New car registrations increased 5.3% year-on-year in March to a record 518,707 units, according to the Society of Motor Manufacturers and Traders (SMMT).
This was the biggest ever month since the bi-annual plate change began in 1999 and the third time the market has surpassed half a million units in a single month.
The month rounded off a record quarter, in which more than 770,000 new cars were registered – a 5.1% increase over the first quarter in 2015.
Private new car registrations increased 3.8% year-on-year, from 252,652 to 262,215 in March. Despite the increase, the private segment’s share of the market decreased from 51.3% to 50.6%, because of a higher increase in fleet car registrations. Fleet car registrations increased 6% year-on-year from 219,519 to 232,729.
Demand was up across all fuel types, with diesel and petrol registrations growing 3.9% and 5.1% respectively, while alternatively-fuelled vehicles enjoyed an uplift of 23.7%.
Mike Hawes, SMMT chief executive, said: "The sector’s strong growth in March rounds off a robust first quarter as British consumers continue to demonstrate their appetite for new cars, especially ultra-low emission vehicles. This confidence should see registrations remain at a high but broadly stable level over the year, but could be undermined by political or economic uncertainty."
Richard Jones, managing director at Black Horse, said: "These figures are very encouraging for the industry – with the new plate surge in March giving us a good indication of the outlook for the rest of 2016, which is even more positive than we’d expected, due largely to continued low rates and further PCP growth. At the same time, we anticipate working even more closely in partnership with our dealers in the coming weeks and months to help with an increasing requirement to retail nearly new cars and low mileage stock through appropriately structured finance."
Derren Martin, senior editor at Cap Hpi said: "March was the strongest month on record for new registrations, beating a record month in 2015, and it was particularly interesting to see the recovery in the fleet sector with demand growing by 6.0%, having struggled in January and February. How the industry copes with increasing volumes of vehicles returning to the market, particularly from ‘tactical registrations’ via pre-registrations and short-cycle daily rental channels, will underpin the stability of the used market.
"Cap Hpi has reported the strength of the market through the first quarter of this year. We are seeing this bullish market reflected in new registrations, used demand and dealer sentiment. Continued strong consumer demand will be the key factor to underpin residual values over the coming months, as record volumes of vehicles return to the market."
Sue Robinson, director of the National Franchised Dealers Association (NFDA), said: "Consumer confidence has been rising as a result of a recovering economy. Fewer concerns about unemployment and the improvements of household finances due to low inflation and pay rises have all helped to encourage consumers to buy new cars.
"The March market has been assisted by the new plate change which encourages consumers to replace their existing vehicle. In addition, strong manufacturer deals and low cost finance offers are boosting consumer confidence to buy."
Close Brothers Motor Finance chief executive officer James Broadhead commented:"Today’s figures from the SMMT, which highlight a record quarter for car registrations, are particularly impressive and underline the continued strength of the automotive industry. It is also encouraging to see growth across all sales types, with alternative vehicle fuel vehicles seeing a notable increase in sales, on top of diesel and petrol vehicles.
"While this growth offers huge potential for dealers, it is important that they remain focused on investing sustainably to ensure that they are prepared for whatever may come in the future. Indeed, whilst strength in consumer demand is crucial, dealers must focus on coming up with new and innovative ways to stimulate potential car buyers, particularly as consumer behaviour changes. Not only will this help ensure that growth is maintained throughout 2016, it will also place dealers in the best position possible should any political or economic issues arise which could impact their business."
Despite a 4.9% year-on-year decrease in sales in March, Ford remained the best-selling brand with 60,349 units sold.
Vauxhall remained the second most popular brand, after selling 51,902 units in March- 9.9% more than the same month in 2015.
Over the same period, Volkswagen’s sales were stable – up 0.02% – at 38,694. BMW and Audi followed with new car sales of 32,470 and 30,483 respectively.