Fleet registrations instrumental to longest ever period of growth

The new car market grew 12% in February, with 76,958 cars registered and fleet and business registrations accounting for 59.1% of the market, with 45,519 units.

It was the 36th consecutive month of growth, marking the UK's first three straight years of increases, according to the Society of Motor Manufacturers and Traders (SMMT).

The UK car market's sustained expansion is the longest ever seen, beating the previous record of 26 months set in the late 1980s.

The number of new cars registered has risen every month since March 2012, as the UK continues to bounce back from the recession and consumer demand has been driven by exciting new products and attractive finance deals.

Year-to-date figures reveal that 143,287 registrations for fleet and business out of 241,814 cars registered overall. That equates to a market share of 59.2% compared to 54.7% (122,118 units) for the same period last year – a 17.4% increase.

Mike Hawes, SMMT Chief Executive, said: "Three years of continuous growth in the new car market is remarkable and reflects the strong upturn in the confidence of UK car buyers since the recession.

"Registrations of fleet and business cars have outpaced the private market in February, reflecting the increased business confidence across the UK.

“With most fleet car buyers on a three-year replacement cycle, many of those cars purchased at the beginning of the current growth period are now due for replacement.

“Over the course of 2015, however, we are expecting a more stable market to emerge given there has already been an extended period of consistent growth."

“It is extremely positive to see the new car market has now achieved 36 consecutive months of growth – increasing 12.0% over the period” said Sue Robinson, director of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle retailers across the UK, commenting on the SMMT’s new car registration figures.

Robinson continued: “Consumers appear to be less reluctant to commit to new vehicles as employment prospects improve, and inflation comes down to a record-equalling low of 0.3% following cheaper fuel and lower energy prices.

“Increased sales are supported by strong manufacturer deals and low cost finance offers that are encouraging consumers to buy.

“We anticipate the market to continue to grow, and have strong expectations ahead of next month’s 15-plate change where customers will be likely to take advantage of a range of substantial discounts and savings, in addition to a variety of low rate finance packages being made available.”

Phil Harrold, automotive partner at PwC, said: "The three years of consecutive growth is really welcome news for the UK automotive industry and the direction of travel of these latest figures for new private car registrations is unsurprising given the relatively stable market and positive consumer sentiment.

“However, the size of the increase in fleet and business registrations is more surprising and is more a reflection of where we are in the cycle of business fleet replacement. Therefore we wouldn’t expect business registration increases to be maintained at this level over the next few months.

"With the positive state of the economy, low interest rates and credit available for consumers, we expect consumer confidence to remain high.

"The forthcoming election and continuing instability in the Eurozone are the only potential clouds on the horizon but we expect the automotive sector to continue being one of the success stories of the UK economy, including a significant uptick in March figures as 15 registration plates roll out of dealerships."

David Raistrick, UK automotive leader at Deloitte said: “The run of monthly comparative growth began back in March 2012 and has now reached three years without, on the surface, any immediate signs of coming to an end. 

"However, there was an indication in January that, whilst the total new car sales maintained the trend, the momentum provided by the private consumer may be running out of steam. 

"Indeed, the 5.1% fall in sales was the first comparative monthly fall since October 2012 and taken with today’s figures, it suggests that 2015 will require a boost from the business and fleet sector to maintain the good news story.

“The continued rise of salary sacrifice schemes plays a part here and is one of the primary growth areas in the fleet sector. Ever-increasing numbers of employees opting to take a new vehicle rather than purchasing a replacement car from the used car market.

“There are a number of factors which will be affecting the private market, the most obvious one being the number of new cars sold over the past three years.  With increasing numbers of these sales being on finance and personal contract purchase plans, with minimum terms usually being 24 months, the significant number of private sales over the last 2 years will have taken many private buyers out of the current market. 

“This year also has seen significant new model announcements from major manufacturers which may have persuaded those private buyers to delay until the launch of the 2015 version of their preferred vehicle.

"The effect of the forthcoming election also cannot be underestimated as this will be in the consumer’s mind, much as it is within the business community, with any uncertainty potentially leading to buying decisions being put on hold.

“Finally, whilst it must be remembered that total new vehicle registrations cannot keep increasing forever, the current level is a strong indicator of a very healthy sector.

"Flat, or even slightly negative, growth for the year as a whole should not be a cause for concern and is still a positive result for 2015.

"The UK new car market has, for the past three years, acted as a barometer for the recovery of the UK economy and consumer confidence. 

"It appears that the business and fleet sector may be the key to this being maintained.”