With UK car showrooms having reopened, the new car market is expected to bounce back in April and throughout the rest of Q2 through pent-up demand, according to Cox Automotive

The services provider has released its latest quarterly insight for the automotive sector. The report found that two-fifths of dealerships (42%) surveyed by Cox are expecting new car registrations to increase in 2021, suggesting the sector could be in for a busy couple of months.

However, despite positive predictions, Cox Automotive is urging caution, since although retailers can expect a boost, sales are unlikely to be at the levels seen when dealers reopened after the first lockdown in summer 2020. 

Philip Nothard, Cox Automotive’s customer insight & strategy director, said: “We know that Q2 performance will increase, although from a low starting point. However, because of the first national lockdown in spring 2020, comparisons will need to be made to 2019 to get the true picture, as sales should be significantly higher than last year.”

The report outlines three scenarios for the new car market, with current knowledge allowing the most likely scenario to be predicted as a -7.7% (-155,078) downgrade on Cox Automotive’s November 2020 forecast, at 1.87 million new car registrations by the end of 2021. Q2 2021 specifically will see 520,835 new car registrations, down -5.9% on the 2000-2019 pre-pandemic average.

Nothard added: “This scenario assumes some modest pent-up demand in April and May, but with some consumer nervousness remaining, it is likely that retail activity won’t recover fully. This also assumes a continuation of the same supply constraints we are currently witnessing.” 

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As for consumer behaviours affecting sales, Nothard said: “It remains to be seen what the consumer appetite for new cars will be like now that physical showrooms have reopened. Disposable income was massively boosted last year so there could be lots more people with money to spend on a new car. On the other hand, due to the unpredictable nature of the COVID pandemic, it’s unlikely that there will be too much ‘irresponsible’ spending.

“We saw a small recovery year-on-year at the end of March this year, but that was largely because virtually no sales took place from 23rd March 2020 following the first lockdown announcement. Overall, the market has been significantly impacted during what is a crucial quarter.

“We have seen an increase in volumes of fleet, which could be a result of incentivised activity to maximise the result for the first crucial quarter of the year. However, any new car registration is likely to create a used car for the future at some stage of its life.”

In total, the UK has seen -12% fewer new car registrations in Q1 compared to 2020 – a year that was already impacted by many additional factors to COVID, such as Brexit and the emergence of new environmental legislation. Compared to 2019, the UK has seen -39.3% fewer registrations in Q1.