New car sales rise in August but market is at five-year low

DEMAND for new cars here rose last month by 1.48% but an NI economist has warned that the market is far from booming.

Statistics from the Society of Motor Manufacturers and Traders (SMMT) revealed that 3,701 new cars were registered here last month, up 1.48% on August 2017, but the annual figure tells a much more realistic story as the number of new cars registered is down by 2.96%, from 39,580 to 38,407.

And Ulster Bank’s chief economist Richard Ramsey said the market is at its worst in five years.

He said: “The longer term trend for new car sales in Northern Ireland remains a downward one. So far in 2018, January to August, new cars sold in Northern Ireland are over 8% lower The number of new cars registered in Northern Ireland so far this year compared to the same period in 2017

than the same period in 2016.

“Furthermore, the volume of new car sales sold year-to-date represents the weakest in five years. The UK market is faring somewhat better but it is a similar story. UK new car sales between January and August 2018 were the weakest in four years. However, unlike the Northern Ireland market, UK car sales experienced record highs in 2017. Northern Ireland’s new car sales, on the other hand, are almost one-quarter below 2007’s record high.”

Mr Ramsey said the results can be taken as a “barometer of consumer confidence”, adding: “Households’ disposable incomes are set to be squeezed further in 2019. Rates and private sector rents are outpacing inflation and wage growth. Meanwhile electricity and gas prices are set for double-digit increases. Food price inflation is set for a pickup in the coming months. Motoring costs are also on the rise with petrol and diesel prices up 11% and 13% respectively over the last year. Petrol and diesel prices are currently at four-year highs andareafarcryfromthe£1per litre that was almost achieved in early 2016.”

SMMT’s survey also revealed an uplift in petrol vehicle sales, while diesel models fell for the 17th consecutive month. The popularity of alternatively fuelled vehicles continued to grow, increasing by 88.7% to take a market share of 8%.

Mr Ramsey said: “With the cost of living squeeze set to intensify in the year ahead we can expect consumers to rein back on non-essential or discretionary expenditure. New car sales

Alternatively fuelled vehicles like the Toyota Prius are seeing sales rise

fall into this category. Against this backdrop we are likely to see new car buyers pay greater attention to fuel efficiency and lower cost cars. The so-called ‘cost of living crisis’ in recent years triggered a change in consumer behaviour. Demand shifted to smaller, more economical

cars. Manufacturers responded with the supply of suitable vehicles. Just like our chocolate bars have got smaller, so too have our SUVs. This trend is set to continue.”

The top new models registered here in the past year are the Fiesta, Golf, Kuga, Tuscan and Polo.