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Early slump hides true picture

Carmakers and dealers are braced for a dramatic market decline this month as the official January registration figures reveal the true effect of a March plate change on annual buying patterns.

Despite huge marketing campaigns, including price cuts, special editions and 0% finance, private buyers have stayed away during January and early February, preferring to put their money down for the T-plate.

Dealers say forward orders are strong and the Retail Motor Industry Federation said the severe slump in January was “no cause for alarm”.

New car registrations in January plummeted by 21.6% to end the month at 181,842, compared to 232,055 in the same month last year. The fall appears more dramatic than it should, not just because of the shift towards March, but because January last year was a record figure.

There was also some evidence of strong 'nearly-new' marketing as dealers sought to shift cars they had registered in December under pressure from manufacturers who wanted to end the year on a high.

Alan Pulham, RMI franchised dealers director, said: “The January figures should not be taken at face value. The drop can largely be explained by the introduction of the twice-annual number plate change and the availability of pre-registered cars. Many big name manufacturers have started the year well, with improved market share.”

The market was running around 20% below last year's figures from the start of the month and a large proportion of the registrations were fleet business, locked into two and three year change cycles. Although all contract hire and leasing companies are flexible about end dates, they report little interest from major fleet managers to change to March. The first big shift is likely to be later in the year, when the V-plate moves from August to September.

Historically January has accounted for about 10% of new car registrations with August taking a further 25%. The Society of Motor Manufacturers and Traders' predicts the new March and September dates will take around 15% each, leaving February and July as low points during the year.

But there are fears the switch to two registration plate changes a year could have a dramatic effect on new car sales in the final quarter of 1999. A recent survey on new car buying habits by Lex revealed 16% of private customers planned to buy in March and 13% in September in the future.

However, none of those questioned planned to buy in October, November or December.

In addition to slow trading throughout the month, January had its usual share of last minute registrations. With four days to go, Vauxhall led the market by just over 1,000 units.

However, Ford pushed through over 10,800 cars, more than 35% of its total, in those final days to end the month on top.

Despite assurances to the contrary, the company continues to be concerned about Focus sales.

Dealers were asked to register more cars as demonstrators in January, discounts are widely available and options, such as air conditioning, are now being offered as standard equipment. The company claims orders for March, particularly diesels and estate, are very healthy.

Rover's highly publicised slump continued, though it was not as bad as wrongly calculated SMMT figures first suggested. The group, including Land Rover, ended the month with 6.17% market share - well down on the same month last year but at around the level of the final quarter of 1998. Rover Cars registered 8,437 units to take a market share of 4.64% and Rover dealers are now openly advertising pre-registered Rover 600 and 800 models at up to £7,000 off list price.

Weak brands face a tough few months while the market settles. Seat, Mazda, Citroen and Nissan look vulnerable. Mazda is reported to have offered up to £3,000 bonus on 626 registrations and there was £2,300 available on Mazda 323. Yet registrations halved in the month.

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