For the first time in a long time, the monthly new car registration report is full of positive news – although no-one’s expecting that it’s the start of a long-term resurgence.
Private new car sales were up by more than 20% compared to July 2019, while fleet registrations were also 5% up. This meant an overall increase of just over 11% on the same month last year, according to the data published by the Society of Motor Manufacturers and Traders (SMMT). It’s a welcome boost to the car industry, although no-one’s getting too excited just yet.
Industry figures have been quick to attribute the strong results to pent-up demand from consumer and fleet customers who have been waiting for months to get behind the wheel of their new cars. Many of July’s registrations numbers will be for cars that were ordered before the coronavirus lockdown started, helped along by strong offers on new cars since dealerships reopened in June.
Further data from the SMMT shows that the strongest growth was in Scotland and Wales, where registrations were up by 36% and 39% respectively. England saw registrations increase by 8%, while Northern Ireland’s were up by 17%.
As we have repeatedly said here at The Car Expert, about 80% of all private new car sales are paid for by PCP car finance agreements, which effectively force customers to keep buying cars every three or four years. With dealerships closed for 2-3 months between March and June, it’s likely that more than 100,000 PCP deals would have expired. That basically creates an automatic demand for a similar number of new (or near-new) cars, so that will have made a big contribution to July’s results – and will probably do so again in August and September.
The increase in fleet registrations is also welcome news, even if it is again largely due to old orders being fulfilled rather than new orders post-lockdown. Industry expectation is that fleet sales will take longer to recover than consumer sales, with so many businesses across the UK hit hard by the national shutdown and fearful that another lockdown may be on the way as winter approaches.
Electricity still flowing as sales increase
The sales figures for hybrid, plug-in hybrid and full-electric cars were still strong in July, which is more positive news. Fleet buyers still tend to favour petrol and diesel cars more than consumers, so it’s not surprising that stronger fleet registrations saw a small improvement in diesel’s market share compared to last month. But the combined sales of electrified vehicles in July were still not far of the sales of diesel cars, so we could easily see that happen by the end of this year.
Year-on-year results for July, as well as year-to-date sales, show the strong growth of both electric and plug-in hybrid vehicles continues.
What’s in store for August?
August is usually one of the two weakest months of the year (along with February), as it falls right before the new number plate month of September. This year may be somewhat different if manufacturers and dealerships are still clearing a backlog of customer orders, although they may decide to try and hold as many over to September as possible.
There is obviously concern that we could all be plunged back into a second lockdown later in the year, which may impact on new car sales. This could go one of two ways: there could be a bit of a rush to buy new cars before another lockdown hits, or fears about an economic crash and job losses could cause people to put off new car purchases. Based on everything that’s happened already this year, who really knows what will happen?
Good month, bad month
Despite the good news overall, there was quite a variation in the fortunes of different car brands. BMW, Dacia, Fiat, Jeep, Kia, Land Rover, MG, Mini, Porsche, Renault, SsangYong and Toyota all saw registrations that were at least 10% ahead of the overall market.
On the downside, things weren’t so good for Abarth, Alfa Romeo, Alpine, Citroën, DS Automobiles, Hyundai, Maserati, Mercedes-Benz, Mitsubishi, SEAT, Smart, Subaru, Suzuki, Vauxhall and Volvo, who all performed at least 10% worse than the overall market.
Corsa stays on top in July
Hatchbacks dominated the top ten list in July, taking seven of the ten best-selling places. The otehr three spots were filled by crossover models. The only saloon in sight would be a small percentage of Mercedes-Benz A-Class sales.
It was month to celebrate for the Vauxhall Corsa, which narrowly pipped the Ford Fiesta to top spot by just 34 units. The Corsa has now also overtaken the Volkswagen Golf for third place in year-to-date sales, and is just 25 units behind the Ford Focus, which took third in July. The new Golf was fourth, just edging the Mercedes A-Class.
Sixth place, and the top British-built car once again, was the Nissan Qashqai – although it was very close between the Qashqai, Volkswagen Polo, Mini hatch and Volkswagen Tiguan. At the bottom of the top ten was the new Ford Kuga, which probably also helped contribute to strong plug-in hybrid registration figures in July.
As usual, we’ll have a more detailed look at the top ten in the next couple of days.