New car registrations fall as UK sector reopens

According to the Society of Motor Manufacturers and Traders, there were 145,377 new car registrations last month, a 34.9% year-on-year decline. The weak performance was attributed to uncertain consumer confidence, as well as Welsh and Scottish car showrooms remaining shut for most of June. The reopening in England was also gradual, one in five showrooms staying shut during the month.

June’s decline was, however, an improvement on May’s historic slump of 89.0%.

Private sales were down 19.2%, with pre-lockdown orders resulting in 72,827 registrations. Fleet sales fell 45.2%, to 69,498.

In the year to date, there were just 653,502 new car registrations, down 48.5% on the same period a year earlier and the lowest level since 1971. The SMMT estimates that around 240,000 private sales have been lost because of lockdown measures.

Mike Hawes, SMMT chief executive, said: “While it’s welcome to see demand rise above the rock bottom levels we saw during lockdown, this is not a recovery and barely a restart. Many of June’s registrations could be attributed to customers finally being able to collect their pre-pandemic orders, and appetite for significant spending remains questionable.”

He called on the government to “boost” the economy as it emerged from lockdown, arguing: “Otherwise it runs the risk of losing billions more in revenue from this critical sector at a time when the public purse needs it more than ever.”

The SMMT said there had been an estimated £1.1bn reduction in VAT receipts during lockdown because of lost car sales.

Howard Archer, chief economist adviser to the EY Item Club, said the figures showed “relative relief” for the sector after dismal performances in May and April, when new car registrations were just 20,247 and 4,321 respectively.

But he added: “Nevertheless, June’s year-on-year drop was still substantial and was higher than what had been seen in February and January, before lockdown restrictions were in force – even allowing for the fact showrooms in Wales and Scotland were not allowed to open until 22 and 29 June respectively.

“The current fundamentals for consumer spending have taken a downturn as a result of coronavirus, and they are likely to remain under pressure in the near term at least. Many people have already lost their jobs, despite the supportive government measures.

“Consumers are likely to adopt a cautious approach to discretionary purchases given the current economic environment.”