Accuracy of UK new car registrations called into question

Author:

ROBIN ROBERTS

Analysts have cast doubts on the latest car sales figures for Britain.

Figures released by the Society of Motor Manufacturers and Traders show a 9.3% increase in registrations last month, but two analysts say this rise does not square with the general downturn in the economy and may be inaccurate.

Commenting on the latest car registration figures from the Society of Motor Manufacturers and Traders, which suggested an increase to 143,884 units compared with July 2011, David Raistrick, UK Manufacturing Leader at Deloitte said, “The continuing growth in new car sales in the UK, compared to increasing pressure due to tough economic conditions, which is resulting in reducing sales elsewhere, is starting to raise questions in global markets.

“This has led to recent suggestions from both retailers and industry insiders that an increase in pre-registration of new cars is perhaps distorting the level of growth being reported in the UK market, particularly in respect of private sales. Official data shows that recorded pre-registrations are up 76% on the first six months of 2011. Whilst the numbers of vehicles are not material to the overall new registrations being reported, it does raise the question as to what is driving the increase.

“Germany is the only other major European market to have shown growth over the first six months of the year but the recent disclosure that nearly 500,000 pre-registrations had taken place in the first six months of 2012, representing 3 out of every 10 new registrations, has raised the spectre that the German new car market is actually in recession. Indeed, our analysis is that that German market has probably suffered a 5% decline during 2012.

“Whilst the practice provides a short term fix for the manufacturer by moving units into the retail sector, the long term effect can only be to undermine residual values and potentially damage brands.”

Skepticism of the figures was also expressed by John Leech, Partner in KPMG’s Automotive practice who said, “This is a surprising result, particularly given that it is the UK consumer who is powering this recovery, with car sales up 10.5% so far this year, offsetting a 15% decline in car sales to UK companies and businesses.

“Although consumer confidence in the UK remains at a low level, carmakers are offering a higher than normal release of new models and large discounts to consumers. Dealer profits are generally healthy and puts the industry in good shape to respond to any future shocks to consumer confidence from the ongoing Eurozone crisis.”

The published results have even concerned the people who sell cars and have showroom experience of the current market. Sue Robinson, Director of the RMI National Franchised Dealers Association said, “In light of speculation about the new car market the NFDA, representing franchised car, commercial vehicles and motorcycle dealers, are carrying out an review of the registration figures to a ascertain a more transparent view of the market.”

However, SMMT chief executive Paul Everitt said, “New car registrations rose 9.3% in July, continuing the upward trend seen during recent months. SMMT’s full year forecast is for 1.97 million cars to be registered during 2012 suggesting a slight slowing of demand in the second half of the year.

“International economic stability remains a concern for vehicle manufacturers and the UK market, but intense competition and new fuel efficient products are creating great opportunities for motorists.”

After the distortions from the Scrappage Incentive Scheme, a degree of pent-up demand and the availability of new products have helped lift new car volumes in 2012. The growth has come despite an unsettled economic backdrop, with disappointing GDP figures and constrained consumer and business spending.

On a 12-month rolling basis, registrations have improved by some 40,000 units or 2% since the start of the year to 1.98 million units, but there is still some headway to recover to the 2.4 million, pre-recession, market of 2007.

All fuel types saw an increase in volumes in July, most notably the market for alternatively-fuelled cars, up 45.9% as new products entered the marketplace. Demand for petrol cars was also boosted by strong growth in the Mini segment, again reflective of new model activity.

The Mini segment grew 93.4% in July, and the Dual Purpose by 42.5%, with the Supermini and MPV markets also showing double-digit growth in the month. The Ford Fiesta was the best-selling model in July and over the first seven months of 2012.

UK July top ten: Fiesta; Corsa, Astra; Focus, Golf, Qashqai; C-Class; Polo; A3 and Insignia.

With more pre-registered cars on the market it means that business car leasing rates might become more competitive and you can keep up to date with all the business car news here.