Auto Trader's Commercial Director, Ian Plummer, provides his view on the latest new car registrations from the Society of Motor Manufacturers and Traders (SMMT)
“With retailer forecourts across the UK shut for the duration of May it comes as little surprise that we were low on new car registrations for the month. Now that retailers in England have reopened (from Monday 1st June) there’s huge opportunity for the industry to help kick-start the country’s wider economy. The market was paused, not stopped. And now, it’s clearly re-starting.
“Even though consumers haven’t been able to visit showrooms over the past month, it hasn’t stopped them from browsing online to find their next car. Our audience is now back up to pre-COVID levels, averaging over 1.7 million cross platform visits every day (an increase of 5% year-on-year), which suggests there’s a lot of pent up demand. Encouragingly, consumer demand for brand new cars reached record levels on Auto Trader on the day showrooms in England reopened – a 158% increase vs pre-lockdown in terms of the number of leads consumers were sending to retailers. It reassuringly demonstrates strong consumer confidence to purchase a brand new car. To complement that, we’ve also seen a 56% increase in the number of new cars advertised on Auto Trader with over 50,000 new cars now advertised.
“Retailers have worked hard to show consumers that they are adhering to the new social distancing guidelines as well as the health and safety measures to instil confidence that if they turn up to a forecourt, it’s safe to do so. They have also developed their digital offering, allowing potential buyers to conduct a virtual walk round or even a video test drive of a car, and then to put down a deposit online and arrange safe home delivery of a vehicle. One thing we’ve learned from this pandemic is that – as a society – there’s been an acceleration to buy online, and not just everyday products but bigger purchases like cars too, and the auto industry is now fully embracing this trend.”
“The UK’s love of finance could also prove to be a market driver. With more than nine in 10 consumers buying their cars on PCP deals, there is a constant rotation of cars every three years or so. Car buyers who were part of the record new car sales numbers seen three years ago will now need to come back into the market to make a new purchase. So with early demand signs looking positive, and the stock available, it points to an encouraging start to the month.
“There remain question marks though about the sustainability of this demand over the mid-term. There are growing calls for government incentives to support the industry with research showing that benefits can be widespread. Government stands to recoup £3 for every £1 spent thanks to increased VAT and vehicle excise duties, as well as reduced employment-related costs in the industry. Consumers who not only want a car but need one, now probably more than ever, will be able to afford to switch to a cleaner model. And by focusing incentives on both EVs as well as the cleanest generations of petrol and diesel models, the environment will benefit from seeing these cars replace the oldest, more polluting models. France has already introduced a very ambitious plan which tackles these issues and aims to take the leadership on EV production and research; Germany is poised to do the same. The UK has similar ambitions and will now need to act fast to keep pace.”