March registrations put spring into new car market

Registrations in March 2007 exceeded expectations of a 425,000 figure by producing the second highest March ever with 449,287 units, according to the SMMT. It also surpassed any September market since the introduction of the twice-yearly plate change in 1999. Only the March 2004 total of 466,954 units was higher.

Volumes were up 3.1 per cent or 13,440 units on the March 2006 market. Between 1999 and 2006, March averaged 423,450 units and equated to 17.5 per cent of the annual market.

Market improving expectations in quarter one

The March growth reflected increased marketing activity by manufacturers, with zero per cent finance and free insurance deals enticing motorists into showrooms.

March accounted for 70 per cent of quarter one's growth, with volumes exceeding expectations by some 20,000 units. The market was up 2.9 per cent or 19,270 units on the 2006 quarter one total.

This strong first quarter will be taken into account during SMMT's April review of the full year forecast - currently 2.315mn units.

All sales types show March growth

Encouragingly all sales type categories posted growth in March. The fleet and business sectors recorded the best gains, but private demand was also up by 1.5 per cent.

Private demand has fallen by almost 20 per cent since its peak in 2003 and significant overall market recovery will need the private sector to show sustained growth.

In the first quarter of the year fleet/business volumes represented 54.4 per cent of the market, up from 53.3 per cent a year ago.

Supermini segment grows, Focus stays top

The Ford Focus remained the UK's best selling model in March and the year so far.

The supermini segment posted a further 4.4 per cent growth in March and accounted for almost half of the total market's volume growth in March and three-quarters of the growth in quarter one.

All bar the 4x4/SUV and mini segment posted growth in March.

Diesel demand continues to grow

Diesel cars recorded yet another increase in registrations, with an 8.3 per cent gain in March. Volumes were up 19,183 units – 99.5 per cent of the total market's gain in March.

Diesel volumes were up 7.8 per cent over the first quarter of the year. Their market share rose to 38.4 per cent, up from 36.6 per cent in quarter one 2006.

The Ford Focus was the best selling diesel model in both the month and year-to-date.

Economic analysis

Since 1997, when Labour came to power, the UK has experienced a period of strong and relatively stable economic growth. Gross Domestic Product (GDP) has only dipped below two per cent once – in 2002. GDP recovered swiftly in 2006 to post a 2.8 per cent gain, matching the rate averaged since 1997.

The Treasury expects growth to pick up in 2007, before moderating in 2008. Others are less optimistic over the pace of growth. If inflation can be tempered, cost pressures and debt levels managed more effectively, then consumer spending may recover and encourage economic growth.

'Growth in diesel and supermini cars shows that fuel efficiency and greener motoring are now critical concerns for buyers,' said SMMT chief executive, Christopher Macgowan.

'The industry has been working hard to improve its environmental profile too. CO2 from tailpipes has reduced dramatically across all bar one of the sales segments since 1997 showing a net 12 per cent reduction of CO2 across the whole market. The recent DfT "Act on CO2" consumer campaign is a welcome further step in a more integrated approach to sustainable motoring.'