The latest SMMT figures show that October registrations reached a total of 157,314 in October, an increase of 4.0% and the 20th consecutive month of growth in the new car market. As a result, the SMMT has raised its forecast from 2.22 million to 2.25 million units for 2013 – 10% ahead of last year.

In response, David Raistrick, UK automotive leader at Deloitte, said: ‘October is the 20th consecutive month of growth in the new car market, but it is also the first month since February 2013 where double digit growth has not been achieved. New car sales have been climbing back towards the levels achieved at the height of 2007 as cheap finance is readily available, but questions about the sustainability of this growth rate remain.’

Looking at what lies behind the numbers, he said: ‘The way in which the car buyer is approaching their next purchase is clearly changing as the actual list price of the vehicle is becoming less important.  The opportunity to put a small deposit down and then effectively rent a vehicle for a fixed monthly payment with the option to buy or return at the end of the term is becoming increasingly attractive to the car buying public.  An increase in interest rates would likely have an immediate impact on the pricing of finance packages; however, the estimated residual value of the vehicle can have a greater impact as larger deposits and increased monthly payments would be required to cover the gap created at the end of the term.’

He added: ‘As more new cars are bought and the stock of used cars increases, residual values may come under pressure and be unable to maintain the robust levels they have achieved to date.’

However, Raistrick said the latest figures continue to highlight the importance of the UK new car market.

He remarked: ‘Last month, the release of the automotive production numbers for the UK showed an increase of nearly 10% when compared against September 2012.  Growth in the export of luxury brands to Russia and China is fuelling the desire to increase production levels within the UK whilst the majority of the top 10 sellers in the UK market continue to be sourced from factories outside of the UK.  While the European market is showing signs of recovery, these are still early days and the UK will continue to be a key market for manufacturers, as it currently accounts for one in five of new cars sold in Europe.’

X