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March 4, 2011updated 08 Apr 2021 8:13am

UK: Car sales decline ‘less than expected’ in February

Strong demand from the fleet sector in February helped to offset a sharp decline in private buyer sales according to data released by the Society of Motor Manufacturers and Traders (SMMT).

Strong demand from the fleet sector in February helped to offset a sharp decline in private buyer sales according to data released by the Society of Motor Manufacturers and Traders (SMMT).

The SMMT said that new car registrations fell less than expected in February, dropping just 7.7% to 63,424 units. The February result, the trade body added, was ‘above expectations and only just below the scrappage-boosted 2010 market’.

February’s sales leave car registrations for the first two months of 2011 down 10.2% to 192,235 units.

The SMMT said that the first six months of 2011 are expected to be down by 8.3% before picking up in the latter half of the year.

“The UK motor industry is looking for a strong March market to help boost confidence and kick start demand for the new 11-plate. February new car registrations were better than expected and whilst below 2010 levels, they were significantly ahead of 2009 and on an improving trend,” said Paul Everitt, SMMT Chief Executive.

“This month’s Budget will be critical in determining consumer and business confidence and the ongoing stability of the market. We’re looking for certainty on motoring taxes, a freeze on fuel duty and measures that support business investment and access to finance and credit.”

While fleet sales were up 8.6% to 38,588 units in February, retail (private buyer) sales were down by 26.7% on last year to stand at 22,584 units.

The SMMT forecast for UK car sales in 2011 currently stands at 1.93m, a drop of 5% on 2010.

Concerns over the underlying strength of the UK economy (GDP declined by 0.6% in the fourth quarter of 2010) and the possibility of interest rate rises later in the year have led some industry analysts and observers to revise down UK car market forecasts.

Analysts also caution that recent increases to the oil price point to downside risk if the outlook for economic growth deteriorates further as a result.

David Raistrick, UK Manufacturing Leader at the auditors Deloitte, recently told just-auto that his forecast for the UK car market in 2011 stands at 1.8m units. “Things would have to get significantly worse to go below 1.8m,” he said.

And he thinks there is little room for discounting to lift volume.

“The low value of sterling and the recent VAT rise have combined to put upward pressure on pricing, particularly for imported cars,” he said, maintaining that the VAT increase this year is having to be passed on to the final consumer. 

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