Buoyant automotive sector sees new car registrations rise 7.9%

Posted on 8 Jun 2012

The new car market grew in May as registrations rose to 162,288 units, a 7.9% increase on the 150,431 recorded in 2011.

The latest figures from the Society of Motor Manufacturers and Traders (SMMT) revealed that the sales are up for the third successive month and that the fleet market has returned to growth. The 7.9% rise is the strongest rate of growth since the scrappage-induced rise in June 2010.

Despite difficulties in other sectors of the economy, fuelled by concerns over the eurozone, registrations over the first five months of 2012 have improved by 2.6% to 868,166 units. This was a 21,653 unit increase over last year, with this growth largely coming from the past three months.

The largest percentage rise for 23 months was boosted by a 14.3% growth in private demand. For the year-to-date, the Ford Fiesta is the top selling vehicle, shifting 50,507 units in the UK, and the Ford Fiesta enters the list at number three, selling 36,916 units. Engines for the vehicles are made in Dagenham, Essex, and Bridgend, Wales.

There are now two cars manufactured in the UK in the top ten, with the rise in sales leading to more jobs and investment in the automotive sector.

The Vauxhall Astra, made at Ellesmere Port, came number five in the list, selling 25,011 units in the UK. The plant was recently given a new lease of life following Gerneral Motors’ operational review of its subsidiary Vauxhall, which saw it shut down its Astra-making factory in Germany.

The Nissan Qashqai, made in Sunderland, registered 18,660 sales in the UK. Nissan’s Sunderland Plant has been the UK’s biggest car producer in every year since 1998.

As new models came to market, the alternatively-fuelled sector grew 31.8%. Petrol and diesel cars also recorded growth in the month and the year-to-date.

New models helped Mini to increase sales by 85.8% in May. The Dual Purpose, Lower Medium, Supermini and Specialist Sports segments also recorded improved volumes in the month.

Year on year, demand from businesses for new vehicles dropped by 13.5%, from 6,347 to 5,490. Businesses now accounts for just 3.4% of sales but, given the increase in the size of the fleet market, the figures suggest that firms are cutting back on capital expenditure and opting for leasing equipment that their company needs to counter cash flow difficulties.

“May’s 7.9% increase in new car registrations is good news for the motor industry and the UK economy, particularly the steady growth in demand from private buyers,” said Paul Everitt, SMMT’s chief executive.

“There is no doubt that vehicle manufacturers and their dealer networks are working hard to deliver value for money to motorists and the consistent climb in new car registrations during the first five months of the year suggests that confidence is returning, despite financial uncertainty in the eurozone.”

David Raistrick, UK manufacturing leader at financial services firm Deloitte, said: “Car dealers […] have to prepare for a challenging second half of the year since major events such as Euro 2012 and the Olympic Games can lead to a drop in enquires and sales.  With some parts of the retail market reporting a squeeze on profit margins, the outlook still appears challenging.”