The UK new car market grew by a steady 3.2% in the first six months of the year, according to the Society of Motor Manufacturers and Traders (SMMT). 1,420,636 new cars have been registered so far in 2016 – the best half-year performance ever recorded.
Growth was reported across all fuel types, with diesel and petrol registrations growing 2.3% and 3.0% respectively in the year-to-date. Alternatively fuelled vehicles (AFVs), meanwhile, continued the significant gains seen over previous months, up 21.3% compared with the first six months of 2015. AFVs now account for 3.2% of the overall new car market.
Demand in June eased slightly, with a -0.8% fall in registrations to 255,756, meeting expectations that market growth would stabilise following a record 2015. Fleet registrations continued the trend of recent months, driving the market with a 4.5% rise and compensating for a 4.5% drop in private registrations.
Mike Hawes, SMMT chief executive, said: “It is far too soon to determine whether the referendum result has had an impact on the new car market. The first six months saw strong demand at record levels but the market undoubtedly cooled over the second quarter. It’s important government takes every measure to restore business and economic confidence to avoid the market contracting in the coming months.”
John Leech, head of automotive for KPMG in the UK, said: “This is the third month that consumer demand has softened and there are many who feel that the top of the market has been reached following 2015”s all-time record sales. Falling consumer confidence since the EU referendum is likely to further reduce sales in the coming months.
“Manufacturers are evaluating their positions carefully – although the industry is in good health and able to support the market, the decline in sterling is widely forecast to persist for many months and therefore we can expect prices to rise and volume expectations to be tempered, particularly in the mass-market sector. However, personal contract purchase (PCP) car finance is continuing to underpin the market and should ensure the market does not sharply contract.
“Overall, we can expect the new car market to fall in the second half of 2016 by around 4%, leaving the full year at or around 2015 levels. It may also be that these changes prove positive for the used car market where supply had been catching up with demand.”