UK: New car sales down by 11.5% in November

By Dave Leggett | 6 December 2010

Data released by the SMMT shows that UK car sales in November fell by 11.5% year-on-year, a fifth successive month of decline.

However, the SMMT said that while new registrations in November were 11.5% down at 139,875 units, that was still ahead of forecast and that the comparison is against a scrappage-boosted market last year. The 'better than expected' monthly performance reflected an improvement in fleet volume and a less steep than anticipated decline in private registrations, SMMT said.

There could have been some pull-forward ahead of the January VAT rise.

The SMMT also noted that the UK new car market remains 3.4% up over the first 11 months of the year at 1,907,029 units, with the year as a whole set to turn out around 2% up on 2009 at just over 2m units.

The November market was up 14.0% compared with last November’s market less scrappage volumes, SMMT said. The market in 2009 included 35,415 cars reportedly bought through the scrappage scheme, equivalent to 22.4% of the total then.

“New car registrations fell by less than expected in November with demand from the fleet sector helping to offset the market rebalancing following the end of the Scrappage Incentive Scheme," said Paul Everitt, SMMT Chief Executive.

The SMMT also held out the hope that the December figures may see a boost from buyers looking to avoid the January VAT rise.

“Registrations are expected to fall next month, but demand may benefit from motorists looking to avoid the January VAT rise. This factor, coupled with the strength of the first half of 2010, means year-end volumes are expected to lift to over 2.03 million units, 2% up from last year. Next year will continue to be challenging as consumer spending tightens and government’s austerity measures take effect.”

Diesel car volumes rose sharply to 53% in November, coupled with the slowdown in registrations of petrol cars which benefitted strongly from last year's Scrappage scheme. Registrations of alternatively fuelled cars jumped 83.5% in November to give them a 1.3% share of the November market and a 1.1% share over the year-to-date.

The Ford Fiesta was once again the best selling new car in the month. Demand for supermini cars has weakened post the scrappage scheme, but volumes of dual purpose vehicles and MPVs continue to rise.

However, David Raistrick, automotive partner at Deloitte, struck a more downbeat note on the overall UK market trend and prospects.

“November’s 11.5% fall in car registration figures is another blow to the automotive industry as numbers decline for the fifth consecutive month,” he said.

And he warned that the unusually cold weather that began in November and is continuing early in December won't be helping.

“While it was always unlikely that the figures would exceed last year’s, which were fuelled by scrappage, the recent cold snap has not helped given that people have been kept away from showrooms.
“Today’s figures are a stark reminder of the challenges that lie ahead for the motor industry into 2011. I think it is unlikely that we will see a pre New Year rush from consumers looking to save the additional VAT which comes into force from 4 January, and I expect December’s figures to remain flat.

“As consumer and business confidence remains unsettled, it is doubtful that either private or business sales will grow in the New Year. I stand by my prediction that new vehicle sales for 2011 will be closer to the 1.8 million unit mark.”

The SMMT is currently forecasting that the UK car market will see a more modest decline of 5% in 2011 to 1.93m units.