The Society of Motor Manufacturers and Traders (SMMT) increased its new car forecast from 2.22 million to 2.25m units following a 4% increase in the October market.
New car registrations increased to 157,314 units in October and registrations year-to-date were up by 10.2%.
Mike Hawes, SMMT chief executive, said: “With October new car registrations up, we have now seen 20 consecutive months of growth.
“These sustained rises have been driven by robust private demand, a trend that has given us the confidence to raise our year-end forecast to 10% ahead of last year.
“Looking ahead, we anticipate more moderate growth as the market stabilises.”
The SMMT is expecting the growth to slow next year and in 2015, with an estimated 1% growth for both years. The SMMT’s forecast for 2014 and 2015 is conservative in comparison to KPMG, that believes the market could see growth of 5% next year.
Dealers have told AM that pre-registration activity accounted for a large percentage of registrations in September, but the SMMT is still confident private growth is driving demand, with a 4.5% gain in October and 15.7% increase over year-to-date.
Mark Ovenden, Ford of Britain chairman and managing director, said private customers have been driving up its share of more profitable retail sales, which he believes is one of the key pillars for a strong overall business.
John Leech, KPMG’s UK head of automotive, said: “The numbers suggest the tremendous growth we have seen in the UK new car market over the last few months is starting to return to a more sustainable growth path.”
One feature of the recent increase in new car retail sales has been the availability of cheap finance from car manufacturer-funded PCPs.
Cars sold on a PCP tend to churn faster as they approach their third birthday, when consumers are faced with the choice of a large balloon payment to retain the vehicle or a replacement new car on another PCP.
Leech said: “This slower pace of growth seems much more sustainable, especially considering the potential impact the huge growth rates in new car registrations might have on used car prices. Returning to a more realistic level will avert a used car price crash such as the one seen in 2008.”
Following the plate-change month of September, October was relatively flat for many manufacturers, with market-leader Ford up 2.82% and Vauxhall up slightly at 0.52%.
Mercedes-Benz was the premium winner in October with growth of 27.97% to 8,346 units in its march to take on BMW and Audi.
Mazda is continuing its recovery in the UK as its Skyactiv models continue to boost registrations, with a 47.27% increase in October to 1,779 units.
Suzuki also had a great month, up 46.57% to 1,369 units due to the help of SX4 S-Cross and strong finance deals on its Alto supermini.
Despite being down 7% in October, Mitsubishi has still posted the biggest growth year-to-date. Toby Marshall, sales & marketing director of Mitsubishi Motors in the UK, said: “With the recent launch of the Mirage and Outlander, we now have our strongest line-up for quite some time.”
Things are also looking a lot more positive for Renault, up by almost 15% in October and up by 46.1% for the 10-month period between January and October, to 49,154 units when combining Renault and Dacia.
Ken Ramirez, Renault UK managing director, said: “The milestone signals a clear turning point for the Renault group in the UK market and demonstrates the increased value of the franchise.
“The launch of Dacia this year certainly contributes significantly to this growth, along with a renewed range of Renault models that have re-energised the brand.”
Fiat Group is still struggling with its position in the UK. While the Fiat 500 made it into the top 10 list of highest model registrations in October, helping the brand to 3.43% growth, the rest of the stable did not fare as well.
Alfa Romeo saw registrations drop by 21.06% to 416 units, Chrysler saw volumes fall by 12.58% to 139 units and Abarth was also down 15% to 100 units (see AM’s analysis of the Chrysler Jeep franchise and interview with Fiat Group UK boss Steve Zanlunghi).
Fiat’s long-term plan to turn Maserati into a rival for BMW, Audi and Mercedes-Benz customers also looks a long way off with 32 units registered in October.
Fellow premium rival Infiniti is also still hoping to build volumes further, with a 32.2% drop in October to 40 units.
The arrival of Infiniti’s 3 Series and 1 Series rivals, the Q50 and Q30, will help pick up registrations.
Downsizing trend continues
Over the past 10 years, there has been a trend towards consumers switching from larger cars to smaller, more fuel-efficient options.
The UK new car market has shifted from the upper medium sector, down 9.6%, towards smaller vehicles, such as the Ford Fiesta supermini. The supermini segment remains the largest by volume, at 36% of the UK market, while dual-purpose has seen a 4.7% increase in market share to almost 11%.
For the latest monthly reistration figures, go to the SMMT website.