Keep calm and drive on
The Brexit wobble could mean September is the best time ever to buy a new car, with exciting fresh models on the forecourts, writes James Foxall. Your guide to the pick of the 66-plate motors begins over the page
For Alfa Romeo sales execs, the summer holidays have probably been spent longing for September. They’ll have weathered the industry’s annual August sales dip. They’ll also be looking forward to the year’s second registration plate change and the arrival of the all-new Giulia. Along with every other new-car dealer in the country, they’ll be hoping that September is one of the year’s sales high points – when the customer rather than tumbleweed rolls into the showrooms.
The year has started well. New and used car sales are up year on year. And this month brings a range of impressive new models to tempt buyers: in dealerships and ready to drive away, or on sale with deliveries pending. There are new or revamped small cars from Ford, Volkswagen, Renault and Citroën. New family cars will be available from Mercedes, Vauxhall and Volvo. And you could pretty much fill a car supermarket with the new SUVs and sports cars that will be appearing on our roads in the coming months.
The result will be familiar, says Rupert Pontin, director of valuations at Glass’s, the trade bible: “There will be the usual spike in new car sales in September. But I think the level of uncertainty around Brexit means some manufacturers will have some spectacular offers.”
Philip Nothard, retail expert for car valuation company CAP, adds: “The manufacturers’ campaigns for the third quarter [which begins in September] are as strong as the ones in the first and second quarters. It’s clear carmakers are still putting a lot of money behind supporting sales.”
The level of discounts will vary considerably. Companies such as Jaguar Land Rover, Jeep and SsangYong, which according to 2016 sales figures are riding the crest of a wave, probably don’t need to offer much in the way of financial contributions to encourage custom. But for brands with diminished sales such as Mitsubishi, Seat and Volkswagen, the spike in buyer interest next month is a chance to use subsidised finance to chalk up much-needed sales.
Nothard says: “If consumers are in the market for a new car, it’s business as usual – and now is a good time to buy or upgrade.” Pontin adds: “The later in the month car buyers can leave it the better, if they’re after a good deal. Dealers will be offering their sales execs big bonuses to hit their targets in September, so they’ll be keen to do business at the end of the month.”
Brits are deeply in love with the idea of parking a new motor on the driveway with the latest registration plate – particularly an all-new model. In September 2015, a record 462,517 new cars went to owners. That meant one in six of the year’s new registrations happened in a single month. The first six months of 2016 were also a record, with 1,420,636 new vehicles sold. But by the time of the EU referendum result in June, sales had already started to drop.
Despite this slowdown, experts aren’t anticipating a September slump and don’t expect a sales collapse like that of 2009-10. This is partly because about three-quarters of the drivers who bought new cars on finance deals three years ago will have agreements ending next month. But their conversion to a new car rather than staying with their existing model isn’t a foregone conclusion. Dealers and carmakers will have to work at convincing buyers they need to spend.
Sales were dwindling before the Brexit vote because buyers were nervous. And there’s nothing to
For the rest of 2016 at least, it seems there will be deals to be had in showrooms
suggest the leave result has done anything to calm their fears. Phil Harrold, automotive partner at global consultancy PwC, says: “One of the important factors affecting the new car market is consumer confidence. Replacing your car is a discretionary choice: most people do it because they want to rather than need to. I think people will err on the side of caution this September.
“For many of the cars sold in September, the decision will have been taken in June and July. The question is how people felt then. I think we’ll see a downturn due to lack of confidence. People were cautious just before the referendum because of the uncertainty. Now we’ve seen the result but still don’t really know what it means.”
Nothard says: “The car manufacturers and dealers realigned their forecasts for this year after the referendum. It’s looking like this year will see growth level off and the market start to slow by the end of the year. But the dealers are fighting against the negativity around Brexit. They want to keep customer activity going.”
Harrold adds: “Finance deals have been very attractive recently as carmakers must move metal. Continental car sales for the past month were down so manufacturers are looking to make up the shortfall in strong markets. Until there is a clear sign that the UK new-car market has moved in one direction, makers will be encouraging dealers to hit targets.”
July’s sales figures appear to confirm this. Growth of 0.1 per cent meant 2016 was up by 2.8 per cent over the same seven months in 2015. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, says: “The market is showing signs of cooling. With low interest rates, attractive finance options and exciting new models, the market still has lots to offer customers.”
Harrold feels optimistic: “As we get further away from the referendum, confidence will return. There are two million people in work now who didn’t have jobs in 2008.”
For the rest of 2016 at least, it seems there will be deals to be had in showrooms.