UK automotive sector enters 2015 full of optimism
7 January 2015
Commenting on the latest car registration figures from the Society of Motor Manufacturers and Traders, which show a 8.7% increase to 166,198 units compared with December 2013, David Raistrick, UK Automotive Leader at Deloitte said:
“At the beginning of 2014, it was clear that we were going to see healthy levels of growth in new vehicle registrations, although the final numbers of almost 2.5m have surpassed everyone’s expectations, especially given the difficulties experienced in the mainstream European markets.
“There is naturally going to come a time when the UK new car market’s record run of comparative monthly growth will come to an end. However, when this point comes, and our analysis suggests it will be 2015 with a plateau having now been reached, it is important that the market reaction is measured. A levelling off in new registrations should be balanced against the reality that as recently as only three years ago, new cars sales were less than 1.95 million, and the European market has been in free fall over this period. Equally, there is a finite limit to the numbers of new cars required every year, no matter how buoyant the markets may be. Current levels are hugely positive, and flat sales this coming year, or even a slight reduction, should still be seen as a positive position, and not a tale of woe.
“A number of positive signs remain for the new car market. There is no immediate indication that finance costs will increase, with the possibility of an interest rate rise receding as inflation remains below the Bank of England’s target. Higher levels of employment should give more private buyers the confidence to make a purchase. Finally, the continuing troubles in the Eurozone will encourage manufacturers to support the UK’s buoyant market.
“In the year ahead, it will be interesting to see whether the falling price of petrol and diesel impacts the alternatively fuelled vehicle market. It will also be worth watching whether changes in the pension industry, which will give people of retirement age full access to their pension fund, provide a further boost to the sector. Finally, it is possible we could see some pressure on residual values given the likely increase of nearly new stock hitting the used market.
“Taking all of these matters into account, our analysis suggests that the UK’s new car market should continue to be a success story over the next twelve months, though it is unlikely that the rate of growth achieved over the past 34 months will continue. Our forecast for the next 12 months is for new registration figures to broadly match, or possibly even be slightly less than 2014. This will be across both the fleet and private markets. Private buyers will still largely be relying on financial products to fund their purchases, albeit with PPI pay-outs and similar providing assistance. We see no reason for this to change over the coming year.
“The 2014 figures are great news, and more of the same or even slightly less in 2015, should be seen in an equally positive light.”
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.