Source: Cazana
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NEW car registration data for August confirms that the market has experienced an exceptional level of activity over the past few weeks with figures up by 23.1% over the same period last year.

However, a surge in registrations was not down to a significant change in consumer demand driven by confidence in the economy. Registrations were boosted by the introduction of the new WLTP regulations that came into place at the beginning of September.

This meant that large volumes of cars that could only meet the outgoing NEDC legislation needed to be registered before the August 31 cut off.

This also resulted in some unprecedented new car deals being offered in an attempt to sell stock to retail consumers. However, it has also meant that there has been a significant increase in pre-registration activity, according Rupert Pontin, Director of Valuations at Cazana.

He said: “Looking at diesel car registration data demonstrates the level of potential inaccuracy with a decline in volume of 7.7% over August 2017. Compare this to the year to date drop in diesel registrations of 28.7% and it is clear that something is not right, although the market share for the month at 29.7% is 10% lower than in 2017 which is more in line with the 11.1% decline measured year to date in 2018.”

Petrol powered registrations for the month improved by 39.1% which is notable, but not as large as the 88.7% increase in registrations for Alternative Fuel vehicles.

Pontin said that with figures that appear to be so inflated, the need for detailed new car market analysis has never been greater. “It will be fascinating to see what happens to registrations during the usually key month of September although indications are that new car supply has been disrupted and focus may well be on moving the quantity of pre-registered vehicles now sitting in the used car market.”

The remainder of the year is likely to be hard to forecast and will bring challenges to some new car franchises.

Pontin said: “With such a difficult trading period in the new car market unfolding day by day, and set to be the case for the remainder of 2018, many businesses will be looking to the used car market to bring stability and more importantly profit to their bottom line.

Reviewing the Cazana data collated daily over the past month shows that the used car market has slowed slightly although this should come as no surprise given that August is a key holiday month for much of the British population and with such favourable weather conditions traffic at the dealerships and more importantly online has been slower than many would have liked.”

Pontin added: “The August data sees a further improvement in the performance of the quick turn sector that consists of cars that have generally come from the ex-rental agents, manufacturer company car and demo schemes and of course pre-registered cars.

“This greater strength represents a two-percentage point lift over August 2017 and it will be very interesting to see how this sector changes next month. As it stands, this performance implies that despite the increase in volume for the sector, retail demand is able to keep pace at the moment. This is contrary to what might be expected given the increase in pre-registration activity.

“It is also of note that in August the ex PCP profile has seen a stabilisation of retail pricing which may come as a surprise to some. However, whilst these top-level figures suggest an air of stability in the market, it is essential to drill deeper and look at more specific vehicles. This is key in a market area that is experiencing such an increase in volumes.”

“To summarise, the August market has been as variable as expected in many ways. The interesting piece has been the odd shape of the new car market and it is reassuring to see that to date the pre-registration activity has yet to impact the used car market in a significant manner.”


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