"Aggressive pricing helps the whole network to benefit and there have been many conquest sales." - Bill Cook, Hyundai dealer

Car manufacturers and franchised dealers are pinning their hopes on a combination of the Government’s scrappage scheme and higher consumer confidence to kick-start the market for new cars.

May provided a mixed message. The 24.8% year-on-year decline in registrations was a shade better than the 27.9% dip over the first five months of 2009. But, with only 134,858 registrations, against 179,272 a year earlier, May was the 13th month in a row to show a drop in sales.

Registrations over the first five months totalled 748,691 – the corresponding 2008 figure was 1,038,289, a fall of close to 290,000 units. On a rolling annual basis the market is down 555,663 units to 1.842 million.

Retail demand fell only 13.8% in May, in part reflecting the fall 12 months earlier when the economic downturn began. The SMMT believes it was also an early sign of a revival started by the scrappage scheme.

Paul Everitt, SMMT chief executive, believes consumer confidence is improving, but accepts the industry still faces “a difficult economic climate”. At the beginning of June, said Everitt, dealers had taken 35,000 orders from retail buyers using the scrappage allowance. 

Sue Robinson, the RMIF’s franchised dealers director, was also cautious about scrappage: “It is still too soon to see its true effect. We hope the scheme will stimulate the new car market and encourage consumers back to the showrooms.”

The outright winner in May was Hyundai with 3,325 registrations – more than 36% higher than a year earlier. 

Between January and May, Hyundai’s sales totalled 14,534, up from 13,458.

Bill Cook, who owns Southend Hyundai and Chelmsford Hyundai in Essex, and is chairman of the Hyundai UK dealer franchise board, said: “The company used its experience from the German scrappage scheme and ordered thousands of extra cars. It also booked venues for regional meetings with dealers before the Government announcement.
“Aggressive pricing has helped the whole network to benefit and there have been many conquest sales. 

My dealerships have taken in a K-registration Mercedes-Benz, a BMW 318 and many Nissans. It means we are introducing many people to the brand.”

The problem for the industry is that scrappage is mainly benefiting manufacturers of smaller cars with good fuel economy. Kia, Hyundai’s sister brand, was just over 20% up in May year on year. Ford said the scrappage scheme had already started to have a positive effect, giving it more than 3,800 extra registrations in May.

Chevrolet strengthened its position as GM’s value brand (almost 22% up in May) and demand for the Mito helped Alfa Romeo win more sales. May’s other risers were GM’s Cadillac (21 this year, eight last) and Corvette (nine this time, none in May 2008).

Diesel penetration fell for the second successive month (from
44.8% to 44.0%).

See new car sales figures.

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