Jump in car sales is a blip not a revival, say dealers
First rise in registrations for 12 months is welcomed, but attributed to last year’s tax changes skewing data
THE precipitous fall in car sales in the UK is showing signs of reversing with a 10.4pc rise in registrations in April. However, the industry is warning that last month may have been an anomaly.
Data on sales of new cars during the month posted a big rise after 12 successive months of decline. According to data collated by the Society of Motor Manufacturers and Traders (SMMT), 168,000 new cars were registered in April, compared with 152,000 in the same month last year. In the year to date, this means sales are down 8.8pc on an annualised basis.
In the first three months of 2018, sales were down 12.4pc. A combination of confusion over government policy towards diesel vehicles and economic uncertainty over Brexit was blamed.
However, sales in the first three months of last year were boosted by drivers rushing to beat the introduction of new vehicle excise duties. This meant that sales in April 2017 were abnormally low as the new VED rules “pulled forward” sales into the first three months of the year.
Some of Britain’s biggest dealers cautioned against thinking that the sales boost for April marked a “new normal” for the UK market. “April’s figures are flattered by soft comparisons for last year,” said Daksh Gupta, chief executive of Marshall Motor Group. “It’s not a new normal.” He added that the way the calendar fell around Easter meant there were more selling days, flattering the performance.
“I’m quite surprised at the 10pc increase,” Mr Gupta said. “It suggests the market for the full year could be down only 2pc or 3pc on last year – which was down 5.6pc on the previous year’s sales of 2.7m, which was an all-time record.”
Trevor Finn, chief executive of dealer group Pendragon, said the impact of VED changes had skewed the previous year’s figures so much that the comparison was meaningless. “Look at April of 2016 – which was an all-time record – to get an idea of what’s going on in the market,” he said, referring to the 189,000 cars sold in the same month two years ago.
Mr Finn added that the whole of the first half of 2017 was “so distorted by VED” that it is far too early to get a clear picture of the true state of car sales. He added: “April’s sales might be a step back to normality but it’s only a step.”
The SMMT’S figures showed that sales of petrol cars rose by almost 40pc on an annual basis to 107,000 in April. Diesel slumped by 25pc to 50,000, with alternatively-fuelled vehicles such as electric and hybrid cars enjoying a sales surge of 50pc to 9,000.
Mike Hawes, chief executive of the SMMT, said: “It’s important not to look at one month in isolation and, given the major disruption to last April’s market caused by sweeping VED changes, this increase is not unexpected.
“While the continuing growth in demand for plug-in and hybrid cars is positive news, the market share of these vehicles remains low and will do little to offset declines elsewhere. Consumers need certainty about policies towards different fuel types, including diesel, and a compelling package of incentives to deliver long-term confidence in the newest technologies.”
Car sales website Auto Trader, which has a unique view on the state of the market from the data generated by consumers searching for vehicles, added to the downbeat tone. Ian Plummer, Auto Trader director, said: “This increase doesn’t mean the underlying market has bounced back. Instead, it reflects the fact that April 2017 was weak as a result of new car buyers pulling their purchases forward ahead of the new VED implementation. May could well see a similar but smaller bounce-back, with June likely to show more of the underlying trend.”