Car sales rebound eases pressure on automotive sector

Cars awaiting export Motorists returning to car showrooms after lockdown ended drove the first rise

Cars awaiting export
Cars awaiting export

Motorists returning to car showrooms after lockdown ended drove the first rise in sales of new vehicles this year, with an 11.3pc rise in registrations last month.

Almost 175,000 new cars were purchased in July following a near-total collapse in the market over the previous months as coronavirus put a brake on transactions.

The rise came in the first full month of dealerships being open. Although dealers in England were allowed to reopen their doors from June 1, it was not until later in the month that Scotland and Wales eased lockdown restrictions.

July’s rise is compared with the same month a year ago and follows declines in March, April, May and June of 44.4pc, 97.3pc, 89pc and 34.9pc respectively.

Production of cars in the UK has also fallen to its lowest level since 1954.

The Society of Motor Manufacturers and Traders (SMMT) that collated the data said pent-up demand and special offers led to a “reprieve” for the sector.

However, it warned that registrations for the year to date were still down by 41.9pc, or almost 600,000 cars. The trade body now predicts that 2020 will result in a 30pc fall in sales on the previous year, representing more than £20bn of lost business.

Mike Hawes, SMMT chief executive, said: “July’s figures are positive, with a boost from demand pent up from earlier in the year and some attractive offers meaning there are some very good deals to be had. By the end of September we should have a clearer picture of whether or not this is a long-term trend.”

The trade body has so far shied away from calling for a scrappage scheme as seen in other major European markets.

This is because it is uncertain how it would boost the UK manufacturing industry which exports 80pc of output, and also due to a desire to see how demand for vehicles settles as the economy stabilises in the wake of the pandemic.