UK car sales motor ahead in February

Car sales moved up a gear in February, data published on Tuesday showed, reversing a five-month period of decline.

There were 81,969 new car registrations in February, according to the Society of Motor Manufacturers and Traders, a 1.4% improvement year-on-year. It was a reversal of January's 1.6% decline and marked the end of five consecutive months of falls.

Private new car registrations rose 4.3%, a significant improvement on the 5.5% average decline seen in the previous 12 months.

The rise was powered in part by strong demand for alternative-fuel vehicle, with sales rising 34% in February, the 22nd consecutive month of growth. Registrations of zero-emission electric cards more than doubled to 731 units.

Mike Hawes, chief executive of the SMMT, said: “Car makers have made huge commitments to bring to market an ever-increasing range of zero and ultra-low emission vehicles. These cars still only account for a fraction of the overall market, however, so if the UK is to achieve its electrification ambitions, a world-class package of incentives and infrastructure is needed.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “February’s rise is another reminder that households’ spending likely will keep growing in the first quarter, ensuring that a retrenchment of business spending due to Brexit risks won’t tip the economy into a recession.”

February is traditionally one of the quietest months of the year ahead for car sales, ahead of March’s number plate change, and there were fewer new car registrations compared to January.

“As a result,” said Tombs, “small shifts in the number of sales in February can lead to big, misleading changes in the year-over-year growth rate. What’s more, the recent pick up might simply reflect some consumers bringing forward purchases, fearing that further depreciation of sterling in the event of a no-deal Brexit would raise the cost of cars later this year.”

However, Pantheon Macroeconomics still expects sales to continue recovering in the second half “if, as we expect, uncertainty fades and growth in real incomes remains relatively strong”.