Following positive figures for March, April’s new car sales figures were disappointing.

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New car sales continue to struggle to match the records set in 2002. It seems car retailers were expecting April’s fall, having continued to reduce prices despite an upbeat March. The main plus point for the UK market outlook is that the strength of the Euro is making imports less attractive.


The Society of Motor Traders and Manufacturers (SMMT) has reported a fall in new car sales for UK during April. Compared to April 2002, new car registrations fell 7% to 194,312 units. The figures mean that year-to-date sales are down 2.6% from a year ago.


Commenting on the new car registrations data, SMMT chief executive Christopher Macgowan was optimistic. “Following two best-ever years, the market was expected to cool in 2003 but with year-to-date registrations down only 2.6%, the year-end forecast is now expected to reach 2.45 million units, up 50,000 on earlier estimates,” Macgowan said. “The record March figure has been balanced in April to bring the market back on track with industry estimates.”


The volume of new fleet registrations continues to resist downward pressure, but private sales fell 10.5%. This comes despite data from CarPriceCheck.com, which indicates a 1.3% average fall in transaction prices from the previous month. Franchised dealers seem to be discounting more heavily, as they compete with banks and leasing companies that are moving into the retail arena.

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Lloyds TSB is currently offering £2,300 off the price of Citroen Xsara VTS. With rivals such as Norwich Union following suit with similar deals on particular models, the UK market could be following the trend of discounting set in the US, which has damaged the profitability of firms such as GM and Ford.


Steve Evans of CarPriceCheck feels that there is oversupply in the market, and that discounts are necessary to address this. However, the residual values of used vehicles, which are already weak, could fall even further.


The one piece of good news for the UK’s new car retailers is that the increasing strength of the Euro is making imports less attractive – transaction prices rose by 1.51% between March and April.


SOURCE: DATAMONITOR COMMENTWIRE (c) 2003 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.