- There was a welcome rise of 3.4% in May, as the car market continues to rebalance following large declines in 2017.
- The message on electrification is getting through as hybrids and plug-ins were up more than a third to take record 5.8% share., down over 20%
- But diesels continue to take the big hit
- Year-to-date market down -6.8% as uncertainty continues to impact business and fleet buyers.
IT might not be much, but the fact that the UK new car market grew by a modest 3.4% in May must be welcomed.
According to figures released by the Society of Motor Manufacturers and Traders (SMMT) there were 192,649 new units registered.
The growth follows a substantial -8.5% decline in the previous May when demand was impacted by the dual effects of VED pull forward and buyer hesitancy ahead of June 2017’s general election said the SMMT.
Private demand in May grew by 10.1%, but declines in the business and fleet sectors were recorded, down -9.6% and -0.7% respectively.
The most popular segments were supermini (up 6.0%), small family (up 1.6%) and dual purpose (up 19.2%), while demand for specialist sports cars also rose, by 12.7%. In addition, the hottest May on record saw a surge in demand for convertibles as drop tops rose 11.7% year on year.1
SMMT figures revealed that the alternatively fuelled vehicle segment grew by 36.1% to 11,240 units, accounting for a record 5.8% of the market. Plug-in hybrid cars were the biggest driver of growth, up 72.7%, while hybrids rose 22.6% and zero emission battery electrics grew 18.7%. Registrations of petrol cars also increased, by 23.5%, while diesels fell for the 14th consecutive month, down -23.6%.
ISMMT reported tha on the year to date, the overall market remains down, with new registrations having fallen -6.8%, as economic and political uncertainty continues to impact demand. Business and fleet confidence, in particular, continues to lag, down -16.2% and -7.1% respectively, while demand from private buyers in the first five months is -5.7% behind 2017 levels.
Mike Hawes, SMMT Chief Executive, said:
“May’s growth, albeit on the back of large declines last year, is encouraging and suggests the market is now starting to return to a more natural running rate.
“To ensure long-term stability, we need to avoid any further disruption to the market, and this will require sustainable policies that give consumers and businesses the confidence to invest in the new cars that best suit their needs. Fleet renewal is the fastest way to improve air quality and reduce CO2, and this applies to hybrid and plug-in technologies as well as the latest low emission petrol and diesels which, for many drivers, remain the right choice economically and environmentally.”
Ashley Barnett, Head of Consultancy at Lex Autolease,commented:
“The increase in new car registrations in May shouldn’t be taken out of context – May is traditionally stronger than April, but consumers and businesses are still hesitant when it comes to replacing their cars.
“Continued confusion around new emissions testing (WLTP) and the impact on availability of vehicles, specifically plug-in hybrids, combined with the lack guidance on policy beyond 2021, means many consumers and businesses are holding off replacing their cars. Clarity is needed from Government to help people make informed purchasing decisions that will contribute positively to targets around emissions and take older, more polluting vehicles off the road.
“This month’s figures buck what has largely been a downward trend, but it’s important to remember that we are also seeing the effects of a natural levelling off in demand following a sustained period of record growth. When the figures are viewed in line with most fleet replacement cycles, the picture is more encouraging.”
Ian Gilmartin, Head of Retail & Wholesale at Barclays Corporate Banking, added:
“The record breaking numbers recorded a couple of years ago are firmly in the past, but it does look like we’re edging back towards where monthly sales should be.
“If the industry can continue to deliver modest growth in the next few months and close the gap on overall sales compared with last year, I think most sellers will be relatively content. Given the wider economic environment, double digit growth in private sales is pretty remarkable even when 2017’s weakness is taken into account. However, the struggling business and fleet sales remain a concern and are evidence of the challenges being faced by businesses when making significant spending decisions.”
