UK new car registrations continue to rise

Demand for new cars in the UK continued to grow last month, with new car registrations totalling 189,514, up 3.5%.

The growth in June – the fourth successive month that new car registrations have increased – was largely driven by private buyers who registered 79,916 cars, up nearly 10% on the same month in 2011, according to the Society of Motor Manufacturers and Traders (SMMT).

The latest data meant the market was 5% ahead of forecasts drawn up for the second quarter by the SMMT.

It also suggested that “despite domestic and international economic concerns UK motorists are responding positively to new products and the latest fuel-efficient technology”, according to SMMT chief executive Paul Everitt.

“The figures for June push volumes of new car registrations for the first half of 2012 through the one million-mark,” he added.

Other sources added that dealers prepared to be more “innovative” when it came to offering customers deals on the forecourt were helping bolster demand.

A new dealership survey from accountants Baker Tilly warned that nearly two-thirds of UK car dealers expected sales to fall during the rest of the year.  

The survey polled more than a hundred senior representatives from dealerships around the UK, with 59% of dealers reporting an increase in discounting over 2011 suggesting, the firm said, that many of new car sales have been spurred “only by showrooms slashing prices”.

Graham Bushby, head of automotive at Baker Tilly Restructuring and Recovery, said: “Rising sales seems, on the surface at least, to be good news. However, widespread discounting lowers margins and affects profitability.

“Profitability is key to good business health, so if that is being affected then dealers should be watchful and monitor the situation closely,” he added.

Responding to what she called "encouraging figures", Sue Robinson, director of the RMI National Franchised Dealers Association (NFDA), agreed that customers were being tempted back into showrooms with "some great offers on new cars".

"This is coupled with consumers still looking to reduce motoring costs by buying vehicles with lower maintenance costs and better fuel economy,” she said.

However Robinson warned that consumer confidence remained fragile. “Additionally, the impending distraction of the Olympic Games that may keep customers out of showrooms will make market conditions challenging over the remainder of the summer," she said.

SMMT figures meanwhile showed energy efficient cars continued to make their mark, with “alternatively-fuelled” car registrations up nearly 48% rise in June, while average new car CO₂ emissions fell 4% to 134.1g/km in the first six months of this year.

“The industry has performed better than expected in the first half of the year and we will now need to work hard to sustain growth,” Everitt said.

The Ford Fiesta continued its market dominance both in June and the first half of 2012, with more than 9,000 units and nearly 60,000 units registered respectively.

The SMMT said new models helped the 'mini' segment post an 82.5% registrations rise in June, while 'dual purpose' and 'executive' segments also posted double-digit growth in the month.

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