Further reaction to SMMT report on new car registrations

Michael Woodward, UK automotive lead at Deloitte, said: “New sales fell year-on-year by 2% in October according to today’s figures from the SMMT.

SMMT“Consumer spending continues to show resilience as demand from private buyers was flat compared to the same period last year. However, a year-on-year decline in the fleet sector of -3% has impacted overall performance, suggesting that business confidence needs to improve to accelerate recovery.

Consumer spending on a knife edge

“Whilst private sales have returned to near pre-pandemic levels, today’s national lockdown measures will see showrooms close their doors once again.

“The impact of a second lockdown is likely to be significant, but the industry is better placed to cope this time around with many dealers and manufacturers improving their online presence, alongside continued trade in service and parts businesses.

“However, uncertain economic conditions and the prospect of further unemployment means consumers continue to put off major purchases. Dealers and manufacturers will have to work hard to convince prospective buyers that they are getting value for money when restrictions eventually lift.

Business confidence holding back a recovery

“Typically accounting for more than half of all new car sales in the UK, we may have to wait several months for fleet sales to return to pre-pandemic levels as CFOs prolong their expectations for a full recovery. Deloitte research found more than 60% now expect demand to remain below pre‑COVID‑19 levels until the second half of next year or beyond.

EVs come to the fore

“October was another excellent month for electric vehicles, with Battery Electric (BEV) and Plug in Hybrid (PHEV) growing their combined market share to 12% compared to just 4% last year. Both BEVs and PHEVs saw growth this month, of 195% and 149% respectively, edging closer to overtake diesel sales (-38%).

“As we await further details on the ban of polluting vehicle sales, the pressure is now on the UK’s charging infrastructure to keep up. Maintaining coordination with charging infrastructure planning will be needed to create sustainable growth and meet the government’s targets. We need to see a joined up approach that considers what kind of chargers are needed and how many, and what the underlying power networks look like.

Brexit back on the agenda

“As the end of the UKs transition period with the EU nears, there is an increased focus across the automotive sector on Brexit preparation, with future supply and inventory a growing concern for many.

“For consumers, the availability of cars should improve as manufacturers build up their UK stock prior to Brexit which could, in turn, see increased discounting in the New Year.”

James Hind, founder and CEO of online car buying platform www.carwow.co.uk said: “The results released this morning from the SMMT are not unexpected in the current climate. As we enter the second lockdown, positivity is far higher within the industry, with our poll to car dealers showing 83% say they are better prepared than the first lockdown. Crucially, the government have clearly said that dealers can offer delivery and click-and-collect. In the first lockdown that clarity only came weeks in, yet despite that on carwow we saw 60,000 leads for brand new car sales in April and May. Dealers are in a much better position this time around too, and whilst showrooms won’t be open for a few weeks for browsing, car dealer’s digital sales teams are ready, and Covid-safe click and collect & delivery options are in place, which will lead to far less impact on new car sales.

In a separate snap poll we conducted to consumers, more than two fifths (42%) of those interested in buying a new car will not delay plans to buy their new vehicle.

It has been a difficult year for new car registrations and this month is no different. The real silver lining throughout the year has been the continuous growth in Electric Vehicle interest and purchases, there is still work to be done to meet the 2032 net zero goal but there are positive signs of a change in consumer attitudes towards a greener motoring future.”

Sustainable Transport Editor at Centrica Amanda Stretton says: “It’s unsurprising that the UK new car sales fell again in October, with tightening Coronavirus restrictions and Brexit uncertainty limiting customers. But with click and collect still a viable option, hopefully the market will continue to be resilient and avoid a repeat of the spring’s decline.

“It’s encouraging to see that there is still an appetite for EV adoption despite the current climate, as demand for battery electric vehicles increased by 195% compared with October last year. In fact, it seems that the positive impact Coronavirus has had on the environment has caught drivers’ attention. A recent study shows that 45% of people have reconsidered their electric vehicle ownership plans as a result of the radical improvement on air pollution seen across the globe. A further 17% said it reaffirmed the decision they had already made to make the switch to an EV.

“However, to enable significant uptake, we need to see greater commitment to rolling out charging infrastructure in public places and the continuation of grants available for home charging. For any customers who have been considering purchasing an electric vehicle but have concerns about costs and charging, our EV Top Tips offers some helpful advice on support schemes available and tariffs out there which offer cheaper, off-peak electricity so that you can charge your EV while you sleep for less.”

Peter Barnes, partner and Head of Automotive at global legal business DWF, comments: “The UK new car market fell by -1.6% in October, with 140,945 cars registered, a nine-year low for the sector. This follows the continued downward trend in new car sales.

“Positively, sales of electric cars, be they hybrid, plug in or battery powered, have risen year on year, by 143.9%, as car buyers’ attraction to this mode of transport continues, possibly fuelled by shorter journey times as a result of people working from home leading to greater buy-in of this technology.

“As a new lockdown once again begins today in England forcing showroom closures, alongside on-going lockdowns in the rest of the UK, the car industry is facing challenges on two fronts: COVID and Brexit. It is hoped that click and collect may help to sustain the car industry during traditionally tough winter months, but it remains to be seen if it will be enough to stop the decline from worsening next month.”

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