Car Market has grown for 3 Consecutive Years

Growth

During February the new car market grew by 12% and fleet and business managers accounted for just under 60% of these new registrations, in fact, the accounted for 45,519 units. This means that February was the 36th month in a row that the new car market continued to grow which shows very positive signs for the economy. According to the Society of Motor Manufacturers and Traders this is the first three consecutive years of growth for the UK. The last record that was set was back in the 1980s where there were 26 consecutive months with continued growth.

Since the beginning of 2015 there have been 143,287 vehicle registrations for fleet and businesses which is great news in terms of growth for the industry. According to Fleet News Mike Hawes, who is the chief executive at the Society of Motor Manufacturers and Traders has said, “Three years of continuous growth in the new car market is remarkable and reflects the strong upturn in the confidence of UK car buyers since the recession.

“Registrations of fleet and business cars have outpaced the private market in February, reflecting the increased business confidence across the UK.

“With most fleet car buyers on a three-year replacement cycle, many of those cars purchased at the beginning of the current growth period are now due for replacement.

“Over the course of 2015 however, we are expecting a more stable market to emerge given there has already been an extended period of consistent growth.”

At QuoteSearcher we believe that given the fact that the jobs market is increasing, contracts coming up for renewal and the fact the 15-plate will be out imminently, the month on month growth won’t be slowing down just yet.

Sue Robinson who is the Director of the National Franchised Dealers Association added that it was really positive for the new car market which has now increased by 12% since March 2012. She noted that customers are now more likely to commit to a vehicle and in particular new vehicles as the employment market improves and continues to grow. This coupled with inflation reducing and therefore reducing the price of energy prices and fuel, purchasing a new vehicle is becoming more attractive.

“Increased sales are supported by strong manufacturer deals and low cost finance offers that are encouraging consumers to buy.

“We anticipate the market to continue to grow and have strong expectations ahead of next month’s 15-plate change where customers will be likely to take advantage of a range of substantial discounts and savings, in addition to a variety of low rate finance packages being made available.”

Others that commented on the growth included Phil Harrold who is an automotive partner at PwC and he has said, “The three years of consecutive growth is really welcome news for the UK automotive industry and the direction of travel of these latest figures for new private car registrations is unsurprising given the relatively stable market and positive consumer sentiment.

“However, the size of the increase in fleet and business registrations is more surprising and is more a reflection of where we are in the cycle of business fleet replacement. Therefore we wouldn’t expect business registration increases to be maintained at this level over the next few months.”

Mr Harrold also added that with the election round the corner and the lack of stability within the Eurozone could mean that the months of consecutive growth could soon be over although he did say that they expect that the automotive sector will be one of the more successful markets.

David Raistrick from Deloitte also commented saying, “The run of monthly comparative growth began in March 2012 and has now reached three years without, on the surface, any immediate signs of coming to an end.

“However, there was an indication in January that, whilst the total new car sales maintained the trend, momentum provided by the private consumer may be running out of steam. Indeed, the 5.1” fall in sales was the first comparative monthly fall since October 2012 and taken with today’s figures, it suggests that 2015 will require a boost from the business and fleet sector to maintain the good news story.

“The continued rise of salary sacrifice schemes plays a part here and is one of the primary growth areas in the fleet sector. Ever-increasing numbers of employees opting to take a new vehicle rather than purchasing a replacement car from the used car market.”

Overall, the next couple of months will be an interesting time for the automotive industry as there are plenty of positives but also some negatives that could impact the market. This may mean that the growth plateau’s especially around the election.

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