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Retail underpins July sales

Stronger than expected new car registrations in July have lifted industry confidence for the second half of the year and yet again forced market planners to revise their total sales projections upwards.

The Society of Motor Manufacturers and Traders, which started the year predicting sales to fall 9%, is now estimating 2.225m units - just 1% down on last year - while the National Franchised Dealers Association is more bullish and talking about 2.25m, fractionally up on last year.

Both report increased consumer confidence, low interest rates and intense competition - leading to exceptional retail support packages - as the main reasons for optimism. Year-to-date registrations are up 15.7% at 1,358,657, against 1,174,787 last year. After a roller-coaster ride in the first three months of the year, monthly totals have been consistent between 167,324 and 196,442.

Amid the euphoria of the first seven months, there is still some caution about the final quarter and the 'Millennium effect', which may yet see customers hold off until 2000 for their new car.

The DVLA has reported booming sales of V-suffix personalised plates but increased requests to delay registration until January 1.

But values guide Cap argues that some fleets will have reached their replacement cycle and many private buyers will have finance deals ending in August. Daren Wiseman, Cap Black Book editor, said these buyers may be tempted to get straight back into a new car rather than delay a month. “Someone who waits until September to trade in their three-year-old car will find they have to MoT and tax it for just one month,” he said.

The shift of plate change from August to September makes any July month-on-month comparison meaningless. There were 167,324 new cars registered, against 37,896 last July. The August figure will slump from its previous peak and September will grow; some estimate to as much as 400,000. Only when all three months are taken together can the true state of the market be judged.

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