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Strongest September in ten years for UK new car sales as small and mid-sized cars lead the way. What next?

Strongest September in ten years for UK new car sales as small and mid-sized cars lead the way. What next? October 08, 2014 by Mike Henshaw

New UK car sales had their strongest September in ten years, boosted by confidence in the economic recovery, the Society of Motor Manufacturers and Traders has reported.

Sales reached 425,861, up 5.6% on the same time last year, and represented the 31st consecutive monthly increase.
Almost two million new cars have been sold so far this year - 9.1% up on the same period last year.

Since the move to a bi annual plate change, March has been the key period for new registrations. However September is now getting a firm foot hold too,  albeit that there is evidence of some manufacturer self-registration activity to support the required outcome.

SMMT chief executive Mike Hawes said: "September's strong performance underlined the continuing robustness of the UK new car market, particularly in the context of last September's bumper volumes.
"Demand for the new 64-plate has been boosted by intensifying confidence in the UK economy, with consumers attracted by a wide range of exciting, increasingly fuel-efficient, new cars."
However, he also warned that the market was coming off the boil.
"In the months since March - which saw an 18% jump in registrations - the growth has shown signs of levelling off as the market starts to find its natural running rate,"
The SMMT data showed that Ford's Fiesta held on as the UK's top selling car, followed by its mid-sized Focus model and the Vauxhall Corsa.
David Raistrick, UK automotive expert at Deloitte, said the figures underlined improving UK business confidence.
"If the new car sales are representative of the performance of the UK economy, there are further signs that confidence within the business sector is improving. Fleet and business car sales are now seeing the sort of growth that has been provided by private sales over the past two and half years.
"The UK market has consolidated its position as the second largest market for new cars after Germany and is almost a third larger than France in third place."
It is, however, tough to see how this running rate can be sustained through the winter.
The underlying sentiment in the money markets is that interest rates will rise and this will make it more costly for manufacturers and dealers to maintain the very competitive finance deals which are fuelling much of the retail demand without taking even more risks with residual values.
Equally any rise in interest rates will undoubtedly dampen the retail demand as household budgets are squeezed again.
However, the retail sector can look forward to the release of pension fund money from April 2015 onwards.
And, on the back of this uplift in sales, it’s also important to really focus on after-sales quality and customer retention to retain the benefits of more units sold.


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