Vehicle sales likely to keep dropping, says Lookers boss
SALES of new cars will continue to decline for the rest of the year as economic uncertainty caused by Brexit weighs on consumers, according to one of the industry’s biggest players.
Andy Bruce, chief executive of car dealer group Lookers, hinted that current industry forecasts for a near- 4pc drop on last year’s record UK 2.7m car sales could be optimistic.
“There has been a mist around the macro-economic picture,” said Mr Bruce. “That mist will lift when we get some clarity around what Brexit will look like but until then sales in the second half will be down.”
Once politicians can agree on how the UK will quit the EU, normality will return to the car sector, he said, predicting “long-term growth in line with population and GDP growth”.
His prediction came as data from the Finance and Leasing Association (FLA) show that the number of consumers buying new cars on finance fell by 8pc in June compared with the same month a year ago. However, the FLA’S data also revealed that despite the drop in the number of transactions, the value was flat at £1.534bn, indicating that the average amount of a finance deal has increased to £18,884.
Car finance has come into focus in recent months with the Bank of England’s financial stability report in June highlighting a surge in consumer credit; car deals now make up £58bn of the £198bn total. Of this amount £24bn is held by banks and £34bn by car companies and dealers. Some have questioned whether car finance could be the next source of a financial crash, similar to the way that risky mortgage lending sparked the 2008 collapse.
The FLA, however, says the system is highly regulated and the fact that most cars are “bought” on personal contract plans (PCPS) means the car has a guaranteed end value and can be handed back with no strings attached.