Napoleon or Nelson?
Is it a time, to shut up shop and leave the UK, do we turn to Napoleon or Nelson for enlightenment? Once described by Napoleon as a nation of shopkeepers, “L’Angleterre est une nation de boutiquiers.” what would he describe us as today “a nation of motorhome owners”? I do not think that fits us does it? So, no doubt he would revise that statement, what best does describes us today? Also, would Nelson turn a blind eye again “I have a right to be blind sometimes… I really do not see the signal.” Would he see the single of the motorhome invasion from Europe? “Kiss me, Hardy, now I am satisfied, thank God I have done my duty”? Have we done our duty to the UK motorhome industry?
So, are we a nation in debt and all at sea, should we seek to purchase a motorhome abroad? Have we been invaded by to many imports of motorhomes, did we start the whole motorhome experience? Looking back at the likes of Auto-Sleepers, with a history stretching back over 54 years making motorhomes in the Cotswolds. So, maybe they made motorhomes popular in the UK. In fact, it may be more difficult now to buy abroad, with the weak pound continuing to be a factor! Many people start out looking for a left hand drive, but, end up buying a right hand drive. The thought of driving on the other side of the road holds some logic! How many English miles has your motorhome covered, as opposed to European travel? If you were looking for a bargain, will you find one here, or does it await across the channel?
Napoleon or Nelson?
So, who takes up the slack when buying a European made motorhome? Therefore, it works both ways, cheap exported motorhomes and higher cost to import motorhomes. Looking at some home truths, the motorhome buying decision may need a little more thought! Or does it force the issue Apparently, the level of unsecured debt in the UK in 2017 was just under £201 billion. In fact, the credit card debt in June 2017 totalled £68.5 billion alone! Therefore, I beg the question, who can afford to buy a motorhome?
So, does the nation have any spare money to buy a motorhome? How easy is it to obtain motorhome finance? What future does buying a motorhome on credit, really hold? Are you buying an asset or a liability? How will motorhomes stand up to the test of time, especially, on residual values? We have had a great run, purely on the fact that second hand UK registered motorhomes are not out there in any real numbers. Supply and demand being the order of the day! Napoleon or Nelson maybe history, but they say that history is know to repeat itself! Another man not known to Napoleon or Nelson commented, “we must always look forward, but we have to understand our history, in order to not repeat the mistakes of the past”. His name Winston Spencer Churchill!
Large Cash Items.
High cash values, places motorhome funding, at the top of any procurement discussions. In fact, you have to ask has there been that surge in pensions being spent, funding motorhome purchases? Has there been more equity releases, than the norm, with people using the funds to buy a motorhome? Certainly, that 10-year finance deal, even at low interest rates, looks attractive to some. Especially, to those wanting to live the dream now, before running down the age clock.
So, what of motorhomes future to business? How is the best way, to look at funding that motorhome? Looking to understand the position you may find yourself in. With a job, without a job, entering the world of pensions and retirement! Leisure related purchases often attract taxes, none worse than the current 20% vat on motorhomes! Therefore, will we see real change in all our leisure related businesses?
Motorhome Residual Values.
Motorhome residual values have remained buoyant in the UK, mainly due to the shortage of used motorhomes. However, one thing alone should start to make people think twice and especially the motorhome manufacturers. So, what is that you may well ask? DIESEL ENGINES! Yes, if we are to faze out diesel engines, then the motorhome manufacturers should be doing something now! Virtually all motorhomes are diesels! Petrol alternatives seem to be a million miles away, as does the electric motorhomes. An aging pile of diesel motorhomes, could seriously affect values. So, maybe that conversion to LPG, is not such a bad idea!
Brexit Affecting Motorhome Sales?
There is no doubt economic uncertainty exists, mainly due to the impact of the UK leaving the European Union in 2019. However, the emergence of Trigano and Hymer calmly walking in the UK motorhome door in January 2017! Mainly driven by desires to have a strong UK market share! Maybe, influenced by Brexit! Therefore, are worrying times ahead for the UK motorhome industry and the economy? In fact, every person living here, all could be affected by Brexit. But, does that concern reach the motorhome and leisure industry? If so, where does that leave us? Will those UK holidays make the demand for motorhomes grow in the UK? Are we going to be able to continue to develop and live the motorhome dream?
Car PCP Timebomb.
In fact, taking a look at the new cars being purchased under personal contract plans (PCPs). In fact, this method has be fuelled historically by low interest rates, apparently, nine out of ten private car buyers are now using PCP’s! In fact, to give you an idea of the scale of debt. British households borrowed a record £31.6bn in 2016, just buying new cars! This happens to be the highest of any major European country! Buying a car is usually a necessity purchase, we need to get to work and the children to school. Is the car pcp a ticking time bomb, if residuals and oversupply kick in what then? Ask, yourself could a PCP work well for the motorhome buyer? Would such a thing open up those European motorhome floodgates? If you were offered a low deposit, with low payments, over a long time would you be tempted? Certainly, ticks all the family holiday boxes and no more flights and hotel bills to pay!
If motorhomes could be brought on a PCP, the buyer will pay a smaller deposit and then commit to making a monthly payment over longer periods. The problem being no one has residual values for all UK and European motorhomes. As with cars they use CAP (current auction prices) and Glasses guide for residual values. So, for now there is no real option to take the residual value risk. So, without that residual option, to buy the motorhome at the end of the contract, we do not get off the ground. However, another point is that compared to a car (a guaranteed projected minimum value) at the end of the contract, would be a significant. Most motorhomes average amount at three years old is an average of circa £35,000! So, get that wrong and losses would pour in!
How Deep is the Debt?
If you look at the debt-stretched households in Britain using PCP for car purchases. Ask, yourself what oversupply does? Simple answer, poor residual values and leads to losses! In fact, as far as cars go, this could, lead to the next subprime lending disaster. There is bound to be pressure on the household budgets. So, with house prices and rents rising, is this just a pcp disaster waiting to happen? Therefore, considering that virtually every car is a diesel, then that pile of diesel cars on the scrap heap, could be larger and sooner than later.
Flying the UK Flag.
So, is it no wonder that Mercedes Benz, BMW, Audi and VW may well have Brexit concerns. Where have all the UK manufacturers disappeared to? Decades of low or nil investment and in some cases, European legislation has destroyed many of them. Yes, Vauxhall, Nissen and Honda have a presence. So, leaving Land Rover and Jaguar to fly a flag. Thankfully, Auto-Sleepers, Auto-Trail, Elddis, Luna and Bailey are flying the UK motorhome flag, be it under new owners in some cases. Hopefully, they all will remain at the forefront of motorhome sales in the UK for some time to come. In fact, if only we could find the right chassis made in the UK, this would certainly send out a strong message.
So, what about the motorhome diesels, what will residual values really be in five years time? The high levels of consumer debt, coupled with the UK’s terms of exit from the EU in 2019. Thus, this must raise the risks for the economy and ultimately the motorhome and leisure industry. Although optimism for leaving the European Union is high, it is unlikely any real benefits will flow immediately. In fact, many would question if at all there will be any benefits. So, will those higher household bills cause financial problems? Consider this, we cannot all live in £1M houses and pay even higher rents. Unemployment may increase and wages may well remain fixed then what? What if interest rates rise earlier?
What Chances of Living the Dream?
Well if we take the whole picture and look at UK motorhome holidays, then we have a chance of growth. Motorhome hire is set to grow, so that first motorhome holiday, may be cheaper that you think! Better ways to buy a motorhome would have an impact. Setting up a way to reduce the VAT on an English built and supplied motorhomes, would drive sales up. If Napoleon or Nelson were still around would they have all the answers? On a campsite what would Napoleon or Nelson make of it all? Would Napoleon have a French made motorhome and Nelson a UK made one? The conversations from within those motorhomes, would have been amusing. “Not tonight Josephine”, “thank God I have done my duty”!