The April UK market in brief
- Significance: 19.8% y/y drop to 152,076 units, although still up marginally in the YTD.
- Implications: Three fewer working days than April 2016 and the introduction of new vehicle excise duty rates.
- Outlook: Although sales decline this month had been expected, IHS Markit anticipates declines will continue. Car market to fall by 4.0% y/y to 2.585 million units.
FOLLOWING a record March, passenger car registrations have plunged during April, according to Society of Motor Manufacturers and Traders (SMMT) data.
The number of cars registered has fallen by 19.8% year on year (y/y) to 152,076 units.
This decline has affected all the customer categories this month:
- Fleet registrations made up the lion share of the market with 86,678 units, although this fell by 12.3% y/y;
- Registrations to businesses also fell by 21.0% y/y to 5,468 units;
- However, the worst performance was from private customers; demand tumbled by 28.4% y/y to 59,912 units.
Despite the rate of decline this month, growth in the year to date (YTD) has remained positive with registrations up by 1.1% y/y to 972,092 units during January to April.
Brand performance – Merc climbs up
Ford remained the leader with 16,183 units registered, although this was a fall of 30.6% y/y. The drag was caused by the top-selling Fiesta, which sold 4,957 units, down 37.4% y/y, and the Focus in fifth with 3,421 units, a decline of 38.5% y/y. Despite the fall in the YTD, Ford continued to show positive growth in the YTD with an increase of 3.0% y/y to 120,707 units.
The substantial fall in the market this month has resulted in a shake-up further down the brand chart.
The most prominent of these was Mercedes becoming the second biggest selling brand in April as it bucked the overall market trend with gain of 10.5% y/y to 13,345 units:
- C-Class and A-Class were the third and fourth best selling models
Third was Audi, dipping by 4.2% y/y to 13,094 units supported by A3 volumes; fourth BMW with an increase of 2.7% y/y to 11,277 units underpinned by the 1 Series.
Further down the order, key mainstream brands suffered falls of a similar magnitude to Ford.
Vauxhall fell 33.1% y/y to 10,732 units in fifth. Although its Astra appeared in the top-10 model chart, this model has fallen 9.0% y/y to 3,346 units, while the Corsa has dropped out altogether in April.
Volkswagen in sixth was another to suffer a poor showing with a contraction of 41.0% y/y to 9,954 units; big falls were suffered by its Golf and Polo.
Nissan also fell by a market-matching 19.8% y/y to 8,041 units to seventh despite the second best selling model, its Qashqai crossover, holding firm.
The remainder of the top 10 was made up of Hyundai, Kia and Skoda, all of which saw modest falls.
What is the outlook for leasing brokers?
The drop in sales from March is down to a number of reasons. One of those has affected a number of European markets this month: fewer working days. As well as one less working day due to calendar impact, a further reduction of two working days has been caused by Easter falling in April during 2017 rather than March last year. However, this is a correction after two additional working days were noted last month.
Even so, taking this factor into account, it is highly likely that the UK passenger car market would not have grown otherwise if each lost day is worth around a 5% reduction in growth.
Another factor that helped boost registrations in March was the change to road tax (VED). Along with customers pulling sales forward, this may have also been brought about by dealers and OEMs pre-registering vehicles.
Within the data, there are also some other interesting changes. During April, there has been a slump in diesel registrations of 27.3% y/y to 68,306 units versus petrol which fell by 13.1% y/y to 77,497 units and alternative fuel vehicles which dipped by just 1.3% y/y to 6,273 units.
Although this negative diesel trend has been taking place for a while – a fall of 6.4% y/y recorded in the YTD versus a gain of 6.8% y/y for petrol – matters are unlikely to be being helped by the negative media attention that it has received and the misunderstandings related to the future of this fuel type.
Although the decline in sales this month had been expected, looking forward to the remainder of the year, IHS Markit anticipates that declines will continue after hitting record levels in recent years.
For 2017, we expect the passenger car market to fall by 4.0% y/y to 2.585 million units, while further declines are expected until the end of the decade.
Among the challenges the UK car market faces are those that stem from the Brexit negotiations and the impact that this has on the economy, as well as a change in the dynamic of the market place if greater regulations and oversight is taken on the personal contract purchase (PCP) finance market.