Brexit decision at ‘inflection point’ for car market – Close Brothers Motor Finance
Following the publication of the SMMT’s UK monthly automotive manufacturing figures for June, Chris Bosworth, director of strategy at Close Brothers Motor Finance, suggests that the current growth spurt may be coming to a close. The extent to which this will be affected by Brexit remains to be seen, Bosworth adds, though it coincides with what he calls an “inflection point” for the UK car market.
“Production in the car manufacturing industry has been going up through the gears for almost a year now, as new models, more plant capacity and increased utilisation of that capacity has expanded the UK’s car making proficiency. A growth spurt since the end of last summer has seen year on year production volumes climb to a high of 1.75 million, but a number of factors suggest this momentum may be short lived.
“We’re yet to see the full effect of the Brexit vote, but any reduction in finance subsidies and the possible relocation of manufacturing plants would lead to production volumes falling. The UK is home to seven foreign volume car manufacturers, many drawn by both the attractive price of metal and proximity to Europe, so any disruption may see car prices climb in the showrooms.
“The Brexit decision comes at what is already something of an inflection point for the car market. A steady flood of new cars entering the market has built up a wave of used vehicles, and these two or three-year-old cars will soon be returning to forecourts. According to the FLA, used car vehicle finance grew by 15 per cent over the first quarter, and as consumers gravitate to well-priced ‘nearly-new’ stock, it will only exacerbate any demand side pressures on UK car manufacturers.”