January 14th 2015
New car sales figures are the highest they have ever been for a 10 year period
It seems the love affair with motoring continues in the UK. Figures released recently by the Society of Motor Manufacturers and Traders (SMMT) has seen car sales hit a new 10 year high in 2014. This appears to be boosted by the general economic recovery with an increase in consumer confidence being given credit for the figures.
During last year 2.47 million new cars were registered which was a healthy increase of 9% over 2013 and the best annual performance since 2004. These figures are marked considering that the issues around the economy didn't present themselves until 2008. The SMMT underline this and partly attribute the growth to the release of pent-up demand from the recession years where new registrations dipped below two million in both 2009 and 2011. Buyers, perhaps buoyed with increases in salaries as the economy has grown again, are once again able to make purchases of big ticket items (demand has increased in the housing market too).
SMMT chief executive Mike Hawes reported that the strong performance meant UK new car registrations were now back at pre-recession levels, with only the years 2002, 2003 and 2004 seeing more registrations than last year.
The numbers mean the UK maintained its status as the second largest market in the EU for new car sales; sitting just behind Germany in the league tables.
Interestingly sales of electric cars saw the biggest growth last year, with the number of cars bought increasingly exponentially from 3,586 in 2013 to 14,498 in 2014. And expectations are there for further growth in this area too with the introduction of new e-models from most major manufacturers due throughout 2015.
Separate data from The Finance & Leasing Association indicate that the majority of new cars were bought by people using credit and through PCP's (Personal Contract Purchases schemes). Ford for example report that in their own dealerships 94% of cars are bought on finance plans and most of those are PCPs.
According to Howard Clifforth, general manager at the TrustFord dealership, customers can drive away a £9,500 Fiesta - the most popular car in the UK - by providing only a £500 deposit followed by monthly payments of £166. Fast forward three years and customers can simply then hand back the car and walk away, make a final payment to buy and own the car outright, or segue into another PCP deal.
Customers are effectively leasing cars in much the same way as they do mobile phones and in many ways this offers flexibility too with drivers being able to switch brands and models every few years and take advantage of new technology and design features.
Looking ahead to 2015 and industry experts think demand will stabilise. Andy Bruce from Lookers PLC – one of the biggest automotive retailers in the country, said: "I think new car sales are going to show a modest rise over the next few years… we are getting to a more mature period of growth."