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Registration rise set to continue, say experts

Industry observers are now predicting that the recovery of consumer confidence is set to continue, and with it continued growth in demand for great deals on new cars.

An 11% increase in new car registrations in May to 180,111 units marked the 15th successive month of growth and private demand is now beyond pre-recession volumes recorded in 2007.

It was the strongest May result for six years.

According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), registrations have risen 9.3% for the year-to-date to 948,666 units.

The 2013 new car market remains 9.2% off 2007 volumes, but trends among private buyers provide a good indication that the confidence of consumers is strengthening while they perceive there are bargains to be had.

Scotland posted the biggest growth in May, with registrations up 17.54%. Wales was up (17.36%), Northern Ireland (12.21%) and England (10.44%).

The growth is against the backdrop of stagnant UK household incomes, forecast to rise by only 0.5% in 2013 by the Office for Budget Responsibility, and continuing falls in new car sales throughout Europe, including stronger economies such as Germany, which fell 9.9% in May.

Mike Baunton, SMMT interim chief executive until former Bentley executive Mike Hawes takes over in the early autumn, said: “The performance of new car registrations in May marks a significant milestone for UK automotive, with cars registered by private buyers rising more than 20%, bettering pre-recession volumes posted in 2007.

“While it is clear that buying confidence among UK motorists is very strong, continued economic uncertainty abroad, particularly in the rest of Europe, will mean manufacturers remain cautious about performance in the second half of 2013.”

Sue Robinson, director of the National Franchised Dealers Association (NFDA), said: “It is now evident that consumer confidence in buying cars is back on track.”

The growth in new car registrations in May reflects a combination of factors, which may include consumers returning to the new car market after delaying regular replacement cycles, motorists replacing vehicles bought under the scrappage scheme, others switching to more efficient vehicles in every class and attractive offers catching the attention of buyers with funds and access to finance.

A switch from used to new may also be occurring, as the recession-induced dip in new car sales restricts the supply of used cars.

Outperformance factors

John Leech, UK head of automotive at KPMG, believes a number of factors are behind the UK’s outperformance of mainland Europe.

“Firstly, given the weakness in Eurozone markets, car manufacturers have turned their attention to the UK to keep their factories busy.

“The new car market in the UK continues to be buoyed by substantial discounts offered by car manufacturers directly to consumers, such as 0% finance.

Analysts at CAP Automotive recently claimed that motorists are enjoying the best new car deals since 1979.

“Secondly, UK banks are midway through settling PPI mis-selling compensation claims with UK consumers, which have averaged £2,700 per claimant over the past two years and totalled £9 billion so far.

"These one-off lump sums have released pent-up demand for cars.

“Finally, there have been some real advances in fuel efficiency offered by car manufacturers in response to a trend for consumers favouring smaller, fuel-efficient cars, up 14% year-to-date.

“At 7.5 years old, the average age of cars on UK roads is now higher than at any time in the past 20 years and consumers are increasingly switching older cars for newer, more fuel-efficient vehicles.”

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  • Ex dealer principal - 06/07/2013 11:04

    Wake up ,when will everyone realise that this increae is only brough about by manufactures making dealers pre register cars to distort the market so that targets can be increased Pre registered cars dont disappear into a hole in the ground Someone should do a survey to find out how many pre registered cars dealers are sitting on ascertain the true market.Pre registering is hastening the day of the small family dealer and adding to the power of the large groups

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