UK car market growth to slow in 2014, predicts Deloitte
The SMMT data shows that 2,264,737 cars were registered in the UK last year; up 10.8% on 2012.
Within the fleet sector, full-year registrations rose 5.7% from 1,025,501 to 1,084,279 units. Private registrations rose 15.6% but it was actually the sub-25 “business” sector that saw the highest percentage increase, with a rise of 18.0% from 89,668 to 105,836 units.
In response, David Raistrick said: ‘The UK new car market has continued its astonishing sequence of comparative monthly growth, extending the run of good news to 22 months. This is an impressive achievement over a period when the other major European markets have been unable to maintain any growth without government intervention. As we enter 2014, can the UK success story continue?
‘The likely answer is yes, but not at the rate of growth achieved over the past 12 months. With new car sales up by over 10% on 2012, it would not be realistic to expect similar levels to be repeated in the next year. There are a number of reasons for this. Most obvious is that the markets in continental Europe are starting to show some improvement. This will potentially lead to a reduction in the number of vehicles being directed into the UK new car market, as the European sectors start to pick up some of the slack.
‘While there is an improvement in European markets, they are unlikely to return to their pre-2013 levels in 2014, with the recovery expected to be more gradual over the next 24 – 36 months. The UK has also benefited from more incentives and low finance deals being offered to new car purchasers than in many other European locations. This is likely to continue into 2014 and may result in there being a balancing of car prices over the next 12 months as supply and demand become more aligned in the UK.
‘There are always winners and losers at times of economic difficulty and the UK car market has definitely outperformed all expectations over the past year. There are likely to be pressures building within the wider UK car market with increasing used car stocks becoming available. This could become a challenge as customers weigh up the monthly cost differential between purchasing a new car as against a nearly new vehicle. The expectation that new car finance rates will remain low in relative terms, which is partially due to manufacturer support, will continue to provide significant competition to the wider used car market.
‘With this in mind, 2014 may see a slight downward movement in residual values as the market adjusts to a greater volume of nearly new car stock. Finally, it is difficult to forecast with any certainty where 2014 will end but the Deloitte automotive team’s analysis is for car sales to remain firmly over two million, and probably in excess of 2.2 million, though definitely below 2.4 million.’