UK car registrations decline in May – SMMT figures

Monday 5th June 2017 | 0 Comments

 

NFDA predicts short-term drop during general election, but KPMG expects steady cooling as manufacturers attend to Europe

After hitting record peaks in 2016 and early 2017, the UK’s new car market saw a significant decline in May. New passenger car registrations declined 8.5 per cent, with a total of 186,265 units. In 2017 overall, the market is 0.6 per cent lower than last year, with more than 1.1 million cars registered between January and May. Alternative fuel vehicles (AFVs) continued their impressive 2017 growth in May, 46.7 per cent higher than in 2016, with a total of 8,258 AFVs registered making 47,936 so far this year. The National Franchised Dealers Association (NFDA) argued that the general election’s short-term impact on consumer confidence has been the key factor, and that medium term prospects remain good for another record-setting year. However KPMG analysts were more taciturn, suggesting car manufacturers have turned their attentions to Europe and expecting a steady decline in 2017.

Business and fleet sectors have driven demand, up 5.3 per cent and 2.4 per cent respectively, to offset a decline from private buyers of 4.2 per cent. However, more than half a million new cars have been registered by private buyers since the start of the year.

Mike Hawes, SMMT chief executive, said, “We expected demand in the new car market to remain negative in May due to the pull-forward to March – which was an all-time record month – resulting from VED reform. Added to this, the general election was always likely to give many pause for thought and affect purchasing patterns in the short term. Although demand has fallen, it’s important to remember that the market remains at a very high level and, with a raft of new models packed with the latest low emission and connected technology coming to market this summer, we expect the market to remain strong over the year.”

“New passenger car registrations declined in May but year to date the overall new car market remains strong,” said Sue Robinson, director of the NFDA, which represents franchised car and commercial vehicle dealers in the UK, commenting on the latest SMMT’s registration figures.

“The general election may have a short-term impact on consumer confidence, but franchised car retailers continue to see solid footfall through the dealerships and in the medium and long term consumer spending is expected to remain stable.”

Robinson added that it is important that government support for AFVs continues: “The growing importance of low emission vehicles is reflected in the strong performance of AFVs in May. However, there must be continued and coordinated support from Government and industry to encourage the uptake of these vehicles, which have now reached a record market share, to ensure that the segment remains strong.

“In a period of change it will be interesting to see what the upcoming months have in store. Positively, the overall 2017 new car market seems set to stay at historically high levels.”

KPMG – new car market in reverse

Contrary to the relatively optimistic NFDA outlook, John Leech, head of automotive at KPMG UK, comments that the fall in car registrations is part of longer trend rather than a symptom of short-term political conditions. “The sharp fall in new car sales in May indicates that the peak in the UK new car market was in the first quarter of 2017. We should now expect to see a steady cooling of sales over the rest of the year and in 2018. UK consumer confidence for major purchases has been declining throughout 2017, as measured by GfK Nielsen, and the adverse changes to Vehicle Excise Duty applied in April 2017 are expected to dampen demand throughout the second quarter of 2017.

“Car manufacturers have switched their attention from the UK market to Europe in response to the sterling’s weakness and stronger consumer demand in the EU. German car sales were up 13 per cent and French car sales were up 8 per cent. We maintain our forecast for 2017 new car sales at 2.5 million, falling from the all-time record of 2.7 million in 2016.”

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Category: Market Info, UK News