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August slump signals further cut in forecast

The SMMT has again been forced to cut its forecasts for new car registrations this year and in 2009 after August plunged to 63,225 down 18.6% year-on-year.

Now the SMMT expects 144,007 fewer new cars to be sold this year compared with 2007 – 5.9% less with an expected total of 2.26 million.

And next year, forecasters say the UK market is likely to be 2.16 million, a further drop of 4.4%, with 100,000 fewer cars registered than in 2008 and close to 250,000 below last
year’s total.

The SMMT’s press release claiming last month was the lowest August since 1966 caused some anger among dealers; until 2001, August was the annual plate-change month and accounted for a third of registrations. 

They accused the SMMT of stoking the flames of recession with rhetoric. While an 18.58% fall on August 2007 looks severe, in volume terms it amounts to a little over 14,000 units, less than three cars per dealership. 

Far more crucial will be what happens this month.

Vauxhall overtook Ford in August but its year-to-date sales are down 4.44% compared to the market leader’s 2.52% dip. 

Growth in hard times

Ford’s share of the market has actually risen, albeit by 0.2%, and its private retail sales are up slightly to 10.7% of the market.

Vauxhall’s share of private retail (retail minus employee sales and business sales to 1-24 car contract hire/rental fleets) has dropped from 7.8% to 6.5% year-on-year.

Brian Hendy, chairman of the Hendy Group, with 40 years’ experience in the industry, believes it is time for all to hold their nerve.

“We must be careful not to talk ourselves into oblivion,” said Hendy, who is Ford dealer council chairman. 

“There is a degree of panic among many motor trade managers who were not in business during the recession of the early-1990s.”

Hendy said showroom footfall was holding up reasonably well and dealers needed to focus on operating lean and trying to trade at a profit. 

But he had a warning: “The final quarter of 2008 could be a killer.”  This month, with the impetus of the new ‘58 plate’, is vital. 

Dealers prepare for tough times ahead

Dealers are braced for a significant fall against last September, but hope for something less severe than August’s slump. 

A drop of between 12% and 15% is likely, say some, and the SMMT expects a decline of around 30,000 units to below 390,000.

The Cleangreencars website compared CO2 emission and August sales figures. It said the worst polluters (Porsche, Land Rover, Jeep and Chrysler) saw sales halve.

A Land Rover spokesman said: “It is a specialist website with a vested interest. August was as much to do with the decline in the premium car sector as it was about emissions.” 

SMMT analysis reveals that 89% of the year-to-date drop was in June, July and August. August typically accounts for only 3% of volumes.

The SMMT hopes the start of 2009 will be the low point. Others do not expect a recovery before 2010.

See new car sales figures or used car sales figures online.

  • You can see full details of August registrations in the 19 September 2008 issue of AM. To subscribe to AM magazine click here or call 01733 468659.

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