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Deloitte forecast of 1.84m new car sales in 2012 in line with wider predictions

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November new car registration figures down 4.2%

As we predicted, November’s new car registration figures are down 4.2% as consumer confidence continues to fall. Whilst the market remains subdued, with only 134,027 new registrations in November, this is slightly better than may have been expected. This decrease does not come as a surprise to the industry, as various factors have been contributing to a fall in new car buyers’ confidence. While retailers are certainly feeling this decline, fleet sales continue to perform well.

Predictions for new car registrations in 2012

Taking into account various economic and environmental factors; our work, in conjunction with the NFDA, suggests that total new car registrations for 2012 will only reach 1.84M, and could even fall as low as 1.80M. In the Retail marketplace I believe there will be a levelling off of sales both in new and used car sales.  This follows a decline in used car sales from just under 7.5M in 2007 to a predicted 6.78M for 2011.

We expect a more restricted number of nearly new used vehicles coming on to the market in 2012 as a result of low registration volumes over the past few years. This assumes that the bulk of scrappage cars are going to be retained by their purchasers and not re-enter the used car market.  As a result of this restricted used car supply, a number of consumers will turn to new vehicles. This will help to balance in part the drop in private consumer demand, with individuals deferring their purchase due to economic environment concerns.

With a limited supply of used vehicles due to reduced levels of non-scrappage new car sales for the last few years, I would expect residual values of used cars to hold steady, or in some cases, even rise slightly due to lack of supply, despite my analysis that used car sales will fall in 2012 to around 6.78M units.

Overall therefore, I would forecast a slight drop on both new and used car sales volumes, but with residual values for used cars remaining firm.

 

The impact of economic environment on new car sales

On a Europe wide basis, overall new car sales have slumped, with Germany being one of the only countries to have seen any significant increase.  Turning to overcapacity issues, Europe is also starting to see a growing mountain of new cars awaiting sale. Current estimates suggest that there may be as many as 3 million excess cars produced in Europe next year that have no global buyers for them. While the UK is not necessarily seeing the same levels of capacity yet, a continuous fall in consumer confidence and therefore new car sales could lead to a similar scenario in the next few months.

Looking to the UK, making up around half the total, the number of retail new car sales during 2012 is likely to remain broadly level with 2011 figures which have shown a decline over 2010.

In the all important fleet market, there has been a steady increase in year on year sales over 2011, as fleet buyers who had previously delayed their replacement cycles came back to the market. However, with this pent up demand largely satisfied, we will start to see new registration volumes in this sector of the market fall in 2012. 

To better understand the impact of the changing macroeconomic environment on car sales, Deloitte has evaluated consumer online search activity and the way that this translates into subsequent car sales (new and used). This provides some cause for short term optimism as current levels of search activity indicate consumer purchases of new and used cars are likely to be slightly higher in December (around 2-4% up on last year). However, December is typically a thin month for volumes of car sales and research by Deloitte that will be released later in the month indicates that the longer-term outlook is less positive as consumers are reporting intentions to restrict their spending on big ticket items such as vehicles across the first quarter of next year. Our Consumer Tracker also indicated that 9% of consumers have delayed purchasing a new car in the past three months. 

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