It had to happen at some point, but new car registrations in the UK have dipped for the first time in October after 43 months of consecutive growth. Sure, the reduction is only 1.1%, but it is a reduction nonetheless and with almost four years of upwards movement, it was news that the industry knew was only a matter of time.
Small drop aside, there is realistically little to worry about. For quite some time now the SMMT has been stating that the good times couldn’t last forever and the reality was simply that growth would slow towards more of a plateau. This is more of a natural situation for the market; it can’t grow indefinitely and some months are never going to be as good for registrations as others. Getting back into a period of peaks and troughs around a common mean simply shows that the market is genuinely back to rude health.
But having been chasing volume for so long, the question needs to be asked as to whether manufacturers can continue pushing volume targets as aggressively as they have been doing. Quite simply, dealers are already pre-registering to high heaven, so pushing for more volume will only compound this problem and reflect an ever-increasingly inaccurate picture of the UK’s car market.
As noted in the news in brief, franchised servicing outlet numbers have, and continue to decline in numbers. Dealers need to find profit from somewhere, and not a great deal of it is coming from new car sales for many brands. If they’re not hitting their bonuses, they have a problem. It’s why aftersales needs to have a renaissance in the franchised sector – it’s a virtuous cycle of customer contact, profit and future sales opportunity.
Getting back to situation where increases in monthly volume are more modest, or even replaced by decreases, isn’t a terrible thing in itself. It’ll be how the industry responds to this ‘new old fashioned way’ of operating, in terms of the way they make money, which will define the future strength of the sector.