New car registrations up more than 10 per cent, but UK engine manufacturing down

UK new car registrations rose for the first time this year, by 11.3 per cent in July, according to figures published today by the Society of Motor Manufacturers and Traders (SMMT).

Some 174,887 cars were registered in July 2020 as dealerships across the UK opened for their first full month of trading since February. This represents a significant improvement on the same month last year, when declining business and consumer confidence undermined the market.

But more than 13,000 jobs have now been lost by UK Automotive across retail and manufacturing as a result of the pandemic, with more likely to follow given the scale of the challenges facing the sector, including shifts in technology, Brexit uncertainty and a depressed market.

Pent-up demand and special offers led to a reprieve for the sector, but overall registrations are still down by more than 40 per cent, or 598,054 units year-to-date.

Despite the increase in July, SMMT’s full year outlook is for a 30 per cent decline in registrations, representing more than £20 billion of lost sales.

Mike Hawes, SMMT Chief Executive, said: "July’s figures are positive, with a boost from demand pent up from earlier in the year and some attractive offers meaning there are some very good deals to be had. We must be cautious, however, as showrooms have only just fully reopened nationwide and there is still much uncertainty about the future.

"By the end of September we should have a clearer picture of whether or not this is a long-term trend. Although this month’s figures provide hope, the market remains fragile in the face of possible future spikes and localised lockdowns as well as, sadly, probable job losses across the economy. The next few weeks will be crucial in showing whether or not we are on the road to recovery."

Private demand saw the most significant growth with a more than 20 per cent increase in registrations, primarily as a result of consumers finally being able to renew their cars after lockdown had forced them to delay. In addition, manufacturer incentives have helped attract customers to showrooms. Eight of the 10 major manufacturers provided attractive finance offers and flexible payment terms in a bid to head off consumer uncertainty – vital as the Coronavirus Job Retention Scheme phases out, potentially sparking redundancies across the economy and impacting confidence to invest in big ticket purchases.

Public appetite for zero and ultra low emission cars remains stable, with plug-in hybrids and battery electric vehicles taking a 9.0% share of registrations for July, compared with 9.5% last month and up from 3.1% for 2019 overall. Meanwhile, ‘supermini’ and lower medium sized (or small family) cars were once again the most popular segments, accounting for 59.1% of registrations. Dual Purpose cars comprised 25.9% of vehicles registered.

Business car registrations showed modest growth, with fleet purchases increasing by just over five per cent.

On the car manufacturing side, last month the SMMT reported that UK engine production had fallen by nearly 40 per cent in first half to 814,957 units.

Commenting on that, Mike Hawes said, "With key global markets locked down during the coronavirus crisis and assembly plants shuttered, it is unsurprising that UK engine production declined significantly during the first six months of 2020. What we need now are measures to support this cutting-edge sector’s restart and a long-term strategy to provide the competitive market and trade conditions that will accelerate recovery and provide the foundations for future growth."