Strong August UK car sales

August UK car sales grew for the 30th consecutive month, as private and fleet consumer confidence surged, said the Society of Motor Manufacturers and Traders (SMMT).

Consumer confidence has been improving across the market, with strong growth in the business, fleet and private sectors.

The surge in private registrations has been particularly impressive, with 1.15 million new cars sold during the past 12 months, compared to 840,000 units during the 12-month period ending in March 2012.

Favorable finance deals have helped push growth in private demand, says SMMT, with purchasers taking advantage of PCPs (Personal Contract Purchase offers).

The difference between PCP and HP

In a Personal Contract Purchase offer, the customer pays the deposit at the beginning, as in an HP (Hire Purchase), and then a fixed amount each month. There is a deferred amount or ‘balloon’ (final balance) payment at the end.

In an HP deal, the customer owns the vehicle at the end, there is no other option. In PCP deals, however, the purchaser can choose whether to make that final payment. That is why monthly repayments are cheaper on PCP deals.

New Car Registrations UK

(Data Source: SMMT)

August best sellers

The best-selling cars in August, in order, were:

  • Ford Fiesta: 4,657 units sold.
  • Ford Focus: 2,740.
  • Vauxhall Corsa: 2,435. (Vauxhall belongs to General Motors)

    Ford Fiesta
    Ford Fiesta, the best selling car in August.
  • Volkswagen Golf: 2,376.
  • Vauxhall Astra: 2,043.
  • Audi A3: 1,641.
  • Volkswagen Polo: 1,299.
  • Fiat 500: 1,203.
  • Vauxhall Insignia. 1,201.
  • Nissan Qashqai: 1,154.

Improved economic environment

The SMMT wrote:

“Against a backdrop of improving economic conditions, the number of UK citizens in employment increased by over one million between Q1 2012 and Q1 2014 – giving individual buyers greater confidence to commit to a new car.”

SMMT Chief Executive, Mike Hawes, said:

“New car registrations reached two-and-a-half years of consecutive monthly growth in August, as confident private and fleet consumers continued to snap up enticing deals on a wealth of advanced new products.”

“The UK’s performance in the context of Europe is particularly impressive, with growth consistently ahead of the rest of the EU for the past two years. As the UK market starts to find its natural level, we expect to see the growth level off during coming months.”

Historically, August is a quiet month for UK car sales. It comes just before one of the 6-monthly registration changes which push up car sales as shoppers want the latest license plate numbers.

Deloitte sees continued growth

David Raistrick, UK Automotive Leader at Deloitte, believes the current growth trend in UK new car sales will continue. He cannot see manufacturers moving their focus onto Europe for the moment, as growth in other parts of the EU are way behind that of the UK.

With the Eurozone facing a serious threat of deflation, it is likely European markets will slow further, as consumers postpone purchases because they expect prices to drop.

Mr. Raistrick sees production being aimed at the UK market, which is currently and likely to continue being buoyant.

Mr. Raistrick said:

“Aside from a potential interest rate rise, the biggest challenge facing the automotive retail sector will be the impact of the increasing numbers of nearly new used vehicles returning to the market. This could detrimentally affect residual values with the knock on effect that the used vehicle purchase becomes a more competitive proposition – bringing an element of balance back to the industry. New cars remain exceptionally good value as a result of manufacturer incentives and the historically low finance rates.”

It is interesting to note that the sales of diesel cars continue outpacing those of petrol-driven (gasoline) vehicles, even among private consumers.

US August vehicle sales were the highest since January 2006.