The annual report from the Society of Motor Manufacturers and Traders (SMMT) was released yesterday, and the news is almost universally good – the study shows that new vehicle registrations reached their highest point ever last year. 2,663,503 new cars were registered during 2015, a 6.3% rise from the previous year – beating last year’s expectations. This makes 2015 the fourth consecutive year that the number of new registrations have risen, and is also an increase on the previous record for overall car registrations – the 2,579,050 new vehicles registered back in 2003.
Although new registrations are not necessarily the same as sales, particularly in light of the large numbers of pre-registered cars ordered by franchised dealers during the year, this figure is a strong indicator that consumer confidence in the automotive sector is continuing to strengthen. Growth was recorded in every sector of the market and for every type of vehicle, including petrol, diesel, hybrid and electric models. Registrations for the latter rose by an extraordinary 40.3%, giving electric vehicles their largest ever UK market share of 2.8%.
The SMMT put the ongoing growth in registrations down to a high level of consumer and business confidence, along with modest inflation and generous car financing deals. Another major boost was provided by vigorous demand from fleet buyers; registrations in the business sector increased by 11.8% to 1.3 million – another new record in itself.
Commercial growth was accompanied by a strong performance from British-based manufacturing. A previous SMMT survey revealed that 1,169,408 units were built in the nine months to September 2015 – a 3.3% rise from the same period in 2014. The organisation has predicted that by 2020, production will exceed the previous high points of the 1970s.
The total number of registrations was helped by a particularly strong December, when 180,077 new cars were registered during what is usually a very quiet month. This bodes well for continued growth in 2016; certainly the SMMT’s chief executive Mike Hawes is ebullient about this year’s prospects. “The past four years have seen a remarkable period of sustained growth, and the outlook remains positive with every reason to expect the market to hold broadly steady in 2016”, he commented. Sue Robinson, director of the National Franchised Dealers’ Association, was equally positive, noting that new vehicles sold would all need servicing and that this would help to keep the market buoyant in 2016.
Although the outlook for the British car industry is generally rosy, there are a couple of reasons for caution. Manufacturers continue to pursue ever-larger registration volume targets, placing greater pressure on franchised dealers to pre-register more cars at a time when the total number of franchised dealers is decreasing. As well as putting retailers in a difficult position, this may further distort the relationship between new registrations and sales, giving an unclear picture of the market’s true state. To meet their targets, however, dealers have access to a greater variety of ways to convert sales than ever before; the all-encompassing presence of the internet in consumers’ lives can and will lead to ever greater online marketing and sales opportunities for retailers.