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Car sales up 11.3% in July compared to a year ago, says SMMT

New car registrations were up 11.3 per cent annually last month thanks to pent-up demand from buyers in a rare ray of light for a beleaguered industry. 

With dealerships reopening doors on 1 June in England and later in the month in the rest of the UK, 174,887 sales were recorded in July – the first full month most were open – according to the Society of Motor Manufacturers and Traders. 

This increase was the first since December but year-to-date demand is down more than 40 per cent and the latest forecast by SMMT predicts a full-year drop of around 30 per cent in 2020.

Mike Hawes, SMMT chief executive, said: ‘By the end of September we should have a clearer picture of whether or not this is a long-term trend.’

The rise follows other signs of a gradual recovery in Britain’s economy after its historic 25 per cent contraction in March and April in the wake of the coronavirus pandemic.  

House prices and manufacturing have risen although jobs cuts are mounting in the retail sector. 

Mike Hawes adds: ‘July’s figures are positive, with a boost from demand pent-up from earlier in the year and some attractive offers meaning there are some very good deals to be had. 

‘We must be cautious, however, as showrooms have only just fully reopened nationwide and there is still much uncertainty about the future.

‘Although this month’s figures provide hope, the market remains fragile in the face of possible future spikes and localised lockdowns as well as, sadly, probable job losses across the economy. 

‘The next few weeks will be crucial in showing whether or not we are on the road to recovery.’

Michael Woodward, UK automotive lead, at Deloitte said: ‘This flurry of post-lockdown activity hints towards a speedy recovery. However, manufacturers and dealers alike will treat these results with caution.

‘The conversion of latent demand, built up over the last four months is a key driver of July’s growth, but we may see a slower rate of sale return over the course of the year once this demand dissipates.’

The SMMT has been lobbying for additional support for the sector, including a possible scrappage scheme.

It says that four in five manufacturers provided attractive finance offers and flexible payment terms in a bid to head off consumer uncertainty.

It adds that this will be vital as furlough phases out, potentially sparking redundancies across the economy and impacting confidence to invest in big ticket purchases.

Michael Woodward adds: ‘Whilst consumer confidence is returning, albeit slowly, consumers remain concerned over the state of the economy and the job market. 

‘As a result, consumers may be more cautious over major purchases moving forward. 

‘However, significant discounting is likely over the coming months as manufacturers bring their factories back up to full capacity. This could help maintain higher level of sales, at least in the short-term.’

Ian Plummer, director of Auto Trader, said it had a record month for website visits in July with hits up 23 per cent compared to last July.

He said: ‘The strong bounce back seen in the latest new car sales figures has been visible for some weeks now in terms of consumer engagement online.

‘Before lockdown had even ended, consumer demand was jumping forwards to levels well ahead of last year as the market “un-paused”.

‘And there are even signs that demand is healthier now than it was pre-Covid and, hopefully therefore, sustainable for some time come.

‘The market is seeing continued consumer interest convert into sales.

‘The changing nature of Covid-19 makes it impossible to predict exactly what will happen in the coming months, however all signs point to a positive outlook for September which is a crucial month in the automotive diary and will be the real bell weather for the UK car market.’

Vauxhall Corsa number one and diesels down 

The best sellers according to the figures were the Vauxhall Corsa, Ford Fiesta and Toyota Yaris, which all had more than 4,000 sold.

This was followed by the Ford Focus, Mini and Volkswagen Golf. Year-to-date, the Fiesta is the biggest seller.

The figures also show that sales of diesel continue to plummet. Sales were down 25.9 per cent in July compared to the same month last year.

It’s great the industry has demonstrated it remains so robust. However, with this month’s success driven largely as a result of pent-up demand and lease cycles there is still much hard work to do ahead.
Rachel Prasher – What Car? 

In contrast, petrol sales remain steady, with 0.3 per cent more petrol models sold last month compared to July 2019.

Meanwhile, sales of alternatively-fuelled vehicles such as electric continue to race ahead.  

Plug-in hybrids and battery electric vehicles taking a 9 per cent share of registrations for July, up from 3.1 per cent for 2019 overall.

Michael Woodward adds: ‘As the UK looks to meet wider net zero emissions by 2050, and a proposed ban on the sale of polluting vehicles brought forward to 2035, the stage is set for further adoption.

‘A third of global new car sales are expected to be electric by 2030. However, continued investment in charging facilities and overcoming consumer concerns around their availability and accessibility could see the UK surpass this, reaching as much as 65 per cent of the domestic market in the same period.

‘With a stream of new EVs entering the market with improved ranges, sales figures for petrol and diesel vehicles are likely to have reached their peak.

‘Pressure is now on fast-chargers with capacity being tested at peak times. Maintaining coordination with charging infrastructure planning is needed if growth is to be sustained.’

Supermini and lower medium sized (or small family) cars were once again the most popular segments, accounting for 59.1 per cent of registrations. 

Business car registrations showed modest growth, with fleet purchases increasing by 5.2 per cent. 

But the SMMT says that more than 13,000 jobs have now been lost by UK Automotive across retail and manufacturing as a result of the pandemic, with more likely to follow given the scale of the challenges facing the sector, ‘including shifts in technology, Brexit uncertainty and a depressed market.’

Rachael Prasher, managing director of What Car?, said: ‘After nearly three months of closed doors, it is great that the industry has demonstrated it remains so robust.

‘However, with this month’s success driven largely as a result of pent-up demand and lease cycles there is still much hard work to do ahead.’

She pointed to an independent poll of 6,400 in-market buyers from June that showed one in five were looking to buy a new vehicle within four weeks, and another 26 per cent said they’d hope to purchase within three months.

She adds: ‘Hopefully we will continue to see registrations rise in the coming months, and particularly for the crucial 70-plate change in September.’

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