Pent-up demand helps UK new car registrations up 11.3%

(Source: SMMT)

New car registrations rose for the first time this year in July. The figure rose 11.3 per cent in the month, year-on-year, according to the latest Society of Motor Manufacturers and Traders (SMMT) figures. 174,887 cars were registered in July 2020, supported by the first full month of trading for dealerships since February. July 2019 registrations were affected by declining business and consumer confidence undermined the market. Pent-up demand and special offers led to a reprieve for the sector, but overall registrations are still down by -41.9 per cent or 598,054 units year-to-date. Despite the increase in July, SMMT’s full year outlook is for a -30 per cent decline in registrations, representing more than £20 billion of lost sales.

Private demand saw the most significant growth with a 20.4 per cent increase in registrations, primarily a result of consumers finally being able to renew their cars after lockdown had forced them to delay. In addition, manufacturer incentives have helped attract customers to showrooms. Eight of the 10 major manufacturers provided attractive finance offers and flexible payment terms in a bid to head off consumer uncertainty – vital as the Coronavirus Job Retention Scheme phases out, potentially sparking redundancies across the economy and impacting confidence to invest in big ticket purchases.

Electric, ULEV continue popularity

Public appetite for zero and ultra low emission cars remains stable, with plug-in hybrids and battery electric vehicles taking a 9.0 per cent share of registrations for July, compared with 9.5 per cent last month and up from 3.1 per cent for 2019 overall. Meanwhile, ‘supermini’ and lower medium sized (or small family) cars were once again the most popular segments, accounting for 59.1 per cent of registrations. Dual Purpose cars comprised 25.9 per cent of vehicles registered.

Business car registrations showed modest growth, with fleet purchases increasing by 5.2 per cent. Even so, more than 13,000 jobs have now been lost by UK Automotive across retail and manufacturing as a result of the pandemic, with more likely to follow given the scale of the challenges facing the sector, including shifts in technology, Brexit uncertainty and a depressed market.

Mike Hawes, SMMT chief executive, said, “July’s figures are positive, with a boost from demand pent up from earlier in the year and some attractive offers meaning there are some very good deals to be had. We must be cautious, however, as showrooms have only just fully reopened nationwide and there is still much uncertainty about the future.

“By the end of September we should have a clearer picture of whether or not this is a long-term trend. Although this month’s figures provide hope, the market remains fragile in the face of possible future spikes and localised lockdowns as well as, sadly, probable job losses across the economy. The next few weeks will be crucial in showing whether or not we are on the road to recovery.”