Last month saw the fastest rate for new car registrations for nearly two years. This is because more private buyers have returned to the showrooms despite the ongoing Eurozone crisis, says the group who represents UK based carmakers.
What is Happening?
In May there were a total of 162,288 vehicles registered which is an 8 per cent increase on May last year. This makes it the third month in a row to see an increase.
Paul Everitt who is the chief executive at SMMT said, “May’s 7.9 per cent increase in new car registrations is good news for the motor industry and the UK economy, particularly the steady growth in demand from private buyers.”
The demand for cars in the UK has been mostly from fleet sales. Companies and staff were trading in their old vehicles and buying more eco friendly cars as these have tax benefits. Since the beginning of this year the total amount of registrations for private cars has increased by 9 per cent and fleet registrations were 5 per cent higher than this time last year.
Why are they Increasing?
There are a few reasons for this increase: many car companies have been offering huge discounts and more finance offers to encourage more customers. Another reason is that people are opting for more fuel efficient vehicles as the price of petrol is increasing so they are trading in their older cars for new ones.
Mr Everitt said, “Undeterred by economic concerns, consumers are still buying new cars, increasingly encouraged by new efficient models. There are worries though that the Olympics will mean consumers will avoid showrooms and that the expected rise in fuel prices in August will also take its toll on the industry.” For those who are struggling at the moment, finding areas to save money in are essential. This means the right car insurance quote should help loosen the purse strings a little and you’ll have money left over to enjoy the summer.
The chief UK and European economist at IHS Global Insight, Howard Archer recently wrote that the drop in oil prices was “good news for the car industry” as the prices fell from their peak in April.
He added: “While the May car sales data are encouraging, the motor industry still faces very challenging conditions, with consumers remaining under major pressure from squeezed purchasing power and elevated unemployment.”