to boost demand – but that then leads to margin erosion because EVs are more expensive to produce than conventionally-powered alternatives.

Whitehorn said: “Car manufacturers are not making as much money out of EVs as they are out of vehicles with internal combustion engines. But they’ve got to sell a whole load more battery electric vehicles to avoid paying hefty fines.

“Therefore, there are going to be big discounts and a lot of incentives to tempt people to purchase them. Already I’m seeing a large number of zero per cent finance offers, with huge financial deposit allowances – up to £8,000 on one volume-selling vehicle, which surprised me.”

Whitehorn’s comments come on the heels of Dacia announcing sub-£15,000 pricing for its new Spring model.

The best way for manufacturers to sell larger numbers of discounted cars would be to make the most of digital retailing, Tony said. ‘That’s how you can change someone from being a tyre-kicker to a contracted customer – and quickly.’

He went on to mention that there are some 50,000 EV charging points in the UK, and referenced South Korea, where there are 200,000 charge points. Turning again to the UK, he added: ‘By the end of 2024, we will have 80-100,000 chargers, so we are getting there.’

The world of electric motoring was a subject discussed by another speaker during The Lead Agency webinar – Alban Treglohan, Client Director at media agency PHD.

Alban, who runs the VW relationship for PHD, said that although there had been ‘a steady improvement’ in the number of car registrations since the pandemic, there had, however, been pockets of downturn in demand.

He said: “Last year was a very challenging year for the EV market, and it’s becoming increasingly difficult to generate new demand for electric vehicles. Discounting is actually becoming a dangerous drug for car manufacturers. You only had to switch on commercial radio last year and you would be inundated with car advertising offering generous deposit contributions and reductions in APRs.”

Alban urged manufacturers and dealers to be ‘a bit braver’ in their approach to promoting electric models. He said that although buyers seemed reluctant and that press coverage was sometimes negative, ‘once you’ve sat in an electric car and driven one, it’s actually a great experience!’

He added: “These vehicles have all been built from the ground up and their quality is increasing exponentially. Brands need to stop being so bland with their EV advertising – make it more exciting! – and drive digital strategies hard to get bums on seats.”

 

 

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