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April 6, 2020

SMMT: UK new car registrations down 44.4% in March

By chris lemmon

New car registrations in the UK dropped 44.4% in March, as the coronavirus crisis caused showrooms to close, according to the Society for Motor Manufacturers and Traders.

The performance represented a steeper fall than during the 2009 financial crisis and the worst March since the late nineties when the market changed to the bi-annual plate change system. With lockdowns taking place in many European countries earlier than the UK, even more dramatic falls have been reported elsewhere, with Italy down 85%, France 72% and Spain down 69% in March.

In total, 254,684 new cars were registered in the month, with demand from private buyers and larger fleets falling by 40.4% and 47.4% respectively. Meanwhile, the numbers of petrol and diesel cars joining the road were down 49.9% and 61.9% respectively.

There was some good news for early adopters, who were able to take delivery of the latest alternatively fuelled cars before the crisis took hold in the UK. Registrations of battery electric vehicles (BEVs) rose almost three-fold in the month to 11,694 units, accounting for 4.6% of the market, while plug-in hybrids (PHEVs) grew 38%. Uptake of hybrid electric vehicles (HEVs), however, fell 7.1%.

While many car showrooms are likely to remain closed for the coming weeks, companies are still working to ensure deliveries to critical workers, and the industry is also striving to keep sufficient service and repair workshops open to maintain vehicles which are helping to deliver essential goods and services across the country.

The news comes as SMMT downgrades its interim market outlook for the year to 1.73 million registrations – a -23% decline on the previous outlook made in January and some 25% lower than the 2.31 million units registered in 2019.  A further outlook will be published in April to reflect the latest conditions.

Mike Hawes, SMMT chief executivesaid: “With the country locked down in crisis mode for a large part of March, this decline will come as no surprise. Despite this being the lowest March since we moved to the bi-annual plate change system, it could have been worse had the significant advanced orders placed for the new 20 plate not been delivered in the early part of the month. We should not, however, draw long term conclusions from these figures other than this being a stark realisation of what happens when economies grind to a halt.

“How long the market remains stalled is uncertain, but it will reopen and the products will be there. In the meantime, we will continue to work with government to do all we can to ensure the thousands of people employed in this sector are ready for work and Britain gets back on the move.”

Industry reaction

Sue Robinson, director of the NFDA, said: “The majority of franchised dealerships’ showrooms were closed for a week or longer in the second half of March which is when a large percentage of new cars are registered. As a result, the decline in new car sales does not come as a surprise.

“NFDA is working closely with franchised retailers and industry partners to mitigate the effect of COVID-19 through lobbying the Government for support on issues such as the inclusion of commissions in the Job Retention Scheme, workshop opening for key workers, MOT exemption and FCA fees for motor retailers. We remain hopeful that the market will recover and franchised retailers will be able to continue their support for consumers on their vehicle purchasing and servicing needs.”

Seán Kemple, director of sales at Close Brothers Motor Finance, said: “There’s no doubt we’re in an entirely new landscape for dealers and consumers alike. Currently, we’re seeing trends sustain in terms of popular vehicle makes and models, but with dealerships having to close their doors to protect their staff and prospective buyers, the future is unclear.

“Manufacturers, dealers, and lenders need to work in tandem to support the industry and the national effort; we’re already hearing good news stories of manufacturers producing essential medical equipment and fleets being used to transport key workers. Until we have more certainty for the future, education and communication around the current circumstances are vital – taking advantage of government support and adjusting to new ways of working are the first steps in the journey.”

Michael Woodward, UK automotive lead at Deloitte, said: “Like almost every other industry, COVID-19 has had a significant impact on UK automotive. Since the outbreak began, supply chains globally have been under increasing pressure and, following the UK’s current lockdown restrictions, dealerships have now closed their doors and manufacturers halted production.

“During this period of economic uncertainty, the industry is beginning to introduce flexible measures around payments to protect the interests of consumers. These include contract extensions, payment deferrals, interim loans and refinancing packages.

“In addition to supporting consumers, many across the automotive industry have also come together to serve the national interest; be it redirecting factory resources to support ventilator production or donating vehicles for the distribution of food and medical supplies. We should all be proud of the way the automotive industry have come together to meet this challenge head-on.”

Karen Hilton, heycar’s chief commercial officer, said: “Such a dramatic decline in registrations is proof that COVID-19 will ricochet through the industry for weeks and months ahead. However, the current situation offers an opportunity for dealers to become fully digitally operational and nurture customers online. And we are already seeing this come into practice. Dealers are using this time wisely to accelerate their digital capabilities which is allowing them to maintain a level of trading at this difficult time.

“With strong levels of stock in the used market, heycar is working with all our dealers to see how we can help them at this time. We know more people are looking online than ever right now, browsing and deciding what their next car is going to be when better times return. The heycar site has seen record traffic levels since the country went into lockdown.”

James Hind, chief executive of carwow, said: “The decrease in consumers browsing carwow has been far less severe than the market drop, and our research has shown 54% of consumers say they are still planning on buying a new car despite social distancing measures, so there’s hope for the industry of pent-up demand leading to a bounce-back after lockdown ends.

“Most dealers are operating remotely, and with few delivering cars right now, there are orders being placed for delivery after lockdown. We’ve seen many manufacturers increasing their discounts on new cars for Q2, and with more attractive finance rates, so for those who are able, it’s a great time to buy.”

Ian Plummer, commercial director at Auto Trader, said: “Clearly the current global pandemic is hitting everyone hard, especially the automotive industry, as retailers have been forced to temporarily close their doors. Therefore sales, which had started strongly prior to the lockdown, have been largely halted in a month which normally sees the greatest number of transactions in the year. However, our market observations do offer a more reassuring picture for the future, as people are still actively looking for their next car.

“Whilst they may not be able to visit a physical forecourt, consumers are clearly visiting digital showrooms in anticipation for when they can. It’s for that reason we’re confident that when the current restrictions have been lifted the market will bounce back relatively quickly, similar to what’s currently being observed in China.

“To ensure they’re in the very best possible position when life returns to ‘normality’, it’s more important than ever retailers are highly visible online and capturing this consumer demand.”

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