The UK new car market was down by 1.6% in October, with 140,945 cars registered, marking a nine-year low for the sector, according to data released by the Society of Motor Manufacturers and Traders (SMMT).
The SMMT said the Covid ‘firebreak’ population restrictions in Wales (which closed non-essential retailers, including car dealers) accounted for more than half of month’s losses. A similar ‘stay at home’ order for England will force more UK showrooms to close in November.
Although the UK’s auto industry pins hopes on click & collect to avoid a repeat of spring’s market wipe-out, the SMMT said it now faces the ‘double hit of reduced winter trading and challenge of Brexit’.
The SMMT said the arrival of new models and ongoing financial incentives helped initially to sustain UK demand in the month (which follows the big seasonal high of September), but the introduction of a ‘firebreak’ lockdown in Wales on 23 October contributed to the nation recording 25.5% fewer registrations by the end of the month, which accounted for more than half of the overall UK decline.
Subdued activity from businesses drove much of the month’s UK drop, with around 2,500 fewer vehicles joining larger fleets than in October last year, while private registrations saw a modest increase of 0.4%. However, this performance was flattered by a weak October 2019, when ongoing supply issues arising from regulatory challenges, as well as political and economic uncertainty ahead of the anticipated Halloween Brexit withdrawal date, saw overall registrations by private buyers recede by 13.1% in the month.
As of mid-October, the industry had been expecting to register about 1.66 million new cars in 2020. However, with the announcement of a second lockdown for England, which will include the closure of vehicle showrooms, the market forecast has been downgraded by a further 100,000 units to 1.56 million. This equates to a total year-on-year decline of around 750,000 registrations and a GBP22.5bn loss in turnover, with 2020 now likely to be the weakest year for car sales since 1982.
While the continuation of click & collect and delivery services is welcome, and should help prevent a return to the sales wipe-out experienced in the spring, it cannot offset the loss of custom from the closure of showrooms themselves, given the unique nature of the car purchase process, the SMMT said.
Mike Hawes, SMMT Chief Executive, said: “When showrooms shut, demand drops, so there is a real danger that with England today entering a second lockdown, both dealers and manufacturers could face temporary closure. What is not in doubt, however, is that the entire industry now faces an even tougher end to the year as businesses desperately try to manage resources, stock, production and cashflow in the penultimate month before the inevitable upheaval of Brexit. Keeping showrooms open – some of the most Covid-secure retail environments around – would help cushion the blow but, more than ever, we need a tariff-free deal with the EU to provide some much-needed respite for an industry that is resilient but massively challenged.”