Retail new car registration figures returned to growth in February, but the year-to-date figure is still down on 2014.
New car retail registrations increased 3.4% in February compared to last year. The year-to-date figure is, however, down 2.6%. Last month retail sales were down 5.1%, the first fall in four years. But overall the market was up 6.7% year-on-year with fleet registrations largely responsible.
Figures released this morning by the Society of Motor Manufacturers and Traders show that overall the UK new car market has grown for a 36th consecutive monthm in February - a record growth period.
In February, traditionally one of the quietest months of the year ahead of the March plate change, the market grew 12% year-on-year with 76,958 new cars registered, achieving a year-to-date rise of 8.3%.
Fleet buyers drove this increase with registrations up 19.9% in February, while the private market saw an increase of 3.4%. Dealers AM has spoken to in recent weeks have, however, reported they have been pressured to 'pull forward' registrations from March and are under intense pressure to pre-register vehicles.
The UK car market’s sustained expansion is the longest ever seen, beating the previous record of 26 months set in the late 1980s.
The number of new cars registered has risen every month since March 2012, as the UK continues to bounce back from the recession and consumer demand has been driven by exciting new products and attractive finance deals.
• Since March 2012, the rolling volume of the UK new car market has grown by more than 540,000 units.
• More than one in three of the past 36 months of growth has seen a double-digit percentage increase.
• March 2014 saw the largest volume increase in the period with 70,018 more cars registered year-on-year.
Mike Hawes, SMMT chief executive, said, "Three years of continuous growth in the new car market is remarkable and reflects the strong upturn in the confidence of UK car buyers since the recession.
"Registrations of fleet and business cars have outpaced the private market in February, reflecting the increased business confidence across the UK. With most fleet car buyers on a three-year replacement cycle, many of those cars purchased at the beginning of the current growth period are now due for replacement. Over the course of 2015, however, we are expecting a more stable market to emerge given there has already been an extended period of consistent growth."
Monthly percentage growth: March 2012 - February 2015
“It is extremely positive to see the new car market has now achieved 36 consecutive months of growth – increasing 12.0% over the period,” said Sue Robinson, director of the National Franchised Dealers Association (NFDA).
“Consumers appear to be less reluctant to commit to new vehicles as employment prospects improve, and inflation comes down to a record-equalling low of 0.3% following cheaper fuel and lower energy prices.
“Increased sales are supported by strong manufacturer deals and low cost finance offers that are encouraging consumers to buy.
“We anticipate the market to continue to grow, and have strong expectations ahead of next month’s 15-plate change where customers will be likely to take advantage of a range of substantial discounts and savings, in addition to a variety of low rate finance packages being made available.”
Richard Parkin, automotive industry consultant at Grant Thornton UK LLP, said: "Today's figures are further evidence of a solid recovery across the UK economy.
"The fact that consumers, as well as businesses, have continued to invest in vehicles is indicative of their confidence in the economy over the mid to longer term.
"However, a looming general election – one of the most unpredictable in modern memory – along with continued uncertainty across the Eurozone, may well foster uncertainty in the market, and this may dampen demand. We can expect the sales records to continue for a few more months, but unless manufacturers begin to scale back their sales volume ambitions, the bubble may burst in the not so distant future.
"Overcapacity in European car production remains, forcing OEMs to discount their products in order to achieve sufficient sales – a factor which will have contributed heavily to today's figures. Despite producing over 1.5 million cars annually, UK sales are predominantly models imported from the Eurozone.
"As the pound has steadily appreciated against the Euro over the past two years, with a more dramatic depreciation of the Euro in recent months as a result of quantitative easing by the European Central Bank, this has made Eurozone-built cars ever more affordable for UK buyers and driven demand.
"Given the nature of the automotive purchasing cycle – both in a consumer and business fleet context – we can expect a tempering of new vehicle registrations later in the year. Plant production volumes for 2015 are, for the most part, set in stone – the cars will be built, it’s just a case of where they are sold, and high UK sales (>2.5m units) have already been factored in to these calculations."
Chris Sutton, managing director of Black Horse, said: “Car sales in 2015 continue at a good pace with businesses taking on new fleets and upgrading company cars demonstrating healthy business confidence however we will have to monitor more closely how consumer demand for new cars continues this year as we have recently seen the rate of growth slow down somewhat.
"Overall though we are hopeful that the March data will show a strong demand for new cars by both consumers and businesses with the new March registration plate.