The UK new car market enjoyed a resurgence in sales in August, with registration figures increasing by 23.1 per cent year-on-year last month.
However, industry insiders have called the rise a ‘false economy’, with demand being boosted by a raft of dealer discounts on models that fail to meet a new emissions standard that came into force in September.
Huge showroom deals were offered last month on these cars as manufacturers will no longer be able to sell them as ‘new’ models with the latest 68 plate.
‘False economy’: August was a strong month for the new car industry, but experts warn that it come have big ramifications for demand in September – which is one of the market’s most important months
According to the new figures released by the Society of Motor Manufacturers and Traders, 94,094 vehicles were registered in August.
While it’s a significant increase on the 76,433 units sold in the same month last year, even the industry spokes group admitted this was due to a heavily discounted market.
It said: ‘…the market responded to regulatory changes, with cost-savvy buyers taking advantage of some compelling deals in what is always one of the year’s smallest months.’
That’s because brands have been offering huge discounts on particular models that will no longer be eligible to be sold as new cars because they don’t adhere to the new emissions regulations introduced by the EU.
The tougher emissions requirements are part of a new test called WLTP (Worldwide Harmonised Light Vehicle Test) – and some models fail to adhere to the stricter restrictions.
As a result, some vehicles were available with up to a third knocked off their list price, as dealers desperately looked to shift remaining stock.
All those cars that fail to meet the standards and can’t be sold with the new 68 plate introduced this month will have been pre-registered by dealers and offered as zero- or low-mileage used cars.
Mike Hawes, chief executive at the SMMT, also noted that while the improvement in sales was positive, August is one of the quietest months for dealer activity and registrations for 2018 still remained down by 4.2 per cent.
SMMT figures showed that overall demand was up by 23.1% year-on-year but conceded that this was mainly due to the huge discounts dealers were offering on some cars
New regulations introduced in September mean any car sold with the latest 68 plate needs to adhere to the latest WLTP emissions standards. Those that failed to meet these were heavily discounted by dealers in August as they looked to clear existing stock
‘Given August is always a small month in new car registrations ahead of the important plate-change month of September, it would be wrong to view the market as booming,’ he said.
‘Indeed, this past month has seen some significant variances as regulatory changes have disrupted some supplies.
‘In the long term, however, the new emissions certification test will give consumers renewed confidence in the performance of all vehicles, helping them choose the latest, cleanest technology that best suits their driving needs, whether that be petrol, diesel, hybrid or plug-in.’
Ian Plummer, director at Auto Trader, said the regulatory changes had indeed influenced a ‘false economy’ for car sales last month and could see figures in September take a significant nose dive.
He said: ‘August was definitely a buyers’ market this year as consumers took full advantage of the great deals on offer as many manufacturers scrambled to beat the deadline of the new Worldwide Harmonised Light Vehicles Test regulations.
‘This may have been a very strong August, but of course it’s a false economy.
‘As we saw in March 2017, when registrations were brought forward in advance of changes to Vehicle Excise Duty, WLTP will put huge pressure on September.
‘What’s more, delays in producing and approving new car stock to the new rules is likely to continue into Q4, which will hamper sales as retailers and consumers will be limited to what’s available.’
The inflated demand made last month the best August on record, according to SMMT stats
carwow ceo Andrew Hooks added: ‘All dealers and manufacturers have been aggressive with savings and incentives. During August, Honda, Suzuki, Volkswagen and Audi, and others, have all had promotions running.
‘However, this spike in numbers is also because dealers have been getting lots of vehicles pre-registered by the end of August.
‘All the pre-registering that has been happening means there are lots of attractively priced cars available to drivers right now.
‘However, for the industry, selling conditions will become tougher as competition increases and, for some manufacturers, supply remains constrained.’
While figures were somewhat inflated by these deals, it was a strong month for sales of alternative fuel vehicles (AFVs).
The UK’s growing range of hybrid, plug-in hybrid and pure electric cars continued to attract buyers looking to ditch diesel in their droves.
Demand for these greener cars increased by 89 per cent in August, with electrified cars accounting for eight per cent of all sales.
This may have been a very strong August, but of course it’s a false economy
Ian Plummer, Auto Trader
This helped to offset an almost eight per cent decline in diesel registrations, though petrol mostly plugged the gap with an 39 per cent increase in demand.
Alex Buttle, director and car sales platform Motorway.co.uk said the improving performance of AFV vehicles was positive, but these demand increases need to be replicated consistently if the government wants to move to an electrified vehicle network.
‘Electric car sales have had an impressive month, but we do need to put this figure into context,’ he said.
‘There were less than 4,000 new cars sold in the corresponding month last year, so these growth figures are hardly going to set the world alight.
‘However, it does feel like there’s real momentum behind sales numbers now and there are positive signs that consumers are feeling more comfortable about the switch over to electric and hybrid vehicles.
‘But the AFV market is under tremendous pressure to hit these kind of stats every month, and we still need to see more Government support in terms of financial incentives, rather than just convoluted strategy documents.’
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