New car registrations in the UK have now grown for 20 months and October’s 4% rise to 157,314 and year to date rise of 10.2% to 1,952,238 units has prompted the SMMT to raise its forecast. Commercial vehicle sales have also risen.
It now expects 2.25m unit sales for 2013, up from 2.22m and sees the market “set to stabilise and grow at around 1% in 2014 and 2015”.
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“With October new car registrations up we have now seen 20 consecutive months of growth,” said chief executive Mike Hawes.
“These sustained rises have been driven by robust private demand, a trend that has given us the confidence to raise our year-end forecast to 2.25m units – 10% ahead of last year. Looking ahead, we anticipate more moderate growth as the market stabilises.”
The UK market has seen a shift from traditional family cars (particularly the upper medium segment) towards smaller vehicles (eg Ford Fiesta), as well as MPV (eg Vauxhall Zafira) and Dual Purpose (eg Kia Sportage) vehicles between 2003 and 2013.
Ever greater emphasis on fuel efficiency, emissions and running costs, coupled with the greater refinement, performance and specification of smaller cars, has driven the trend for downsizing.
Increased choice, comfort and safety, as well as improved functionality, have enabled the market mix to evolve over time.
The supermini segment remains largest by volume, while dual purpose has seen the largest growth in market share.
John Leech, KPMG’s UK Head of Automotive, said: “Today’s numbers suggest that the tremendous growth we have seen in the UK new car market over the last few months is starting to return to a more sustainable growth path. And for the first time in over a year, the three other main European markets have had a similar experience, with new registrations in Germany growing by 2%, France by 3% while registrations in Italy fell by 5% due to a VAT increase taking effect.
“This slower pace of growth seems much more sustainable especially considering the potential impact the huge growth rates in new car registrations might have on used car prices. One feature of the recent increase in new car retail sales has been the availability of cheap finance from car manufacturer-funded personal car plans (PCPs). Cars sold on a PCP tend to churn faster as they approach their third birthday as consumers are faced with the choice of a large balloon payment to retain the vehicle or a replacement new car on another PCP. It is hoped that a slower pace of new car sales will avert a used car price crash such as the one seen in 2008.
“With improving UK economic conditions and rising house prices having a positive impact on consumer confidence we continue to forecast that strong private demand will see new car registrations grow by 5% in 2014 and beyond.”
Commercial vehicle registrations were up strongly in October, rising 27.3% to 27,578 units in the month.
Year to date sales rose 9.8% to 266,934 units.
In October, vans rose 26.3% with 22,473 registrations and posted YTD growth of 11% to 227,477.
Truck demand – a good measure of economic activity – grew 32% in the month with 5,105 registrations; year to date volumes returned to growth, 3.2% ahead of 2012 at 39,457 units.
“Both the van and truck markets showed great strength in October boosting the sector by 27.3% and taking the 2013 growth rate to almost 10%,” said Nigel Base, SMMT commercial vehicle manager.
“We anticipated this late strength in the truck market and SMMT has raised its forecast for van registrations to 264,100 a 10.2% rise on last year.”
