Matt Freeman, of CAP Automotive Intelligence Services, was invited by credit & risk intelligence specialists Graydon to offer his view on the UK & European new car markets in 2013. The following information was provided for publication on the Graydon blog.
With a 5.3% year-on-year rise in car registrations, the UK was one of the few bright spots in a very difficult European market in 2012. This naturally poses the question of whether momentum can be maintained into 2013. The SMMT remains confident that sales will “hold firm” in the New Year, but other commentators have offered a range of view, some less optimistic.
New models are often a stimulus for market growth, and the UK market will see a slew of new product, including some very important drivers of volume sales. In the small family and supermini segments, 2013 sees the launch of the new VW Golf – always a hotly anticipated event, and small cars ranging from the low-cost Dacia Sandero to Vauxhall’s chic Adam. In the premium sector, Mercedes replaces its A-Class with a new model targeting the Golf market, whilst other premium brands continue to consolidate their grip on the market, with all the major brands (and a few newcomers) launching product across almost all segments.
At the same time, the economic situation in the UK presents reasons for caution. With incomes continuing to be squeezed by rising taxes, reduced benefits, an increasing cost of living due to rising food and fuel prices, and house price uncertainly, consumers may decide to row back from big ticket purchases. On a more positive note, with interest rates at a historically low point, modest falls in unemployment and rises in incomes (if still below inflation) there may be enough private consumers willing to take the plunge into the new car market in 2013. Although private sales saw a rise in 2012, fleet sales were almost flat, whilst business sales saw a decline. This trend means that the private market will continue to be under pressure to support sales volumes in 2013.
There is also a European dimension: with other major European car markets posting double-digit falls for 2012 and some commentators expecting another poor year in 2013, we can expect to see manufacturers continue to focus on the UK as a refuge. With the current exchange rate making European imports profitable (or giving increased scope for discounting) you have a recipe for keen pricing in the UK market, another reason for buoyant sales.
To conclude, manufactures have a large number of key models to launch in 2013, and will be looking to ensure that they meet their targets, despite the difficulties of the European marketplace. With the UK offering the best hope of good sales volumes, and with the balance of economic indicators pointing to a moderately positive situation, we expect 2013 registration to hold steady at just over 2 million units.