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New cars bounce back

Pent-up demand boosts sales as car dealerships reopen – but reprieve may prove temporary

Tom Harrison
Content writer
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Posted 6 AUGUST 2020

New car registrations rose in July for the first time this year, new figures from the Society of Motor Manufacturers and Traders (SMMT) reveal.

But the rise may be down to pent-up demand from customers unable to buy cars during the lockdown, rather than a longer-term revival of the automotive sector. Private sales were up 20.4% compared with July 2019, while fleet sales showed an increase of 5.2% by comparison.

The SMMT figures show that new car registrations increased in July by 11.3% year-on-year to 174,887 vehicles as dealerships across the country reopened for their first full month of trading since February.

According to the motor trade organisation, this represents a significant improvement on July last year when the market was hit by a fall in business and consumer confidence.

Doubts about the future

The SMMT warns, however, that while pent-up demand and special offers have led to a reprieve for the sector, overall registrations are down by -41.9% year-to-date and the full year outlook is for a -30% decline in registrations – 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.”

And the financial effects of the crisis may also affect consumer’s future car choices.

Dan Hutson, head of motor insurance, at comparethemarket.com says:

“The bounce, while great to see, is due to pent up demand from nearly three months of dealership closures. With more people driving to work, to avoid exposure to the virus on all forms of public transport, we may see continued resurgence in demand. Our recent research found that 61% of people expected to drive to work when they return to the office, compared to 34% prior to the coronavirus pandemic. What remains to be seen is whether this demand will result in more positive months of new car registrations, or whether people will favour second hand vehicles as the UK feels the financial effects of the pandemic.”

Popular cars

Plug-in hybrids and battery electric vehicles made up 9.0% of registrations in July, while supermini and lower medium sized family cars were the most popular, accounting for 59.1% of registrations. The top five best-selling cars in July were the Vauxhall Corsa, Ford Fiesta, Ford Focus, Volkswagen Golf and he Mercedes-Benz A-Class.

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