Car dealers reported a 60% decline in demand during March as reaction to political uncertainty over Brexit the introduction of WLTP-related taxation changes caused owners to hold on to their cars for longer.
Cox Automotive reported the damaging impact of political and legislative changes on the sector during the key ‘plate change month, which resulted in the market’s 3.4% decline in new car registrations.
Philip Nothard, Cox Automotive’s customer insight and strategy director, suggested that uncertainty surrounding the UK’s delayed departure from the EU may have had a negative effect.
He said: “March was a month of two halves in the wholesale market. We saw strong prices and demand in the first two weeks, particularly for ready-to-retail stock, but the market was more challenging in the latter part of the month, possibly as a reaction to political uncertainty over Brexit.”
Nothard added: “In the fleet market, the introduction of WLTP and ongoing uncertainty around taxation is causing owners to hold on to their cars for longer, and we’re seeing older, higher mileage vehicles entering the wholesale market.
“While demand for fleet vehicles was strong in March, changing vehicle profiles have had a direct impact on the average value of fleet stock.”
But while the latest dealer sentiment survey from Modix suggested a drop-off in consumers’ desire to invest in a new car, 62% of respondents reported that days in stock were lower than prior year.
Cox Automotive recorded a double-digit increase in part-exchange volumes through its physical and digital wholesale channels in March.
Manheim saw the number of part-exchange vehicles rise by 10% month-on-month, while the average part-ex price was up 1.7% to £4,150, it reported.
Dealer Auction, Cox Automotive’s online trade-to-trade auction platform, also reported increased volume (up 8%) while the average sales value rose slightly to £5,088.
NextGear Capital, Cox Automotive’s stock funding business, meanwhile, reported an increase in average vehicle values, up 5% month-on-month to £7,958. Average holding days fell by three, to 59.8.
Cox Automotive said that both petrol and diesel prices had declined on a year on year basis during March, adding that this was likely to be influenced by an increase in vehicle age and mileage.
The average price of Alternative Fuel Vehicles (AFVs) increased by 2.3%.
Nothard said: “March’s new car registration figures made for disappointing reading, with the market down 3.4%.
“It seems clear that political uncertainty in the key plate change month had a big part to play, but private registrations have held relatively steady YTD, down just 1% year-on-year.
“From a fleet perspective the headline new car figures don’t necessarily tell the full story, and manufacturers have worked hard to maintain a stable market by using all the sales channels available to them.
“In the used market we’ve heard reports of a fall in demand in March, but dealer sentiment around days in stock suggests that this area of the market is still performing strongly.
“Concerns on margins expressed in February’s survey have lessened in March, but this is likely to be a continued theme in the coming months as some manufacturers increased new car prices from April 1.”