New car registrations in Britain soared last month on the eve of an EU change in law which would ban models not meeting the tougher WLTP emissions test.
Thousands of models across Europe were heavily discounted by dealers backed by car makers anxious to clear unsold stock of the NEDC tested models.
This push and the fact some car makers are struggling to build cars which fully meet the WLTP requirements is likely to lead to a shortage of models registered this 68-plate month and possibly for a few months, when sales are traditionally lower in the winter.
Some car makers have planned and prepared better than others but the sheer volume of cars made by some means they have issues with compliance.
|Today’s figures in the UK went up 23.1%, according to the Society of Motor Manufacturers and Traders with 94,094 new cars were registered. It was the highest August figure since the start of the century.
Demand was up across the board, with consumers and fleets boosting year-on-year registrations by 23.3% and 19.7% respectively, while the smaller business sector rose 166.4%, equivalent to an uplift of around 1,500 units against August last year.
Superminis remained the most popular buy, followed by small family and dual purpose cars, with the luxury saloon and city car segments recording the most notable growth, up 120.8% and 39.6%.
|August top ten
Within the figures, the UK’s growing range of hybrid, plug-in hybrid and pure electric cars continued to attract buyers, with a record one in 12 people choosing one. Demand surged by a substantial 88.7%, with the sector accounting for 8.0% of the market – its highest ever level – as billions of pounds of manufacturer investment help deliver more ultra-low and zero emission models to the market.
|Sean Kemple, Director of Sales at Close Brothers Motor Finance, comments on the SMMT UK monthly automotive registration figures for August, “This spike in car registrations is almost certainly a reaction to the incoming Worldwide Harmonised Light Vehicle Test Procedure, which shifts into gear during September.
“Manufacturers have offered a wealth of incentives to shift stock before the new rules come into play, with dealers and customers alike benefitting from the race to outrun the new regulation.
“Moving into Q4, there will likely to be a time lag as manufacturers grapple with the new measures, potentially leading to a shortage of vehicles in the new car market. Dealers need to ensure that they’re trading stock efficiently, especially cars that may not meet the new emissions test. With the incoming new stock drought, having the right used cars on the forecourt is more important than ever.”
Alex Buttle, director, car buying comparison website Motorway.co.uk observed, “August new car sales figures will give the UK car market a timely boost in what is typically a quiet month for sales, as consumers hold off purchasing until the new September reg plate comes out.
“Electric car sales have had an impressive month, up nearly 90% on August 2017, but we do need to put this figure into context.
“There were less than 4,000 new cars sold in the corresponding month last year, so these growth figures are hardly going to set the world alight.
“However, it does feel like there’s real momentum behind sales numbers now and there are positive signs that consumers are feeling more comfortable about the switch over to electric and hybrid vehicles.
“But the AFV market is under tremendous pressure to hit these kind of stats every month, and we still need to see more Government support in terms of financial incentives, rather than just convoluted strategy documents.
“Also, it’s hard to ignore the relentless decline of diesel, down another 7.7% in August.
“That’s the 17th consecutive month of negative sales, although on a slightly more optimistic note, it’s actually the first time in over a year that monthly sales haven’t fallen more than 20%.
“Saying that, we shouldn’t pop the corks quite yet as there are no strong indicators to suggest the UK new car market is about to drag itself out of the long-term mire.
“And if anything, last month’s interest rate rise could well put a major spanner in the works of any imminent recovery.”
Rising interest rates are likely to put the brakes on the boom, however.
“The new car market is being fuelled by a mountain of consumer debt. There has been an explosion in car finance products taken out by indebted households, with personal contract plans the major culprit,” he added.
“The rapid growth in PCP loans has taken place during a period of strong employment and low interest rates. But the PCP loan market could grind to a shuddering halt now there is uncertainty around interest rates and the possibility of more rate rises in the near future.
“Households are already feeling the strain financially, and they are likely to think twice about taking out loans on big ticket purchases such as cars until the post-Brexit economic climate is more certain. And that’s not great news for the car manufacturers.”
Dan Hutson, Head of Motor Insurance at Compare the Market, said of the sales, “New car registrations always see a spike in the number of cars hitting the road, but these figures come at a time when the cost of running a car is becoming prohibitively expensive for many people – particularly for young drivers. The rising cost of insurance has been a major factor for this age group who now pay an average of £1,324 a year to insure their vehicle.
|“More motorists in the market means September also sees an increase in the number of people shopping around for car insurance. However, there are a number of factors to consider before you hop behind the wheel.
“The top ten most popular cars, according to our data, include the Ford Fiesta, Vauxhall Corsa and Ford Focus. These popular cars have an average premium of £774, but the average premium across the UK currently stands at £727, meaning the average motorist could save nearly £50 on insurance by choosing a different model, or more than £150 for a smaller car.
“For those who shop around, the savings are even greater. Motorists who compared insurance quotes rather than automatically renewing their policy with their current provider, saved an average of £117. For young drivers, the savings are even greater. Motorists aged between 17 and 24 who shop around for insurance stand to save an average of £257 a year.
|“Electric cars have seen a huge surge in demand this month. However, for electric cars to really take off, steps must be taken to improve and expand the infrastructure on which they rely and reduce the upfront cost. Whilst the ongoing running cost of an electric car might be lower due to savings on fuel, we are not yet at the point of critical mass where manufacture, repair, insurance and distribution costs fall significantly. This means that joining the green revolution remains merely an ‘electric dream’ for the majority of British motorists.”
– Compare the Market