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Room for hope as new car market suffers third successive drop in registrations

John Bowman by John Bowman
November 8, 2020
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October’s drop in new car registrations  – its third successive fall – didn’t come as a surprise to industry figures but some even saw reason for hope.

James Fairclough, chief executive of AA Cars, said: ‘The steady decline in sales is a sign that consumers are holding on to their money, with many concerned about their job security and what may happen to their finances in the future.

‘The pressure on new car sales may also be the product of the rising popularity of used vehicles. AA Cars’ data shows demand for used cars has risen 15 per cent compared to last year.’

Rachael Prasher, managing director of What Car?, said: ‘We’ve been tracking in-market buyer trends since March, and our latest research at the end of October of more than 6,100 in-market buyers found one in five were looking to buy a vehicle in the next four weeks.

‘We expect to see online transactions and deliveries grow in the new and used car sectors, with both customers and retailers becoming more familiar and comfortable with the concept.

‘However, as next month’s registrations will undoubtedly show, it isn’t going to be a sufficient substitute for showrooms just yet.’

  • New car sales drop to nine-year low for October

Seán Kemple, managing director at Close Brothers Motor Finance, commented: ‘October is typically a harder month for sales in the new car market, and this year the industry is facing persistent challenges that are slowing recovery and hindering growth.

‘But there is a diamond nugget in the crown of coal. It’s a pivotal moment in the electrification of the UK car market, and consumers are driving the change toward greener roads.’

Alex Buttle, director of used car marketplace Motorway.co.uk, said: ‘Under the circumstances, a 1.6 per cent decline in registrations could be considered a good result, particularly against the backdrop of rising Covid-19 cases and economic uncertainty.

‘The new car industry is now facing even more issues as we go into a month-long lockdown. But despite the bleak picture, we don’t expect to see a similar slump in new car sales like we witnessed back in March through to June.’

James Hind, founder and chief executive of Carwow, said: ‘The results released this morning from the SMMT are not unexpected in the current climate.

Source: SMMT

‘It has been a difficult year for new car registrations and this month is no different. The real silver lining throughout the year has been the continuous growth in electric vehicle interest and purchases.’

Auto Trader director Ian Plummer said: ‘Data shows that it is fleet sales which are causing the dip in numbers in October and that’s not surprising.

‘Many companies haven’t updated their business fleets because the shift in working habits for much of 2020 has meant they don’t need to.

‘The new car market is also still feeling the effect of production line closures earlier in the year, straining the availability of brand-new car stock to meet strong consumer demand.’

Heycar chief commercial officer Karen Hilton said: ‘The rollercoaster of 2020 continues – but the automotive industry is much better set up to deal with what lies ahead. Things don’t feel as uncertain as they did back in March.

‘The reason we feel that we can all weather the storm is that dealerships are no longer defined by their four walls and forecourt – their digital offering is just as important.

‘Online models have developed quickly and staff have adapted to this new way of working.’

Meanwhile, Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, commented: ‘This headline statistic only goes some way to capturing the two faces of the UK’s vehicle market.

‘Fleet sales, responding to challenging business conditions, were down by a substantial 3.3 per cent year on year but private sales, driven by changing patterns of daily life in the current environment, were actually up 0.4 per cent.’

Michael Woodward, UK automotive lead at Deloitte, said: ‘The impact of a second lockdown is likely to be significant, but the industry is better placed to cope this time around.

‘However, uncertain economic conditions and the prospect of further unemployment means consumers continue to put off major purchases. Dealers and manufacturers will have to work hard to convince prospective buyers that they are getting value for money when restrictions eventually lift.’

David Borland, Ernst & Yound UK & Ireland automotive leader, commented: ‘While volumes and revenues remain subdued in the quarter, there are positive signs with many manufacturers and dealers reporting increases in profits.

‘This is being driven by manufacturers using their reduced capacity to focus on a more profitable product mix and the continuing strength of the used car market helping to buoy dealer performance.’

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