Steady growth in May car registrations

New car market increases 2.5 per cent in May, with 203,585 vehicles registered

Demand for new cars in the UK remained stable in May with a steady 2.5 per cent growth in registrations, according to figures released by The Society of Motor Manufacturers and Traders (SMMT). 203,585 cars were registered in the month, May’s highest total since 2002.

Following the trend set in the previous two months, fleet registrations drove the growth, with an 8.8 per cent rise counterbalancing a -3.0 per cent fall in registrations to private customers.

Demand for diesel cars grew 5.0 per cent, outstripping that for petrol models, which saw a marginal decline of -0.6 per cent. Uptake of alternatively fuelled vehicles, meanwhile, continued to outpace the overall market with registrations increasing by 12.1 per cent.

1,164,870 cars have now been registered in 2016 – 4.1 per cent ahead of the same period last year. However, May demonstrated a continuation of the easing of growth, being the second consecutive month of sub-3 per cent growth in registrations – evidence of increasing market stability following a record 2015.

Mike Hawes, SMMT chief executive, said, “The new car market in May remained high with compelling offers available on the latest vehicles, but the low growth is further evidence of the market cooling in the face of concerns around economic and political stability. Whether this is the result of some buyers holding off until the current uncertainty is resolved or a sign of a more stable market for new cars remains to be seen.”

Commenting on the figures, Sue Robinson, director of the National Franchised Dealers Association (NFDA) which represents franchised car and commercial vehicle retailers across the UK, said: “It is positive to see that new car registrations rose 2.5 per cent in May to 203,585 units – the highest May total since 2002.”

Robinson continued, “We are pleased to see that although retailers from various sectors forecasted a modest slowdown in sales in May, new car sales continued to perform well.

“These results are in line with recent predictions that new cars sales will grow by 200,000 units in 2016 to a total of 2.8 – 2.9 million of vehicles, which would surpass last year’s record of 2.6 million.

“Despite less stable economic conditions and short-term uncertainty ahead of the EU referendum, the car market has continued its upward trend and is set to remain strong this year.”

KPMG automotive head comments

John Leech, head of automotive at KPMG UK, comments on the UK car registration figures published today by the SMMT. He said:

“UK new car sales were up 2.5 per cent in May due to the buoyant fleet sector offsetting a fall in demand from consumers. This is the third month that consumer demand has softened and signals that the top of the market has been reached for consumers following 2015’s all-time record sales.  Sterling has weakened by 11 per cent since November 2015 due to Brexit fears but so far this has not translated into transaction prices as manufacturers anticipate this is a short-term fluctuation. Cheap PCP car finance offered by manufacturers remains widely available and with renewals rising, it is unlikely that we will see consumer demand soften substantially further this year. Fleet sales are unlikely to keep up their current pace of growth for long however it is likely that the total UK car market will plateau in the second half of 2016.”