UK car sales struggle amid consumer slowdown
New registrations in September, which traditionally account for nearly one in five transactions for the entire year, were down 0.8% on the same month in 2010
Dan Milmo, Industrial editor
guardian.co.uk, Thursday 6 October 2011 14.36 BST
UK car sales are likely to be flat next year after lacklustre figures for the key buying month of September crushed hopes of a strong recovery in 2012, according to the leading trade body.
The Society of Motor Manufacturers and Traders (SMMT) and retailers said new registrations in September, which traditionally account for nearly one in five transactions for the entire year, were down 0.8% on the same month in 2010, with 332,476 vehicles signed up. The top 10 vehicles also appear to reflect straitened times on the road as well as the high street, with the Ford Fiesta and Focus – both economical mass-market hatchbacks – the top-selling brands.
It means the UK car market is on track for a 5% fall on last year’s performance, when the industry and motorists were still benefiting from the tail end of the government’s scrappage scheme, which subsidised the replacement of dated vehicles with cars straight off the production line.
The SMMT’s chief executive, Paul Everitt, said that a hoped-for recovery in sales had yet to materialise, forcing the adjustment of predictions that vehicle acquisitions would rise by up to 5% in 2012. Instead, they will just edge above the predicted 2011 total of 1.92m units, to 1.96m.
“We had expected at this point to see more positive growth and a stronger recovery, something which we are clearly not seeing. As a consequence, we have downgraded our forecast for 2012. We had expected it to be just above 2m [units].”
Everitt said sales of car fleets and vehicles to businesses had been strong in September, “as has been the case throughout the year”, but that had not been matched by the consumer. “There has been a much weaker demand in the private retail part of the market. It means that dealerships are having a difficult time.” The private market fell 9% in September, the SMMT said.
Brighter outlook for domestic manufacturers
The SMMT stressed that a weak consumer outlook has not translated into doom and gloom for resurgent domestic car manufacturers. Britain is set to make 1.5m cars this year, rising to about 1.6m in 2012, underlining the industry’s strength as one of the UK’s biggest exporters, with about eight out of 10 of those vehicles to be sold to overseas buyers. Everitt said there was no sign of an effect on UK carmakers – led by the likes of Bentley, Jaguar Land Rover and Aston Martin, plus the giant Japanese firms Nissan and Toyota – of the ill winds blowing through the world economy. “There are some issues out there but at the moment we feel reasonably confident on exports,” said Everitt.
“Markets like China, India, Russia and even the US are all growing. Companies like Bentley, Rolls, Aston Martin and Jaguar Land Rover are seeing good growth in those markets. We are probably more positive on manufacturing than perhaps some other sectors. We can see the desirability of these products in some key markets.” The Mini – which is popular in the US and China – makes an appearance in the September top 10 bestsellers list.
Despite the SMMT’s bullishness, Everitt urged the government to give more support to manufacturers, including extending tax credits for research and development, using capital allowance loopholes to encourage investment in factories and ensuring that a forthcoming “credit easing” programme helps companies rather than banks.
“It is important that they develop a mechanism that allows the money to find its way to the companies that need it and want to spend it on the economy,” he said.