Cox Automotive has reiterated its prediction of a 2.9% decline in new car sales for 2019 after the publication of half-year data by the Society of Motor Manufacturers and Traders (SMMT).
The automotive sector remarketing and funding specialist initially made its prediction that the market would end the year with a total of around 2.3 million new car registrations in its annual Insight Report, which was compiled in partnership with Grant Thornton.
Now it believes that data released by the SMMT which revealed that there were 1.3 million registrations in the first half of 2019, down 3.4% YoY, has brought the realisation of its prediction a step closer.
Philip Nothard, Cox’s customer insight and strategy director, said: “The new car market faced a challenging second quarter, with low levels of consumer demand, and continued confusion over company car tax.”
“We expect to see this even out slightly in the second half of the year, with some increase in the level of fleet and business activity, however registrations are not expected to return to 2018 levels.”
The recently published Cox Automotive and Grant Thornton Insight Report suggested that the downward trend in registrations is due to a unique set of diverse pressures on the new car market beyond the ‘big hits’ of WLTP and taxation changes.
Cox said that this view had been borne out by the results of Cox Automotive’s dealer survey which showed that dealers were relatively optimistic in the first quarter, but more than half of those surveyed reported that retail demand was down YoY in Q2.
The survey results for June showed that 48% of dealers expect conditions to remain the same in the second half of the year, while 38% expect them to decline, and 14% believe they will improve.
Nothard said: “The new car market reached a peak in 2016, and since then we’ve seen a gradual decline in numbers as registrations return to pre-peak levels.
“It’s worth remembering that 2019 is still likely to see the sixth highest number of registrations ever recorded in the UK, and that 2016 was an unusual year, with high levels of pre-registration activity.”
Looking ahead, OEMs are expected to continue to offer substantial discounts or subsidised finance in a bid to drive new car sales, according to Cox.
The introduction of RDE2 in September is also set to have an impact on the market.
Cox said that derogation would offer “something of a safety net”, but added that there may be higher than average levels of pre-registration activity in August as some OEMs struggle to meet the new standards.
Nothard said: “The second half of the year will certainly have its challenges, with vehicle legislation changes, political uncertainty, and unstable consumer demand.”
“That said, it’s not all doom and gloom for the automotive industry. Many retailers and OEMs anticipated a challenging year for new cars in 2019, and focused their strategies on other profit centres, such as used cars and aftersales. In fact, research from NextGear Capital suggests that almost two thirds of dealers are on track, or performing above their half year forecasts.”
“Manheim data also shows that fleet vehicles are returning to the wholesale market, relieving pressure on sourcing used stock, and suggesting that some of the challenges generated by taxation uncertainty are beginning to ease.”