UK passenger car sales continue growth in 2013 by rising 11.5% y/y during January

The UK passenger car market has opened its account for 2013 by continuing the positivity witnessed over much of the course of 2012. According to the latest data published by the Society of Motor Manufacturers and Traders (SMMT), registrations have increased by 11.5% year-on-year (y/y) to 143,643 units during January. The main driver of this growth has been private demand, up by 15.9% y/y to 61,075 units. Fleet sales have also seen a smaller improvement, increasing by 6.0% y/y, although this helped to keep its market share above half at 52.4% y/y. Demand from businesses also surged this month, rising 40.4% y/y to 7,357 units.

From a brand perspective, Ford regained its position as the largest selling brand as its registrations reached 19,640 units, although this was a decline of 2.1% y/y. It was helped to this position by the Fiesta and Focus, which were the top selling models in January. A far more buoyant performance was seen by its close rival, Vauxhall. The General Motors (GM)-owned brand's sales jumped 50.7% y/y to 18,253 units, as the Astra and the Corsa ended the month in third and fourth spot. The Volkswagen (VW) brand in third place witnessed a flat month as its sales dipped by 0.25% y/y to 11,560 units, despite the Golf and the Polo ending January in sixth and eighth. Other strong gainers this month included fourth placed Audi, whose 15% y/y gain was the largest of the German premium brands which languished further down the top-ten chart. Nissan went on a charge as well, as its sales jumped 50.8% y/y thanks to the Qashqai and Juke sport utility vehicles (SUVs) which helped it sell 9,477 units in fifth. Another notable gainer this month has been tenth-placed Hyundai which saw its sales rise 19.6% y/y to 4,863 units.

Outlook and implications

Although in outright terms the state of the UK economy is hardly rosy, it remains more stable than many of its peers across Western Europe such as France, Spain and Italy. The country has been able to manage its public spending cuts over a longer timescale and job cuts have not been as sudden or as deep in those economies. This has helped maintain a thin veneer of relative consumer confidence. Further helping matters are the significant incentives offered by automakers to ensure a turnover of product, which include money off deals and finance deals that make it very attractive for those with the means to replace existing vehicles. Indeed, the SMMT has said there is also some suggestion that those who have delayed purchases in the past are now deciding to reap the benefits now. Automakers may also be undertaking pre-registrations of some vehicles either at the behest of manufacturers or as a way of meeting targets, which will be then sold as nearly new to customers less choosy about specification.

Looking forward, the SMMT has recently offered its latest guidance for 2013. It is now expecting new car registrations to reach 2.057 million units, an improvement of 0.6% on the 2.044 million units sold in 2012. At that point, the then-chief executive of the SMMT Paul Everitt said in a statement: "We anticipate the market will hold firm, with manufacturers and dealers working hard to deliver quality and value to motorists." IHS Automotive is more bearish in its expectations, with sales anticipated to dip to 1.99 million, a slide of 2.8% y/y. This is due to the ongoing pressures on the economy and customers within, as the country flirts with the prospect of a triple-dip recession. There is also the major fiscal tightening that is still being enacted by and which is now expected to be completed by fiscal year (FY) 2017/18. However, in the favour of the consumer no interest rate increases are expected before 2015 as the Bank of England attempts to offset the economic weakness.