Readers who are invested in the UK motor trade will love today’s news. If they have proper motor trade insurance, they should be even happier.
The sharp drop in car sales over the last year seems to have been halted in its tracks. New car registrations increased by 10% last month.
The industry warns, however, that these figures might not be an indication of things to come.
According to SMMT (the Society of Motor Manufacturers and Traders), its provisional data showed that 168,000 new cars were registered last month, compared to 152,000 in April 2017.
During the first quarter of 2018, car sales dropped by 12.4% as buyers became increasingly reluctant to make such a large investment. A combination of Brexit-related economic uncertainty and confusion over the UK government’s policies regarding diesel cars can mainly be blamed for this.
Sales during Q1 2018 were, however, strengthened by buyers trying to beat the implementation of VED (Vehicle Excise Duties) which came into effect in April.
This resulted in last month’s sales looking artificially low, as the impending VED regulations urged prospective buyers to pull forward their purchases to the first quarter.
A number of the biggest car dealers in the UK warned that the industry should not see April’s high sales as a “new normal”.
Marshall Motor Group’s CEO Daksh Gupta said: “This April’s figures are flattered by soft comparisons for last year. It’s not a new normal.”
He continued by saying that the Easter period had more selling days this year, which artificially boosted sales performance.
Gupta went on to say that the 10% increase surprised him because, according to their calculations, that means a 9% sales increase for the year to date compared with the same time last year.
He added: “It suggests that the market for the full year could be down only 2% or 3% on last year – which was down 5.6% on the previous year’s sales of 2.7m, which was an all-time record.”
Pendragon Group’s CEO Trevor Finn agreed that the introduction of VED distorted the previous year’s data, which meant that any comparison was largely meaningless.
He continued: “Look at April of 2016 – which was an all-time record – to get an idea of what’s going on in the market.”
Finn was of course referring to the 189,000 cars that were sold during April two years ago. He also said that VED totally distorted the first six months of last year, making it way too early to obtain a clear image of the real state of UK auto sales.
He concluded by stating that April’s sales could be one step in the direction of normality, but only one step. “It’s not that the market’s current size is the difficulty, it’s the size of the correction that is the difficulty.”
The SMMT’s provisional data, which will be modified when final registration numbers come in, revealed a sharp increase of close to 40% in petrol car sales to 107,000 last month. Diesel car sales, however, continued their previous decline and dropped by 25% to 50,000.
It is also worth noting that sales of hybrid and fully electric cars experienced a 50% surge in sales to reach 9,000 last month.
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