UK new car sales continue to rise but at slower pace

Signs of weakening demand from some business and private customers as new vehicle registrations increase 2.5% in May

New car sales in the UK have continued to grow but at a slower pace than previous months amid signs of falling demand from some business and private customers.

New car registrations in May rose 2.5% compared with last year to 203,585, the highest for the month since 2002, according to the Society of Motor Manufacturers and Traders (SMMT). But the trade group noted growth had eased off with May marking the second month running when car registrations rose by less than 3%.

May new car registrations Illustration: SMMT

Growth last month came from companies freshening up their business fleets, with that part of the market growing 8.8% on the year before. But registrations to private customers fell 3% and there was also a 20.2% decline in business registrations, which covers companies that have 24 or fewer cars registered. Fleets are those with 25 or more.

Business registrations covers a relatively small part of the market and so the figures can be volatile from month to month.

Some business surveys have shown companies are putting off spending decisions until after the EU referendum on 23 June. But the SMMT said it was too early to tell if the slowdown in new car registrations was down to the vote.

“The new car market in May remained high with compelling offers available on the latest vehicles, but the low growth is further evidence of the market cooling in the face of concerns around economic and political stability,” said Mike Hawes, the SMMT chief executive.

“Whether this is the result of some buyers holding off until the current uncertainty is resolved or a sign of a more stable market for new cars remains to be seen.”

Car sales are a bellwether for overall spending, so the slowdown in registrations to private customers this year was concerning, said Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“The fall in car sales cannot be attributed solely to greater consumer caution ahead of the referendum. The fall in consumer confidence this year also has reflected slower growth in real incomes, amid weaker job growth, rising inflation and an intensifying squeeze of welfare spending,” he said.

“Much of the pent-up demand from households that put off car purchases during the recession also has now been satiated.”


Katie Allen

The GuardianTramp

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