New car market crashes 97 per cent as lockdown shuts showrooms

New car registrations fell to their lowest level since 1946 as the coronavirus outbreak had a devastating impact on the UK car industry.

Data from the Society of Motor Manufacturers and Traders shows just 4,321 new cars were registered in April 2020, compared with 161,064 in the same month last year.

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That represents a 97 per cent decrease on last year and the worst results for dealerships since just after the Second World War.

SMMT chief executive Mike Hawes said the “exceptionally grim” figures were not surprising as the car retail industry has been brought to a virtual standstill by the pandemic and associated lockdown.

Worldwide halt

Car dealerships are among the many businesses forced to close during lockdown, all but halting their business, although some have continued to offer phone and online services.

Car production also stopped almost entirely across the globe due to the pandemic, with manufacturers only now slowly bringing their European plants back online.

The SMMT said that of the 4,321 registered in April, 70 per cent was companies stocking up their fleets, mostly through pre-lockdown orders. Most of the others were sold to help key workers and would have come via wholesalers or direct from the manufacturer rather than from a dealership.

For the first time, Tesla topped the SMMT’s best-sellers list, with 658 Model 3s registered, ahead of 367 Jaguar I-Paces. The perennial best-selling Ford Fiesta was not even in the top 10.

(Data: SMMT)(Data: SMMT)
(Data: SMMT)

Pent-up demand and public transport fears

Despite the inevitable sharp downturn in the market, some industry observers are predicting a post-lockdown spike in sales. Many online buying platforms have reported sharp increases in people registering interest in vehicles and some predict that more people will switch from public transport to private cars again in the wake of the virus’ spread.

Jim Holder, editorial director of What Car? said there was “a substantial amount of pent-up demand” for new cars. But he warned that longer-term the industry could face a slump in demand.

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He said: "What Car? has been polling visitors to its website throughout the crisis, with data suggesting that around one in five of visitors is ready to buy a car once lockdown lifts. However, there is also a clear trend that the number of visitors planning to buy in six months or more is declining, suggesting that consumer confidence is dropping and that the longer-term prospects for the industry are worrying."

Ian Plummer, commercial director at Auto Trader, commented: “Whilst the market is down significantly, our data does point to a market that has been paused, rather than stopped. Our research of over 3,000 consumers conducted last week showed that only two per cent have been put off from buying a new vehicle. In fact, 25 per cent said they wanted to buy a vehicle as soon as they could.

“The same research showed that 48 per cent of public transport users would be less likely to use it as a result of social distancing anxieties, and for the same reason, 56 per cent of driving licence holders who don’t currently own a vehicle would now consider buying one.”

Karen Hilton, chief commercial officer at online buying platform heycar, said its figures echoed those findings: “We have experienced a 50 per cent increase in website traffic from March to April. With the introduction of our new ‘register interest’ button beginning of April, we’ve also seen an 18 per cent surge in users submitting leads.

“Lockdown has also given people time to reflect on their way of life and we wouldn’t be surprised to see them increasingly opting for the safety and solitude of their vehicles post-lockdown rather than crowded buses or trains.”

Scrappage scheme

Seán Kemple, director of sales at Close Brothers Motor Finance, warned that while the new car market might enjoy an initial uplift, the wider economic impact of the pandemic could see more drivers looking for cheaper second-hand vehicles.

He said: “When the lockdown does begin to lift, we should see pent-up demand released, triggering a sharp rise in sales of the cars sitting in showrooms; we’ve already seen this in the European used car market as dealers review and reprice their stock after lockdown.

But after an inevitable uplift, the future is less certain. We know that in times of economic hardship, buyers often shift from new to used cars in order to get their hands on a more affordable vehicle. An appreciation for the greener world caused by lockdown may prompt a rise in AFV demand, or low oil prices could bolster the diesel market. More broadly, a newfound reticence to use public transport might boost demand for private cars.”

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And AA Cars’ James Fairclough predicted the Government could come under pressure to support the industry through incentives such as a scrappage scheme, a theory echoed by Jim Holder, who said: "We expect talk to turn to incentives soon ­– both from the industry's car makers themselves, but also potentially from Government, perhaps with an environmentally-focused scrappage scheme."

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