Hopes for bumper September car sales are dashed: New registrations slide to the lowest level for plate-change month on record
- Registrations in September fell 4.4% annually with 328,041 new cars sold
- The weakest performance since dual number plate system launched in 1999
- The industry had pinned hopes on strong September sales performance that would suggest it could bounce back from the Covid-19 pandemic
- Trade body bosses said the figures show the sector is ‘not in recovery’
Hopes for a surge in car registrations last month to help the motor industry recover from the coronavirus pandemic have been dashed as official figures confirmed the lowest recorded September in 21 years.
Registrations are down 4.4 per cent annually with 328,041 new 70 plate models sold – the lowest figure since a second annual plate change was introduced for the ninth month in 1999.
Trade body bosses warn the figures show the sector is ‘not in recovery’ and failure to control the coronavirus crisis and strike a trade deal with the European Union will have a knock-on effect for consumer demand, making the short-term future of the sector ‘very challenging indeed’.
‘Not in recovery’: Hopes for a bumper registrations performance last month have been quashed as figures released today show the weakest September since the dual number plate system was introduced in 1999
The volume of registrations in September 2020 is almost 16 per cent lower than the 10-year average of 390,000 for the month, official data from the Society of Motor Manufacturers shows.
The disappointing performance in the 70-plate month follows low volumes recorded in September 2019 and 2018, when regulatory changes surrounding the latest emissions testing regime delayed vehicle certification and caused supply problems across Europe.
Registrations in September 2020 are ‘well short of previous years’ and follow an ‘erratic period of market performance since emerging from lockdown’, the SMMT said.
There were dramatic declines in sales of diesel and petrol cars, which fell by almost 40 per cent and over 20 per cent respectively last month.
September’s damp squib is now officially the weakest performance since the dual number plate system was launched over two decades ago – an incentive launched by the Government and industry in a bid to stir up extra demand for new cars.
While it is officially the worst September for car registrations for over two decades, sales were on-par with the previous two years – which were both restricted by the introduction of new emissions test regulations
Private sales only marginally down as surge in demand for EVs continues
While the headline stats suggest a depressing month for dealers, the numbers show that private registrations fell by just 1.1 per cent in September, as many drivers still headed to showrooms and online to take advantage of manufacturer deals on new motors.
Sue Robinson, chief executive of the National Franchised Dealers Association, said that franchised dealers had seen ‘strong consumer demand in September’ with ‘nearly all dealerships open and good deals available on new plate vehicles’, but pandemic restrictions had limited the availability of cars in the country.
‘Dealers have been experiencing high levels of enquiries, but consumer interest was partially offset by supply constraints that have affected a number of brands over the past weeks,’ she explained.
Diesel demand sank by almost 40% in the month, while petrol sales were down by more than a fifth. A surge in electric vehicle registrations did little to plug the hole left by the decline
September’s figures mean that for the year to date 1,243,656 new cars have been registered – down by a third on the first nine months of 2019.
Battery electric vehicles (BEV), plug-in hybrid (PHEV) and conventional hybrids (HEV) cars saw strong growth.
These zero and low-emission models accounted for more than one in 10 registrations in September, with demand for BEVs continuing to surge, up 184.3 per cent compared with September last year.
Sales of 21,903 electric cars in September accounted for a third of all 2020’s BEV registrations.
With BEV, PHEV and HEV combined seeing sales of 60,647, these eco-friendly cars easily surpassed the 46,996 diesel registrations in the same month.
The Vauxhall Corsa (pictured) overtook the Ford Fiesta to become the UK best-selling model in September
But while demand for plug-in models remains the sole positive during a difficult 2020 for the automotive sector, not one electric car is among the top 10 most popular vehicles in September.
The best-selling car in was the Vauxhall Corsa, which overtook the usual favourite, the Ford Fiesta.
September was also a strong month for the Mercedes-Benz A-Class, VW Polo, Nissan Qashqai, Ford Puma and Volvo XC40, while the VW Golf, Mini and Ford Focus retained their reputations among the most bought cars among UK drivers.
Fewer ‘pre-registrations’ by car dealers impacted September sales
Michael Woodward, UK automotive lead at Deloitte, said the September performance could have been the result of manufacturer’s easing sales volume targets on their dealer networks, in light of the pandemic.
This has seen fewer dealers ‘pre-registering’ cars – a tactic where they register the vehicle in their name so that it appears in records as being sold to keep up with the car maker’s objectives.
By doing so, dealers can bolster their stock of used cars by advertising these motors as a ‘nearly-new’ models at reduced prices.
Fewer pre-registrations by dealers impacted registration volumes, according to Deloitte
Mr Woodward said dealers have actively refrained from doing this in September as manufacturers are being sympathetic to the hurdles faced during the pandemic.
‘The reduction in pre-registrations is good for OEMs [Original Equipment Manufacturers] and leasing companies.
‘It keeps new car prices high and hence the residual price of the used car when it comes back. This anticipated strengthening of residuals could allow leasing companies to reduce monthly lease costs or improve their profitability.
‘Dealers have commented about a shortage of ‘the right cars’ being available as OEMs have been conservative in their ramp up of production. Hopefully this will be resolved in following months.’
‘Bleakest period’ in UK auto sector’s history, says trade boss
SMMT chief executive Mike Hawes described the period as the ‘bleakest’ ever for the UK automotive sector
However, the SMMT warned that despite this growth there needs to be additional demand for electric cars if the government is to hit its ambitious targets for zero-emission vehicle registrations and a potential ban on the sale of new petrol, diesel and hybrid vehicles as early as 2030.
Describing the current situation as ‘one of the bleakest periods in the sector’s history’, SMMT chief executive, Mike Hawes, said: ‘During a torrid year, the automotive industry has demonstrated incredible resilience, but this is not a recovery.
‘Despite the boost of a new registration plate, new model introductions and attractive offers, this is still the poorest September since the two-plate system was introduced in 1999.
‘Unless the pandemic is controlled and economy-wide consumer and business confidence rebuilt, the short-term future looks very challenging indeed.’
Concerns are now mounting for jobs and the future of the industry, which faces a myriad challenges over the next quarter.
Brexit uncertainty and the threat of tariffs still hang overhead, which will likely see the price of new cars imported to the UK from the EU increase in price by an average of £1,800, according to the latest reports.
The shift towards zero emission-capable vehicles is also demanding huge investment from the sector, and stalling fleet renewal across all technologies is hampering efforts to meet climate change and air quality targets now.
Additionally, consumer and business confidence is threatened by the forthcoming end of the Government’s furlough scheme, an expected rise in unemployment and continuing restrictions on society as a result of the pandemic.
‘With little realistic prospect of recovering the 615,000 registrations lost so far in 2020, the sector now expects an overall 30.6 per cent market decline by the end of the year, equivalent to some £21.2billion in lost sales,’ the SMMT forecasts.
The price of new cars imported to the UK from the EU from 2021 are set to increase in price by an average of £1,800 as manufacturers pass on additional tariff costs to consumers