The UK car market may is heading for a record 2.6m units this year, but it has more potential for growth according to Ford's UK chief, speaking to just-auto.
In recent years the UK car market has been boosted by the relatively strong performance of the UK economy at a time when continental demand has been depressed. It has also been helped by attractive finance deals, low interest rates and a strong pound that has encouraged shipments of cars to the UK from continental European plants.
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The UK car market posted another record in September, which was the 43rd consecutive month of growth.
With the UK car market running at such a high level, the question of when it could run out of steam – particularly as demand picks up in mainland Europe – is increasingly being asked.
Andy Barratt, recently appointed as Ford of Britain's managing director, told just-auto that Ford's view is that the UK car market will be 'flatish' in 2016. However, he also believes there could be some potential for further market growth.
“Other commentators see potential for more growth,” he says. “For example, as more PCP [personal contract plan] customers come in to renew the vehicles they have got at the moment. Also, the vehicle parc that's out there is probably the oldest it has been for a while. That parc has to renew at some point. So there may be a little bit more natural growth in there.”
Barratt also points to trends in the UK commercial vehicle market. “It keeps growing and we are having a phenomenal time this year in terms of absolute volumes. That is good because that is business making a demand. There is good confidence, construction is booming again, the economy looks good, interest rates and inflation are very low. I think car demand could remain buoyant. Once you've had a new car and you have had it in a very affordable way, that carries on, it suits lifestyles.”
Market leader Ford has a long track record with PCPs in the UK car market, having introduced them over twenty years ago.
Barratt also revealed that the Bank of England likes a regular update from Ford on its PCP business as it tracks trends in consumer lending in the UK. “We see them 3-4 times a year,” he says. “We have had about 1.1m customers on PCP so we have a long track record in this area and the Bank is very interested to track consumer trends and behaviour.”
Barratt also believes that the sterling-euro exchange rate has also supported UK car market growth as eurozone producers have looked to gain from a favourable exchange rate at a time when demand on the continent has been weak.
“The strong pound has created more of a buyers' market,” he says. “It's created a benefit for customers on a number of levels, in terms of cars at more advantageous prices, lower monthly payments, or companies providing extra equipment or offers.”
And there's another point Barratt makes about the UK market that is often overlooked. Cars shipped to the UK car market are not going to leak out across borders to other markets if market conditions change for a manufacturer in the short-term. “Once a car arrives in the UK and the steering wheel is on the right-hand side, it's not really going anywhere else. The stuff that comes here is staying here and that creates a pressure of its own.”
See also:
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