Vehicle prices to start rising after pound slump

Car prices to start rising after pound slump
U.K. Car Sales At Record High In 2016: SMMT
Author

06 January, 2017

Eighty-five per cent of cars sold in the United Kingdom are imported from overseas, and following the European Union referendum and devaluation of the pound the prices of these cars are beginning to rise.

"Looking longer term, the strength of this market will rest on our ability to maintain our current trading relations and, in particular, avoid tariff barriers which could add significantly to the cost of a new auto".

But there is bad news for dealers as sales are expected to fall this year.

More than 85 per cent of the cars sold in the United Kingdom are imported, and falls in the value of the pound since the Brexit vote in June have led many manufacturers to raise prices.

Fleet and business sales drove the growth, with 1.48 million vehicles registered, up from 1.42 million in 2015.

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SMMT's chief executive Mike Hawes attributes this to the popularity of new technologies and a latent demand for new cars built up during the recession. They were down 5.5 per cent in December, the ninth monthly decline in a row. Ford registered more United Kingdom cars than any other manufacturer in 2016, at 318,316.

The year closed with a fall in demand in December of 1.1% or 2,055 units overall. The SMMT noted that the competitive range of affordable finance is a crucial factor driving private demand as consumers are able to take advantage of low interest rates and flexible payment options.

Vauxhall had the second highest registrations of 250,955 in 2016, while Volkswagen was third with 207,028 new cars registered over the past 12 months. However, alternatively fuelled vehicles (AFVs) experienced a strong uplift in demand, up 22.2% across the year. Petrol cars accounted for 49.0% of the market, while diesel-powered cars made up the remaining 47.7%.

However, plug in hybrids and petrol electric hybrids also saw a growth. "Looking longer term, the strength of this market will rest on our ability to maintain our current trading relations and, in particular, avoid tariff barriers which could add significantly to the cost of a new vehicle". We also anticipate trends in the aftersales market to be robust given the rising United Kingdom vehicle parc, albeit note potential cost pressures with the apprenticeship levy as previously flagged.


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