New car sales accelerate to record high for second year

Annual new car sales have reached an all-time high for a second consecutive year
Annual new car sales have reached an all-time high for a second consecutive year

Annual new car sales have reached an all-time high for a second consecutive year – but are expected to fall in 2017, according to an industry trade association.

Some 2.69 million cars were registered in the UK last year, the Society of Motor Manufacturers and Traders (SMMT) said.

This is up by 2.3% on 2015.

The organisation’s chief executive, Mike Hawes, said growth was due to “very strong” consumer confidence, low interest finance packages and a raft of new models.

“P eople are obviously driven by new technologies,” he told reporters at a briefing in central London.

“Increasingly people do want to see connectivity. People are wedded to mobile phones. They expect equally to have that connectivity on the move.”

Mr Hawes predicted that registrations would decline by “between 5% or 6%” in 2017, but said this was still ” historically an incredibly high level” and insisted it would not represent “a collapse in the market”.

He said five consecutive years of increased sales has been fuelled by latent demand built up during the recession.

“We have to recognise that growth can’t be inexorable,” he said. “There is undoubtedly a levelling off.”

More than 85% of new cars bought in the UK are imported and their cost is “gradually going up” due to the reduction in the value of the pound, Mr Hawes said.

Although manufacturers hedge against currency risk and absorb some of the additional costs, there have been price rises of “2% or 3%”, he added.

Mr Hawes expects 2017 car sales to be “lumpy”, adding that, although the triggering of Article 50 for the UK to leave the EU would “probably not immediately” have an impact on purchasing patterns, he acknowledged that “we have not seen the full effects of Brexit”.

Jim Holder, editorial director of magazines Autocar and What Car?, described the 2016 figures as “very positive”, saying “the expected Brexit bump was mostly negated”.

He told the Press Association that some people within the automotive industry are warning that sales could drop by 10%-15% this year, so manufacturers would be “very pleased” if the SMMT’s prediction of a 5% or 6% drop-off proved accurate.

He added: “When you’re at record levels and you bounce down, I think that’s reasonable.”

:: These are the UK’s new car registration figures for recent years:

2012: 2,044,609

2013: 2,264,737

2014: 2,476,435

2015: 2,633,503

2016: 2,692,786

December was the second month of 2016 when sales decreased, down 1.1% on the same month in 2015.

Fleets were responsible for most of the annual growth, with demand up 4.8% to 1.38 million.

Private registrations were down 0.2% to 1.21 million.

The market share of petrol cars rose from 48.8% to 49%, while alternatively fuelled vehicles such as hybrids and pure electric cars went from 2.8% to 3.3%.

Diesel cars were down from 48.5% to 47.7%.

In September 2015 US regulators told Volkswagen to recall 482,000 diesel cars after discovering they contained illegal defeat devices.

The Environmental Protection Agency said the software allowed cars to release fewer smog-causing pollutants during tests than in real-world driving conditions.

It then emerged that about 11 million cars worldwide were fitted with the software, including 1.2 million in the UK.

SMMT figures show that sales of Volkswagen cars in the UK suffered their first year-on-year fall this decade in 2016, down by 7.5% on the previous year.

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