New car sales are slowly picking up after the first full month of showroom openings, said the Society of Motor Manufacturers and Traders.
Registrations in May reached 156,737 units, an almost eightfold increase on the same month last year, but down -14.7% on pre-pandemic May 2019, and -13.2% on the 10-year May average.
Against a more positive economic backdrop – including OECD forecasting a 7.2% increase in UK GDP during 2021 – fleet registrations grew more than twice as fast as private purchases in May.3 Large fleets accounted for 50.7% of all new vehicles hitting the road, demonstrating improving business confidence compared to the same month last year.
In terms of segments, dual purpose vehicles saw a small decline in market share in the month, down to 26.7%, leapfrogged by lower medium cars which rose to 27.8%. Superminis remained Britain’s most popular car choice, with a 31.1% share.
Mike Hawes, SMMT Chief Executive, said, “With dealerships back open and a brighter, sunnier, economic outlook, May’s registrations are as good as could reasonably be expected.
“Increased business confidence is driving the recovery, something that needs to be maintained and translated in private consumer demand as the economy emerges from pandemic support measures. Demand for electrified vehicles is helping encourage people into showrooms, but for these technologies to surpass their fossil-fuelled equivalents, a long term strategy for market transition and infrastructure investment is required.”
James Fairclough, CEO of AA Cars, went on, “The new car market has burst back into life, and sales in May were up substantially on April’s figures as buyers once again flocked to showrooms across the UK.
“With lockdown restrictions set to be eased even further in late June, many prospective buyers will be keen to choose a vehicle that will enable them to enjoy a summer staycation in the UK, or just to travel to see family and friends across the country.
“But there are other reasons why dealerships are so busy. AA Cars data shows that drivers’ main reason for buying a new car this year is to own a more environmentally friendly vehicle.
There are also good signs for the used car dealers and buyers.
Seán Kemple, Managing Director of Close Brothers Motor Finance, pointed out, “New car sales are finally catching up to pre-pandemic levels as forecourts reopen and hopes rise for a solid economic recovery.
“But severe supply issues caused by Covid-19, Brexit, and now a global semiconductor shortage are choking the new car market, causing long delays and slow delivery times for new orders. This is pushing people toward the used car market instead. With demand for car ownership rocketing, largely prompted by a reticence to take public transport post-Covid, and many people emerging from the lockdown with increased savings, opting for a used car may be the more accessible and convenient option for buyers.”