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UK car sales grow for record 27th consecutive month

  Monday, 23 June 2014

UK car sales have risen for the 27th month in a row, breaking a record that dated back to the 1980s. 

The availability of easy credit combined with heavy discounting and rising consumer confidence (not to mention fairly solid economic growth) has swelled the demand for new cars within the UK.  Sales in the country are now out-pacing pre-recession levels.

British car buyers have been considered the darlings of the European car industry within the last couple of years, with the rest of the continent still struggling with lower sales.

New car sales in the UK rose 7.7 per cent in May, reaching a total of 194,032 vehicles.  Figures show an 11 per cent increase over those from 2013.

Some market researchers and analysts have questioned the stability and sustainability of the growth, as well as the economic foundations on which it has been built. Recent research has shown that at least eight in every 10 new cars in the UK are currently bought with credit.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Trades, spoke to the Financial Times, saying:

“The new car market has now grown in every month since March 2012, the longest period of growth on record and a reflection of the UK’s ever-improving economic conditions,”

“With SMMT forecasting an overall rise of around 6 per cent over the year, the coming months should see some levelling off in growth rates as underlying demand stabilises,”

Last month, the SMMT increased its sales estimate for 2014 to more than 2.4m cars, compared to the previous figure of 2.3m.

Executives, though, have been keen to stress that the market will begin to flatten out soon, approaching a more steady level of annual demand.

Richard Lowe, the head of Retail & Wholesale at Barclays, attributed the growth to the increase in consumer confidence.

“Looking ahead over the summer months it will be interesting to see if this holds firm, or whether we will see the growth rate drop down a gear,” he said,

“If there is a slowdown, all eyes will be on manufacturers and the actions they take to try to drive the market forward.”

Out of the manufacturers in the UK, Renault saw the biggest levels of growth, with a remarkable 65 per cent increase in the number of sales.  This was mainly driven by a 92 per cent increase in sales of the budget Davia brand.  Toyota and Volkswagen also saw their sales expand by 21 per cent and 15 per cent respectively.  Ford was the most notable firm to register a fall in sales, seeing a reduction in 9 per cent per month.

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