UK dealers saw new car registrations increase by 10.8% in 2013 to 2,264,737 units, according to the latest figures from the Society of Motor Manufacturers and Traders.
The total for the year has shown the highest volume since 2007 and the market is now 5.8% behind pre-recessionary levels, with December’s performance (up 23.7%) marking the 22nd consecutive monthly rise in registrations.
On average, an additional 600 extra cars registered per day in 2013 than in the previous year.
Despite calls from dealers that the market has seen more pre-registration activity in 2013, the SMMT maintains that consumer and business confidence, after an extended hold-off period and a competitive market place helped fuel growth.
The increase in private registrations accounted for two-thirds of overall market growth. In 2013 private buyers accounted for 47.5% of the market, up from 45.5% in 2012.
Mike Hawes, SMMT chief executive, put the rise down to strong financial offers as well as increased demand for more technologically advanced cars.
He said: “With its best year since a pre-recession 2007, the UK new car market has helped stimulate the country's economic recovery.
“While the European market is only now showing signs of improvement, the UK has consistently outperformed the rest of Europe with 22 consecutive months of growth.
“We expect new car registrations to remain stable in 2014 as customers return to a more regular replacement cycle.”
The SMMT said a change in buying patterns has been driven by demand for smaller, more fuel-efficient models, as well as the greater versatility offered by vehicles in dual purpose and MPV segments.
Dual purpose sales overtook upper medium volumes in 2013 to become the third largest segment. However, the supermini segment remains the largest by volume, with a market share in 2013 of 35.9%.
All sales types recorded growth in 2013, although it was the private sector which saw the largest volume gain.
All regions in the UK saw an increase in registrations in 2013. The Welsh market saw the highest rate of growth in 2013, up 16.93% to 83,633 units, followed by Scotland, up 12.55% to 204,592, England up 10.46% to 1,916,702 units and Northern Ireland, which was up 10.4%.
Top 10 models of 2013 by units registered
Ford Fiesta 121,929
Ford Focus 87,350
Vauxhall Corsa 84,275
Vauxhall Astra 68,070
Volkswagen Golf 64,951
Nissan Qashqai 50,211
BMW 3 Series 43,494
Volkswagen Polo 42,609
BMW 1 Series 41,883
Peugeot 208 38,616
Sue Robinson, director of the National Franchised Dealers Association (NFDA), said: "It is extremely encouraging to see that the car market is back performing at pre-recession level.
“Increased retail demand drove UK sales in 2013. Competitive offers by manufacturers along with strong finance offers boosted sales as consumer confidence returned to the market.
“Car showrooms have reported increased sales activity and interest from consumers looking to replace their vehicles, which is some cases are part of the aging car park or not as fuel or energy efficient as modern vehicles.
“The NFDA expect the market to continue to perform well and to build on the success of 2013.”
Michael Allen, Panmure Gordon executive director equity research, support services, said: "A key theme for 2014 will be on margins and whether OEM target expectations are realistic for the year ahead. Our overall sense is that most of the larger dealer groups would have hit year end targets, with some of the smaller dealerships continuing to struggle providing further M&A opportunities. Used car prices appear to remain stable, with January a key selling period to private consumers."
John Leech, KPMG UK head of automotive, said: "The real story in 2013 has been the success of the Personal Car Plan (“PCP”) offered by car manufacturers – indeed the way the British buy cars has been truly transformed.
"Gone are the days where the consumer asks the bank for a personal loan. Car dealers now sell finance with the car where half the price is paid over 36 months and the remaining half is cleared by a bullet payment at the end of the three years.
"This has been great for new car sales as consumers choose to take a new car on another PCP rather than pay the bullet. However, the danger for car manufacturers and used car dealers is that the supply of three year old cars is starting to ramp up and, maybe in a year or two from now, will exceed demand leading to a potential residual value price crash and increased risk of loan default by consumers.”
Mark Ovenden, Ford of Britain chairman and managing director, said: "Ford’s commitment has been consistently to provide UK customers with the best vehicle range and aftersales support supplied through the strongest dealer network. Our long-standing market leadership is the result of this strategy.
“In 2013, Ford extended its sales lead in a fiercely competitive market thanks to the launches of award-winning vehicles and technologies and we will continue to appeal to private and business customers, as we go through 2014, by strengthening our vehicle range still further and providing the best sales and service offering in our dealerships."
The Vehicle Remarketing Association (VRA) welcomed the 2013 results, with larger volumes boding well for a used car sector that has suffered through lack of stock.
John Davies, VRA chairman, said: “The used car sector is often viewed as a poor neighbour when considering overall market health.
“But its success plays a key role in driving the new car market forward. The UK’s remarketing industry is a well-oiled, robust machine that helps keep new car sales moving forward and I have no doubt that members will welcome the outlook of much needed additional stock in 2014 and beyond.”
The issue of pre-registrations and the new car market continues to concern some industry commentators, but for VRA members every used vehicle represents an opportunity to demonstrate remarketing expertise that is envied throughout Europe.
Gerry Keaney, BVRLA chief executive, said: “Fleet and business sales were responsible for more than 50% of new car registrations, which demonstrates the vital role road transport plays in driving the UK economy.
"The outlook for 2014 is also positive, with small but stable growth forecast. Hopefully this growth will be well balanced. It is vital that vehicle manufacturers take a disciplined approach to self-registrations.”