Where have all the cars gone?

Just like the ‘find the lady’ card trick where sleight of hand defeats the eye, in the background of my mind there has always been a nagging question about registration statistics. I’ve always considered that bumper vehicle registrations, year on year must expand the service market downstream – but it didn’t appear to happen.

We are all well aware that our service conquest vehicle is a loss to the Dealer sector and therefore our market is dependent on the downstream ageing of new cars into used units that we ultimately service and repair – our bread and butter.

Whilst great play is made by the SMMT and other bodies of the registration volumes achieved in the UK, in the region of two million units per year, and how the motor industry is helping power the country out of recession, less is made of the fact that approximately a quarter of that number, two hundred and fifty thousand used cars are de-registered and exported – research suggests these are undamaged ‘proper’ vehicles including, in the last five years, an average ten thousand current year vehicles.

One shipping line runs 22 ships between Northern Europe and West Africa, each capable of carrying some 2,500 vehicles – this would suggest that about two vessels of this size per week sail from UK alone.

A Freedom of Information request to the Department for Transport shows that the majority of this volume has increased since the inception of the ‘End of Life Vehicle Regulation’ where, in Europe the vehicle manufacturers are responsible for the ultimate dismantling of their vehicles – no such regulation exists in Africa.

The trick is how these vehicles are gathered for export? I visit dealerships and auctions and in both, an entity buying these volumes of vehicles would become immediately apparent but none does. I would suggest, therefore, that the majority form part of guaranteed buy-back schemes in the fleet and lease sector – and their value controlled by ‘dealer’ service.

Now we could discuss various elements of these exports such as the effect on the UK’s balance of payments but the truth may be less altruistic – I’ve been unable to find an average cost for dismantling a vehicle, a cost the vehicle manufacturer would have to bear, but even if it were as little as £50 per unit (the rendered scrap has a value that offsets the total cost) it would be over 12 million per year.

The back-hand of these exports is to strangle the retail used car market by driving cost-of-ownership down by keeping residual values high – and new vehicle purchasers able to afford new cars.

So don’t rub your hands and relish all those new vehicles, soon to be visiting your garage – they’re probably in Africa.