The UK car market is coming back, but is still well down on normal levels

The UK car market is coming back, but is still well down on normal levels

Figures released by the SMMT show that the UK new car market was down by 34.9% year-on-year in June. The large decline is an improvement on May's drop (-89%), but the SMMT said the drop reflected uncertain economic confidence and the delayed re-opening of Welsh and Scottish dealerships.

The lacklustre performance means that the market so far this year is down 48.5%, with almost 616,000 sales lost.

Private demand proved more resilient than business, down 19.2% in June with orders made pre-lockdown resulting in 72,827 registrations and accounting for more than half of the market. Fleet sales fell by a very substantial 45.2% to 69,498 units as businesses paused purchasing amid expenditure reviews. 

With one in five showrooms in England remaining shut throughout June, and those in Wales and Scotland unable to open until the end of the month, there remains some uncertainty regarding the true level of demand, the SMMT said. The trad association also said the hoped for release of pent-up sales has not yet occurred, with consumer confidence for big ticket purchases looking weak meaning that automotive is likely to lag behind other retail sectors. 

As the wider retail and hospitality sectors re-open and society and the economy begin a gradual return to normality, the true picture of consumer confidence is likely to emerge in the coming months. However, concerns remain with the government's Coronavirus Jobs Retention Scheme winding down and major employers across all sectors announcing significant job losses. The subsequent effect on livelihoods as well as on business and consumer confidence will not help a depressed market.  

Mike Hawes, SMMT Chief Executive, said: "While it's welcome to see demand rise above the rock-bottom levels we saw during lockdown, this is not a recovery and barely a restart. Many of June's registrations could be attributed to customers finally being able to collect their pre-pandemic orders, and appetite for significant spending remains questionable.  

"The government must boost the economy, help customers feel safer in their jobs and in their spending and give businesses the confidence to invest in their fleets. Otherwise it runs the risk of losing billions more in revenue from this critical sector at a time when the public purse needs it more than ever."