Industry hoopla masks flat private new car sales

Despite positive-sounding press releases from the car industry, there was nothing to really cheer about for consumer new car sales in July.

According to registration data published this morning by the Society of Motor Manufacturers and Traders (SMMT), overall new car registrations were up by 28% compared to the same month last year. However, this was almost entirely thanks to rebounding fleet purchases (up 62%) while private new car sales were almost completely flat (up only 0.3%).

Cost-of-living pressures, thanks to runaway inflation and ever-increasing interest rates (which went up again yesterday) are clearly deterring consumers from buying new cars. There are certainly more deals available, along with a number of 0% interest rate finance offers from some car brands, but these don’t really come close to cancelling out the steadily increasing costs of new cars.

While the fleet results look fantastic at first glance, it’s really an ongoing recovery from the last few years of significantly depressed fleet sales. Compared to pre-pandemic results for July in 2019 and 2018, these latest figures are still 10-15% down.

Flat month for private sales deflates June optimism

Last month, we were welcoming a 15% increase in private new car sales results. This month, however, things returned to the flat results of the previous few months.

Year-to-date, private new car sales are about 1.5% up on the same point last year while fleet registrations are up 41%. Again, this is up on the turbulent results for the last three years but still well behind 2019 and earlier.

In all likelihood, this is the new normal for new car registrations – at least for the forseeable future. Registrations have been steadily decreasing since 2015, and the July results are in keeping with that longer-term trend.

July

Year to date

EV sales up but not by enough

As with fleet numbers, the data for new electric vehicle sales looks promising at first glance with an 88% increase over the same month last year. While this is definitely good news for the UK’s transition to electric motoring, it’s still not behind schedule. EV market share was 16% in July, which is in line with the year-to-date position and still behind the full-year results for 2022 (16.6%).

The strong growth in new EV sales in the second half of 2022 has not been maintained in the first half of 2023, and much more needs to be done to accelerate this.

Month-by-month numbers can also be quite misleading for EVs, as the largest player in the market – Tesla – still has a massive influence on the numbers. Tesla registered more than 3,000 new cars in July, compared to just 3 cars (no, not a typo) in the same month last year. This is not a reflection of any staggering increase in Tesla’s popularity, but simply a factor of the company’s shipping and delivery schedules. Had Tesla’s boats run a couple of weeks late, July’s EV numbers would have been far less impressive.

Diesel sinks to last place

It had to happen eventually, but July also marked the first time that diesel was the least popular form of powertrain for new cars.

Back in 2017, diesel ruled the roost for new car sales with up to 55% of the overall market share. Last month, it was below 8% and an increase in plug-in hybrid sales was enough to drop diesel to the bottom of the pile.

Expect this to be the new normal – although diesel may still end the year ahead of plug-in hybrids, its contribution to the new car sales market is dwindling into insignificance.

New car registrations by fuel type – July

*includes mild hybrids
Source: SMMT

New car registrations by fuel type – Year to date

*includes mild hybrids
Source: SMMT

Good month, bad month

While a 28% overall market increase sounds great, the growth is never spread equally across the car industry. Some brands (particularly those with strong fleet appeal) enjoyed a great month, while others underachieved quite significantly.

July was a good month for Abarth, Citroën, Ford, Lexus, Mazda, MG, Peugeot, Polestar, SEAT, Skoda, Suzuki, Tesla, Vauxhall and Volvo. Each of these brands outperformed the overall market bt at least 10% (so achieved a year-on-year improvement of at least 38%).

Meanwhile, it wasn’t exactly sunshine and rainbows for Alfa Romeo, Alpine, Bentley, BMW, Cupra, Dacia, DS Automobiles, Fiat, Genesis, Honda, Hyundai, Jaguar, Jeep, Land Rover, Mercedes-Benz, Mini, Smart, SsangYong and Toyota. All of these brands underachieved against the overall market by at least 10% (so an overall improvement of less than 18%, and in some cases a significant decline).

That means that the following brands more or less stayed put in line with the overall market growth: Audi, Kia, Maserati, Nissan, Porsche, Renault, Subaru and Volkswagen.

Volkswagen topped the sales charts for the second month in a row, ahead of Ford, Audi, Kia and BMW. Ford has the strongest growth in absolute numbers, selling 4,000 more cars this July than last year. On the other hand, Dacia had the biggest fall, with sales down by more than 1,800 units (54%) on the same month last year.

Ford Puma is top of the pile in July

The Ford Puma comfortably topped the new car sales charts in July, which also extended its lead in the overall 2023 sales race. The Vauxhall Corsa finished sixth, meaning that it clings onto second place in year-to-date numbers, but is falling back into the clutches of the 2022 sales champ, the locally-built Nissan Qashqai.

It was a strong month for mid-sized SUVs, with five of them in the top ten. This will almost certainly be a reflection of July’s solid results for fleet sales, with consumer darlings like the Mini hatch and Volkswagen Polo/T-Cross/T-Roc models nowhere to be seen.

Finally, the Ford Fiesta slipped another spot to tenth in the 2023 sales race, being just outside the top ten again in what was its final month of production. Will this be the last time we ever see it in the best-sellers list? Tune in next month to see if Ford has any supplies left…

We’ll have our usual full analysis of the top ten shortly.