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Record new car sales in 2016 - but Brexit could hit industry hard in 2017

Record new car sales in 2016 – but Brexit could hit industry hard in 2017

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Record new car sales in 2016 - but Brexit could hit industry hard in 2017

The number of new cars registered in the UK hit a record high last year, with nearly 2.7 million cars sold in 2016.

That’s according to figures released this morning by the Society of Motor Manufacturers and Traders (SMMT) – but the organisation’s chief executive has warned the industry could be in for a ‘lumpy’ ride in 2017.

Speaking at a briefing held in London, Mike Hawes told Motoring Research that he expects the number of new cars registered this year to dip by 5-6% to around 2.55 million.

The trade body chief exec suggested that we might see a spike in new car registrations, particularly for premium cars, in March, as buyers attempt to ‘beat’ the new VED (car tax) bands being introduced in April.

Price rises expected

This is despite Theresa May aiming to trigger Article 50 that month – something which Hawes doesn’t think will in itself have a big effect on numbers. What will have an impact, he said, is price rises caused by the weakness of the pound – an effect the industry has already started to see.

Hawes said: “Ultimately, a fall in sterling is going to flow through to an increase in pricing, probably of the magnitude of 2-3% over the coming months.”

He explained that more than 85% of cars sold in the UK are imported, but customers might not be too concerned about minor price rises. The majority of private car sales involve finance in some way, so a small increase in a car’s list price would result in a tiny rise in monthly repayments.

Some manufacturers might try to soak up the price rise rather than pass it onto customers. This would, however, mean they have smaller margins to work with so might not be able to tempt buyers with impressive finance deals and promotions – something which is partly credited with the success of UK car sales in 2016.

Registrations of diesel cars slump

The figures released this morning also reveal that diesel cars appear to be out of favour, with diesels accounting for 47.7% of all new car registrations – a drop of 0.8% compared to their market share in 2015.  They still sold record numbers overall, however, and Hawes says he doesn’t think this decrease is necessarily down to Dieselgate.

“Supermini and mini [city] car segments are growing,” he said, “and these are usually powered by petrol engines. People are buying more smaller cars and that could explain why we’ve seen a drop in the popularity of diesel.”

He also credited investment in alternatively-fuelled cars and a growing interest in new technology for the drop in diesel car sales.

Nissan Juke Sunderland

Car industry risks £4.5 billion Brexit bill

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Nissan Juke SunderlandThe UK government should immediately focus on post-Brexit priorities for the automotive industry or the sector’s considerable recent success story will be at risk, the president of trade body the Society of Motor Manufacturers and Traders (SMMT) has warned.

British car buyers could also face much higher prices in showrooms. 

Speaking at the organisation’s 100th annual dinner in London, Gareth Jones revealed the British motor industry faced a £4.5 billion Brexit ‘double whammy’ bill if single market access is not secured once Britain leaves the European Union. 

This could comprise EU tariffs of at least £2.7 billion on cars imported to the UK, and £1.8 billion on automotive exports. 

It risked adding an average of £1,500 to the price of an imported new car: many best-selling models in the UK, such as the Ford Fiesta, Vauxhall Corsa and Volkswagen Golf, are built in Europe and imported into the UK.

‘Don’t take today’s boom for granted’

The British automotive industry is booming at the moment, said Jones. 2016 is likely to set a record for exports and also top 2015’s hefty production volumes. This, however, is the result of investment decisions made years before the vote to leave the European Union, warned Jones.

Success thus cannot be taken for granted. “The renaissance is down to years of hard work, hard won investment and long-term collaborative partnership between industry and government… We operate in an intensely competitive environment.”

SMMT members are clear on what they want: membership of the single market, consistent regulations, access to skilled workers globally and international trade free from barriers and red tape. 

“This won’t be easy,” said Jones. “There will be competing priorities. But be assured, as the negotiating positions harden, SMMT will continue to make this case to government.”

And the automotive industry’s current strength, he added, should ensure such demands are heard. 

UK car exports are booming - but Brexit Britain slumps

UK car exports are booming – but Brexit Britain slumps

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UK car exports are booming - but Brexit Britain slumps

Doubts over the economy hit the car industry last month – with a 10.6% slump in the number of British-built cars sold within the UK compared to the same time last year.

That’s according to production figures released this morning by the Society of Motor Manufacturers and Traders (SMMT), which reveal that this dip was offset by the number of cars being exported worldwide.

The number of exports increased by 5.0% – up to 123,119 in September 2016, contributing to a year-to-date total of more than one million (up 12.2% compared to 2015).

This puts added pressure on the UK Government to negotiate a fair trade deal between the UK and Europe when article 50 is triggered by Theresa May.

“British-built cars are in demand across the world as demonstrated by the double digit growth in exports this year, resulting in more than a million cars produced for international markets,” explains SMMT chief executive Mike Hawes.

“The vast majority of cars manufactured here in the UK are destined for abroad and future growth will depend on securing our international competitiveness and the barrier-free access to major global markets that has enabled UK Automotive to thrive.”

The SMMT recently revealed that the number of private buyers registering new cars dropped by 1.7% in the plate-change month of September.

UK car exports are booming - but Brexit Britain slumps

Brexit: fewer private buyers bought new cars in September

Brexit: fewer private buyers bought new cars in September

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Brexit: fewer private buyers bought new cars in SeptemberThe number of private motorists buying cars in the UK has dropped following the Brexit vote – despite a record-breaking September for new car sales.

Private new car registrations in the ’66’ plate-change month decreased to 223,844 vehicles last month – a drop of 1.7% compared to September 2015.

While the number of new cars registered was buoyed by business sales, creating a rise of 1.6% overall, this growth was significantly lower than previous years. In September 2015, new car registrations increased by 7.1%.

Last month, we reported that new car registrations increased by 3.3% in August following the Brexit vote.

The latest figures have been released this morning by industry trade body, the Society of Motor Manufacturers and Traders (SMMT).

“September is always one of the biggest months for Britain’s new car market,” said SMMT chief executive Mike Hawes, who was positive about the increase in registrations in September – but added that political uncertainty could be bad news for the car industry.

“Business and consumers place September orders many months in advance, so the ability of the market to maintain this record level of demand will depend on the ability of government to overcome political uncertainty and safeguard the conditions that underpin consumer appetite.”

Motorists appear to continue to be concerned about fuel economy, with the number of new diesel cars registered up 2.8%, while alternatively-fuelled cars (including electric and hybrid cars) increased by nearly a third (32.6%) compared to September 2015.

The number of new petrol cars registered dropped by 1.1%.

Commenting on the news, Chris Bosworth, the director of strategy at car finance company Close Brothers, said it’s important to analyse the figures.

He said: “As we have seen for the last six months, private sales have continued to fall causing the growth trajectory of new car registrations to steadily drop. Many consumers are now starting to gravitate to well-priced ‘nearly-new’ stock as manufacturers reduce the number of subsidised finance offers available.

“We have also recently seen several foreign-based manufacturers announce the potential move of their European headquarters from the UK, meaning the make-up of the UK car industry in the long term is far from certain. Looking forward, new innovations – such as safety improvements, alternative fuels and models – released by manufacturers will be the main drivers in encouraging people to continue to purchase new cars over used vehicles in the coming months.”

Revealed: September 2016’s best-selling cars

1: Ford Fiesta (19,769)
2: Vauxhall Corsa (14,570)
3: Volkswagen Golf (11,003)
4: Ford Focus (10,992)
5: Nissan Qashqai (10,619)
6: Volkswagen Polo (9,765)
7: Vauxhall Astra (9,495)
8: Audi A3 (9,252)
9: MINI (9,025)
10: Mercedes-Benz C Class (8,603)

Nissan Qashqai

Booming UK car production hits 14-year high in August

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Nissan QashqaiA boost in car exports of more than 10% in August 2016 has seen UK car production reach its highest total for the month since back in 2002, the SMMT has today revealed.

Almost 111,000 cars were built in Britain during August 2016, growth of 9.1% over the previous year and further strengthening the British car industry’s rolling yearly output growth of 12%.

The lack of a post-Brexit recession has helped home demand hold up, with production for British customers up 6.2%. It’s the rise in exports of 10.2% that really helped grow UK car production during August, though – continuing a trend seen throughout the year, which is up more than 13%.

Year to date, 877,523 cars have been built in Britain and exported to other nations.

Mike Hawes, SMMT chief executive, said: “August’s strong performance is good news for car makers and welcome news for the UK economy, which depends on this thriving sector for an increasing share of UK exports.

“British car producers are exporting a diverse range of high quality, attractive new models that are in demand across the world thanks to multi billion pound investments made in UK plants over the past few years.”

Hawes did sound a Brexit-themed warning, though. “Future success depends on continued investment in plant and products and that in turn depends on the UK maintaining internationally competitive business and trading conditions.” Politicians, he could have added, take note…

The growth of the British car industry over the past decade or so has been striking – and it comes after a nadir was reached in the mid-2000s following years of gradual decline.

Back in 2002, MG Rover was still a big British car manufacturer; its collapse in 2005 hit UK car production hard. But foreign investment has seen the industry recover since then and today’s figures for August 2016 are latest evidence of its continued growth.

UK car sales up 3.3% post Brexit vote

UK car market booms despite Brexit vote

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UK car sales up 3.3% post Brexit vote

The number of new cars registered in the UK in August increased by 3.3% compared to the same time last year, according to figures released this morning by the Society of Motor Manufacturers and Traders (SMMT).

On the face of it, that suggests the automotive sector hasn’t been hit by the UK’s decision to leave the EU – but the number of private customers buying new cars is down by 0.2%. The demand for diesels also took a minor 0.2% knock.

While these figures are marginal – any decrease in a year of steady growth is of interest. So far, more than 1.68 million cars have been registered in the UK in 2016 – up 2.8% compared to this time last year.

SMMT chief executive, Mike Hawes said: “August is traditionally one of the quietest months as consumers look ahead to the September plate change, so growth, albeit small, is good news.

“With showrooms full of exciting models featuring the very latest technology and a raft of affordable finance options, it still makes economic sense to consider buying a new car. The key to maintaining this strong market is consumer confidence for which we look to government to deliver the conditions for economic growth.”

Alternatively-fuelled vehicles (such as hybrid and electric cars) saw significant growth of 30.8% in August. Almost 54,000 have been registered so far in 2016, compared with just over 44,000 in the entirety of last year.

The market has been buoyed by the fleet sector, which saw new car registrations increase by 7.7% to 43,267 last month. So far in 2016, fleet accounts for 51% of all registrations.

August’s best-selling cars

  1. Ford Fiesta: 4,547
  2. Ford Focus: 2,519
  3. Vauxhall Corsa: 2,393
  4. Vauxhall Astra: 1,931
  5. Volkswagen Golf: 1,855
  6. Volkswagen Polo: 1,765
  7. Vauxhall Mokka: 1,762
  8. Kia Sportage: 1,540
  9. Ford Kuga: 1,515
  10. Nissan Qashqai: 1,491
Toyota Burnaston

Britain has built 1 million cars already in 2016

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Toyota BurnastonNew car production in Britain is marking a full year of growth by topping the 1 million year-to-date production total, the SMMT has revealed.

1,023,723 cars have been built in the UK thus far this year, a 12.3% increase on 2015 figures – and, encouragingly, exports have outpaced even this growth, with volumes sent overseas up 13.7%.

This is particularly good news for post-Brexit UK: the fall in the value of the pound makes exports more lucrative for car makers.

The running total is the best performance since 2000 and it’s the first time since 2004 that volumes have risen above 1 million in the first seven months.

“UK car production in 2016 is booming,” said SMMT chief executive Mike Hawes, “with new British-built models in demand across the world.”

So far in 2016, 77.8% of UK car production has been exported overseas – that’s almost 800,000 vehicles.

“Manufacturers have invested billions to develop exciting new models and produce them competitively in the UK.”

But what about the risks of Brexit and car makers taking investment to other countries? Hawes indirectly addressed this too.

“Future success will depend on continued new car demand and attracting the next wave of investment, so Britain must demonstrate it remains competitive and open for business.”

Over to you, government ministers…

SMMT used car sales 2016

2016 used car sales hit record high

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SMMT used car sales 2016Britain’s used car sector grew 7.9% in the first half of 2016 as a record-breaking 4.18 million secondhand motors were bought and sold.

This was the first time the used car market broke the four million barrier.

And the most bought and sold used car? It’s probably going to be a silver Ford Fiesta supermini aged between one and three years old, located in Greater London.

“The growth in the used car market has reflected the record demand for new cars in recent years,” said SMMT chief executive Mike Hawes.

However, he did warn that future growth “will depend on stable consumer and business confidence”.

12-year record broken

A total of 4,181,042 used car transactions beat the previous high back in 2004. April was the biggest single month for used car sales, buoyed by the March registration plate change: more than three quarters of a million secondhand cars were sold in this month alone.

The most-sold secondhand motor was a supermini: 1 in 3 used cars is one, with the Ford Fiesta and Vauxhall Corsa topping the popularity list. Small family cars such as the Ford Focus were next up: together, these two sectors account for over 6 in 10 used car transactions.

Silver was Britain’s favourite secondhand colour, followed by black and blue.

But although cars are lasting longer than ever, with the average age of a British motor rising all the time, the most popular used car remains one aged between one and three years old. All hail the nearly new bargain-hunting British used car buyer!

New car showroom

New car sales plunge in Scotland, Wales, Northern Ireland

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New car showroomThe SMMT has revealed that new car registrations in Scotland, Wales and Northern Ireland fell heavily in July, with only a small rise in English car sales stopping the market falling into negative territory.

The Welsh new car market was down 4.7% and Northern Ireland fell 7.7%; Scotland scored the biggest decline of all with a fall of nearly 8.1%.

All three markets are smaller than the new car market in England, which registered a small 1.2% rise. But cumulatively they add up to around 12% of the total new car market: the significant declines thus almost tipped overall new car registrations into negative territory.

It is possible that uncertainly over the results of the European Referendum has hit new car sales in these regions: both Scotland and Northern Ireland voted to remain. Wales, in contrast, voted for Brexit.

The Scottish result accelerates a year-to-date decline in new car registrations seen to date in 2016: they are currently 1.1% lower than 2015, whereas the new car market in England is 3.4% up.

But despite the big July decline, car sales year to date in Northern Ireland are still positive: the market has grown 0.6% to 37,635 registrations.

A UK-built Vauxhall Astra

New car sales grow just 0.1% in July

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A UK-built Vauxhall AstraThe continued growth of new car registrations in 2016 slowed in July with the market rising by just 0.1% – and it’s private buyers who are starting to stay away from the showrooms.

Indeed, private new car registrations actually declined in July 2016, by a hefty 6.1%. It was growth of 5% in the fleet car sector that helped ensure the market wasn’t down overall.

It means year-to-date growth in 2016 is down to 2.8% with just under 1.6 million new cars registered so far.

“After a healthy start to 2016 and record registrations in 2015 the market is showing signs of cooling,” said SMMT chief executive Mike Hawes.

“The automotive market is a vital part of the British economy and it’s important government delivers the economic conditions which instil business and consumer confidence.” This is perhaps in reference to the post-Brexit slump some say is starting to emerge.

All eyes will thus be on the Chancellor of the Exchequer today when he reveals the decisions of the latest Monetary Policy Committee (MPC) meeting: a cut in interest rates to kickstart the economy is mooted.

Hawes is keen to keep car buyers’ confidence up. “With low interest rates, attractive finance options and exciting new models coming to the showrooms, the market still has lots to offer customers.

July 2016: new car best-sellers

As ever, the Ford Fiesta led the market in July 2016, by the well-established very clear margin. But it was Vauxhall that may be celebrating with most enthusiasm; the Corsa was second and the new Astra is at last starting to make in-roads, with a third-place position.

The British-built Astra beat the Ford Focus into fourth position, with the also-British-built Nissan Qashqai in fifth.

Volkswagen slipped back from the highs of previous months with the Golf in sixth and Polo in seventh, then it was the third Vauxhall in the top 10, the Mokka, ahead of the Mercedes-Benz A-Class and C-Class.

In total, 178,523 new cars were registered in July 2016.

1: Ford Fiesta

2: Vauxhall Corsa

3: Vauxhall Astra

4: Ford Focus

5: Nissan Qashqai

6: Volkswagen Golf

7: Volkswagen Polo

8: Vauxhall Mokka

9: Mercedes-Benz A-Class

10: Mercedes-Benz C-Class