New car registrations up in December

The new car market rose by 38.9% to become the third best December on record and highest since 2005, according to the Society of Motor Manufacturers and Traders (SMMT). The performance was above forecast, as buyers acted before VAT rose.

New car registrations dropped 25.9% or 322,524 units in the first six months of 2009.  The Scrappage Incentive Scheme, introduced in May, reinvigorated the market with registrations in the second half of 2009 rising by 21% or 185,728 units.

The strong year end lifted registrations to 1,994,999 units, some 67,000 above the forecast in October and 337,000 units above the April forecast (pre scrappage scheme announcement).  However, 2009 was still the first sub two million market since 1995.

Scrappage accounted for a provisional 20.8% of December volumes, with over 280,000 units going through the scheme since its launch in May.  With the scheme finishing the overall new market is forecast to fall back below 1.8 million units in 2010.

Private demand performed better than expected, buoyed by scrappage and, more recently, consumers taking advantage of reduced VAT rates.  

Ford’s Fiesta was the best selling model in December and over the full year.

Paul Everitt, SMMT chief executive, said: “The December new car market was boosted by the Scrappage Incentive Scheme and consumers looking to avoid January’s VAT increase.

“The 2009 market of 1,994,999 new car registrations was significantly above early expectations and reflects the positive impact of the scheme, due to end in February.

“Another tough year awaits the UK motor industry in 2010, with new car registrations expected to be below 2009 levels and only limited recovery in the van and heavy commercial vehicle markets.  Sustaining the progress made in the latter part of 2009 will require stronger demand from fleet and business buyers, alongside the greater availability and affordability of credit and finance.”