Car Sales Increase But Industry Warns About False Dawn

By KRoock74 from Wikimedia Commons

The abrupt decline in car sales appears to have been halted with a 10 percent increase in new car registrations last Month. However, the industry is warning that the recorded increase is an anomaly.

Early numbers on sales of new cars during the past month recorded a huge increase following 12 consecutive months of decline.

According to the provisional data that was collated by the , there were 168,000 new cars that were registered in April, as compared with the 152,000 during the same month in the past year.

During the first three months of this year, the sales were down by 12.4 percent as motorists backed away from splurging on cars. A mixture of uncertainty regarding government policy towards diesel vehicles and economic risks that are related to Brexit was blamed for the decline.

However, the sales in the first three months of 2017 were boosted by drivers who were rushing to beat the imposition of new Vehicle Excise Duties (VED) which were imposed after March.

This indicated that the sales in April 2017 were abnormally low as the new rules of the VED “pulled forward” the sales into the first three months of last year.

Some of the biggest car dealers in the United Kingdom warned against thinking that the sales increase for April signified a “new normal” for the British car market.

The chief executive of Marshall Motor Group, Daksh Gupta, stated: “This April’s figures are flattered by soft comparisons for last year.

“It’s not a new normal.”

Gupta added that the way that the calendar falls with Easter suggested that there were more selling days this year, thus flattering the performance.

Gupta stated: “I’m quite surprised at the 10 percent increase – according to our calculations that means the industry is at about 9 percent up for the year to date.

“It suggests that the market for the full year could be down only 2pc or 3pc on last year – which was down 5.6 percent on the previous year’s sales of 2.7m, which was an all-time record.”

The chief executive of dealer group Pendragon, Trevor Finn, said that the effect of VED changes had skewed the figures for the previous year so much that the comparison was insignificant.

Referring to the 189,000 cars that were sold in the same month two years ago, he stated: “Look at April of 2016 – which was an all-time record – to get an idea of what’s going on in the market.”

Finn added that the whole of the first half of last year was “so distorted by VED” that it is considered far too early to see a clear a picture of the real state of car sales.

He continued: “April’s sales might be a step back to normality but it’s only a step. It’s not that the market’s current size is the difficulty, it’s the size of the correction that is the difficulty.”

The early figures of the SMMT – which will be adjusted as the final numbers on registrations come in – revealed that the sales of petrol cars increased by nearly 40 percent on an annual basis to 107,000 last April, while diesel dropped by 25 percent to 50,000, with alternatively fuelled vehicles such as hybrid and electric cars experiencing a sales increase of 50 percent to 9,000 in the month.