The UK automotive market has peaked, according to the head of the UK’s motor industry body, who predicts a decline in sales this year.
A record 2.69 million new cars were sold in the UK in 2016 — 2.2% more than in 2015 —
according to the latest figures from the Society of Motor Manufacturers & Traders, but new-car sales fell by 1.1% in December (to 178,022).
SMMT chief executive Mike Hawes predicts a 5% decline in sales in 2017. “We’re talking about a market that is at peak demand, following the sector’s resurgence after the recession,” said Mr Hawes, adding that the “UK has witnessed double-digit growth” in the years since the downturn.
“Growth at the rate we have seen can’t continue forever. This year may well be more challenging, as sterling depreciation raises the price of imported goods, but with interest rates still at historic lows and new models arriving, there are still many reasons for consumers to consider a new car in 2017.”
Ian Gilmartin, head of retail and wholesale at Barclays, said the record numbers for 2016 were “no mean feat” but added: “As the slightly softer December data suggests, we’re not going to match the record figures this year.
“Currency moves following the EU referendum vote and wider economic developments are starting to feed through and are likely to lead to some price increases, making it difficult for sellers to replicate the most attractive offers we saw over the last 12 months.
“However, if the industry retains its commitment to quality and is able to match the tremendous efforts made in 2016, it can still succeed this year.”
Mike Allen, a senior analyst at the Zeus Capital group, is rather more pessimistic and predicts a near-10% decline in car sales this year. “We expect conditions to get more difficult from here.
“We remain in uncharted waters, with consumer confidence likely to be more fragile, reflecting greater levels of uncertainty and volatility.”