New car registrations fell 89 percent to the record-lowest May for motorcycle sales since 1952, according to official figures published today by the Society of Motor Manufacturers and Traders.
Only 20,247 engines were registered – down from 183,725 in May 2019 – as ‘click and collect’ sales during the month failed to trigger sales in the UK to bounce back at the same pace as in other markets in Europe.
But the impact of car showrooms closed all month failed to quell demand for electric vehicles, with zero-emission model registrations rising 22 percent in May – and the Tesla Model S was again crowned the most popular new car in the UK as it was in April.
Much misery for the car industry: new car registrations dropped 89% last month as dealers remained closed. Some 20,247 motorcycles were sold in May, helped by showrooms that provided click-and-collect services on site
Mike Hawes, chief executive at SMMT, said the “devastating impact on the market” was “inevitable” as dealers had to endure a second month of coronavirus shutdowns.
The arrival of click and collect services in mid-May provided a number of ways in which showrooms completed sales, with registrations improving from the 97 percent dive dive recorded in April.
However, the 89 percent slump to the lowest registrations in May for 68 years puts the UK auto industry behind other European markets, which have posted better statistics.
In Italy, which saw a 96 percent drop in April, registrations fell by only 53 percent year-on-year in May.
France was one of the best-performing markets, outperforming expectations with a 47 percent drop last month compared to a 89 percent drop in April.
The number of new cars in Spain fell by 71 percent in May, which was an improvement from the 96 percent drop a month earlier.
Ireland also showed an improvement, despite the fact that all dealers were closed during the month. Registrations of 1,750 new cars in May were down 72 percent from last year, but will be seen as a step in the right direction after plunging 96 percent in April.
The SMMT confirmed that registrations reached their lowest level in May for the fifth month of the year since 1952
Mike Hawes, chief executive at SMMT, said the “devastating impact on the market” was “inevitable” as dealers endure a second month of coronavirus shutdowns
Mike Hawes said the recovery in the UK car market will really begin this month, as dealers have been allowed to open since June 1 as part of the latest measures to ease the lockdown – assigned showrooms have a social distance protocol.
Hawes said this week marks a “critical moment for the entire industry and the thousands of people whose jobs depend on it.”
Customers eager to trade in for the latest cutting-edge new cars can now return to showrooms and early reports suggest there are good things under the circumstances, although it is far too early to say how demand will come in the coming weeks and months, ”added the SMMT boss.
Car dealers are allowed to reopen on June 1 under the latest eased government measures. The SMMT said it is now a “crucial” time for the industry to recover
Dealers had to include new social distance measures in their showrooms, including screens to separate sellers from customers
“Rebooting this market is a critical first step in driving the recovery of Britain’s critical automakers and supply chain, and supporting the wider economy.
“ By ensuring that people have the confidence to invest in the latest vehicles, they can not only get on the road safely, but these new models will also help address some of the environmental challenges facing the UK in the long term is confronted.’
Ford dealers reached the most sales of the month, totaling 2,111 in May. That was less than 19,892 of the brand’s models registered in the same month in 2019 – down 89 percent.
The manufacturer with the second highest registrations last month was Mercedes-Benz with 2,002, down 86 percent.
The Tesla Model 3 was the most registered car in the UK for a second consecutive month as orders continue to lag in the UK. Photo shows customers who picked up their car last year before the pandemic hit
Electric car sales outperform the slumping market – and Tesla is celebrating for the second month in a row
While registrations of all other fuel types fell, battery electric vehicles saw a 22 percent increase in May.
About 429 more zero-emission electric cars were sold compared to May 2019, which was due to pre-orders of the latest premium models delivered to customers, according to the SMMT.
At the top of the list of premium plug-in engines was the Tesla Model 3. For a second consecutive month, it was the most purchased car in the country, with 852 registered in May.
The Tesla Model 3 sold the Vauchall Corsa in May and the perennial British favorite, the Ford Fiesta
That was 62 more than the second most popular engine of the month, Vauxhall’s Corsa, and 82 more than the UK’s most-bought car in the past 11 years, the Ford Fiesta.
Felipe Munoz, global analyst at JATO Dynamics, said of the continued demand for electric vehicles in Europe, “This one [electric] cars are likely to become the first choice for consumers looking for private transportation.
“Manufacturers who have invested heavily in electric vehicles are best placed to face the tough months ahead.”
Tom Clarke, head of electric vehicle strategy at LV = General Insurance, said the company has seen an upward trend in electric car insurance in the past two weeks.
“At the end of May, the number of policy measures we have seen since the end of March was at the highest level, and we expect this trend to continue in June,” he explained.
Tesla is still the most popular electric car we insure, making up 36 percent of our book, with Nissan being the second most popular model, according to today’s SMMT figures.
“In May, however, we insured more Nissan Leafs and Volkswagen e-Golfs than Teslas, perhaps reflecting the growing interest in more affordable electric car models.”
BEV: Electric vehicle battery; PHEV: Plug-in hybrid electric car; HEV: hybrid electric vehicle; MHEV diesel: Mild Hybrid Electric Vehicle diesel; MHEV: Mild Hybrid Electric Vehicle gasoline
Could there be a government-backed scrapping scheme on the cards?
Mike Hawes has been in contact with Chancellor Rishi Sunak about a possible government-backed scrapping program to help the industry recover from Covid-19, with The Guardian publishing extracts of a leaked letter from the SMMT boss.
In it, the trade organization estimates that a scheme that gives £ 2,500 off a new model when motorists scrap their older car can purchase 600,000 additional vehicles.
Which car? Editor Jim Holder said, “Our survey of market buyers shows that more than a third plan to buy a new car in the next four weeks, so we should see an increase in registrations in June.
“On the other hand, we are also seeing a decline in the number of buyers looking to buy in the next six months, indicating that long-term consumer confidence is declining.”
Experts say they expect the government will be pressured to encourage car buying – such as a scrapping scheme – to help industry recover from the crisis
Holder said he expects pressure to be exerted on the government to look at an incentive – such as a scrapping scheme – to support the sector in the medium term, just like after the financial crisis 11 years ago.
“The call for government intervention in the automotive retail industry will only grow in the coming weeks. Unlike in 2009, the market starts from scratch. That’s a big hill to climb.
A new scrapping scheme can be a positive lever, not only to support sales and raise more taxes, but also to increase emissions targets by taking older, more polluting vehicles off the road in favor of ultra-low-carbon and electrified alternatives . “
The total market has now fallen by 51 percent in the first five months of 2020, with just over half a million registrations compared to more than a million at the time last year.
The SMMT has already lowered its forecast for new car sales to just 1.68 million registrations in 2020 – the lowest in three decades.
This sets the industry on track to record the worst performance since recordings of 1.59 million in 1992 and an annual decline of more than a quarter.
A leaked letter from Mike Hawes, the boss of the SMMT, sent to the government suggested that a scheme of £ 2,500 could put 600,000 new engines on the road.
In response to the leaked communication with the government, Hawes said in a statement today, “Like many sectors, we have communicated continuously with the government, highlighting the situation and what support might be needed if the immediate crisis subsides.
“Showrooms opened in England yesterday and so far the reports point to a positive response from consumers.
While there will be pent-up demand, the impact on underlying consumer confidence will be unclear and we may need to work with the government to find ways to boost demand, especially given the contribution this sector makes to the economy and jobs .
“That time is not now, but industry and government must be prepared for all events.”
Michael Woodward, UK automotive lead at Deloitte, said that despite optimism that the market will recover in early June, there is still “uncertainty about consumer behavior” that will allow people to “think about making big purchases right now.”
He added, “Operational problems can also hinder the speed of recovery. For example, purchased cars can hang on the spot while manufacturers try to ramp up production.
Likewise, the inventory dealers have may not meet consumer specifications, especially those looking for cheap public transport alternatives.
During the previous economic downturn, most European countries issued scrapping schemes to boost sales. Most manufacturers will offer big incentives to support early sales, but if the buying public thinks there are more incentives, it could block vehicle purchases in June. ‘
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