New car demand ‘warms up’

The UK new car market grew by a modest 3.4% in May with 192,649 new units registered, according to figures released today by the Society of Motor Manufacturers and Traders (SMMT).

The growth follows a substantial -8.5% decline in the previous May when demand was impacted by the dual effects of VED pull forward and buyer hesitancy ahead of June 2017’s general election.

Private demand in the month grew by 10.1%, with more than 83,000 consumers driving home in a new car, and offsetting ongoing declines in the business and fleet sectors, down -9.6% and -0.7% respectively. The most popular segments were supermini (up 6.0%), small family (up 1.6%) and dual purpose (up 19.2%), while demand for specialist sports cars also rose, by 12.7%. In addition, the hottest May on record saw a surge in demand for convertibles as drop tops rose 11.7% year on year.

Meanwhile, there was good news for the alternatively fuelled vehicle segment, as demand for hybrid and plug-in cars grew by 36.1% to 11,240 units, accounting for a record 5.8% of the market. Plug-in hybrid cars were the biggest driver of growth, up 72.7%, while hybrids rose 22.6% and zero emission battery electrics grew 18.7%. Registrations of petrol cars also increased, by 23.5%, while diesels fell for the 14th consecutive month, down -23.6%.

In the year to date, the overall market remains down, with new registrations having fallen -6.8%, as economic and political uncertainty continues to impact demand. Business and fleet confidence, in particular, continues to lag, down -16.2% and -7.1% respectively, while demand from private buyers in the first five months is -5.7% behind 2017 levels.

Mike Hawes, SMMT chief executive, said, ‘May’s growth, albeit on the back of large declines last year, is encouraging and suggests the market is now starting to return to a more natural running rate. To ensure long-term stability, we need to avoid any further disruption to the market, and this will require sustainable policies that give consumers and businesses the confidence to invest in the new cars that best suit their needs. Fleet renewal is the fastest way to improve air quality and reduce CO2, and this applies to hybrid and plug-in technologies as well as the latest low emission petrol and diesels which, for many drivers, remain the right choice economically and environmentally.’

James Fairclough, CEO at AA Cars, commented, ‘After months of consecutive decline, the new car market is now starting to show the early signs of rejuvenation, which is great to see.

‘Another month of growth in June would provide even more confidence that upward trajectory on new car sales is here to stay, but the signs are encouraging.’

Alex Buttle, director, car buying comparison website Motorway.co.uk, said, ‘The car industry will take any positive signs right now, however modest, and two consecutive months of growth at least offers a glimmer of hope. But let’s not kid ourselves; the industry is still facing a crisis, and it’s far too early to be talking about a recovery.’

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