LITTLE surprise that the UK new car market fell again in October, with registrations down by 1.6% year on year, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
With lockdowns and restrictions in various parts of the country, the industry recorded 140,945 new registrations last month, making it the weakest October since 2011 and 10.1% lower than the average recorded over the past decade
The arrival of new models and ongoing financial incentives helped initially to sustain UK demand in the month, but the introduction of a ‘firebreak’ lockdown in Wales on 23 October contributed to the nation recording 25.5% fewer registrations by the end of the month, which accounted for more than half of the overall UK decline.
Subdued activity from businesses drove much of the month’s drop, with around 2,500 fewer vehicles joining larger fleets than in October last year, while private registrations saw a modest increase of 0.4%.
However, this performance was flattered by a weak October 2019, when ongoing supply issues arising from regulatory challenges, as well as political and economic uncertainty ahead of the anticipated Halloween Brexit withdrawal date, saw overall registrations by private buyers recede by -13.1% in the month.
As of mid-October, the industry had been expecting to register about 1.66 million new cars in 2020. However, with the announcement of a second lockdown for England, which will include the closure of vehicle showrooms, the market forecast has been downgraded by a further 100,000 units to 1.56 million.
This equates to a total year-on-year decline of around 750,000 registrations and a £22.5 billion loss in turnover , with 2020 now likely to be the weakest year since 1982.
While the continuation of click and collect and delivery services is welcome, and should help prevent a return to the sales wipe-out experienced in the spring, it cannot offset the loss of custom from the closure of showrooms themselves, given the unique nature of the car purchase process.
Mike Hawes, SMMT Chief Executive, said: “When showrooms shut, demand drops, so there is a real danger that with England today entering a second lockdown, both dealers and manufacturers could face temporary closure. What is not in doubt, however, is that the entire industry now faces an even tougher end to the year as businesses desperately try to manage resources, stock, production and cashflow in the penultimate month before the inevitable upheaval of Brexit.
“Keeping showrooms open – some of the most Covid-secure retail environments around – would help cushion the blow but, more than ever, we need a tariff-free deal with the EU to provide some much-needed respite for an industry that is resilient but massively challenged.”
Sue Robinson, Director of the National Franchised Dealer Association said: “It is encouraging to see the continued, strong growth in the battery electric and plug-in hybrid vehicle segments. Over the past months, dealers have experienced large volumes of online inquiries and we expect this to continue through November.
“Dealers will continue to comply with the regulations to arrange the delivery of cars and, where possible, meet customers’ aftersales servicing needs, in particular, to support key workers and all those who need a car to go to work or for other essential needs.
“Vehicle showrooms were the first industry sector to reopen on 1 June, operating to Covid-secure guidelines. There is no evidence that dealerships have caused the spread of Covid-19 and shutting showrooms for four weeks can damage the livelihoods of the 590,000 people employed in vehicle retail as well as the 168,000 people employed in vehicle manufacturing”.
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