New car registrations in the UK have been encouraging to the automotive industry and to the analysts who track the economic climate. According to the Society of Motor Manufacturers and Traders (SMMT), which represents UK automobile makers, the number of new car registrations in May this year rose by 8% from 2011. It was the third monthly increase in a row and the largest in two years. It was also 6% higher than SMMT’s forecast for May.
Chief Executive for SMMT Paul Everitt said the figures suggest that consumer confidence is on the rise, in spite of current eurozone woes. He said the increased demand for private transportation is especially encouraging; in the recent past demand has been chiefly for fleet cars. Companies and their employees have been trading in cars for the tax benefits associated with new low carbon emission vehicles.
Purchase of private cars was up by 14% in May, while new fleet car purchases were up by only 5% from last year. Part of the reason is undoubtedly the incentives offered by carmakers, i.e. discounts and affordable financing, to draw buyers into their showrooms. Overall the news is positive, but analysts are also warning that the picture may change again during the last half of 2012 and onwards.
There is the expected increase in fuel duty, as well as the ongoing wage crunch and overall unemployment figures to contend with. Opposed to these negatives, the substantial drop in oil prices is a big positive, but that too could reverse itself in the coming months. Everitt noted too that this summer’s Games will probably divert a lot of potential buyers from the showrooms.
