March new car registrations robust

New car demand rose by 2,355 units in March, as the new plate proved more popular than expected, despite underlying concerns with the economy, according to the Society of Motor Manufacturers & Traders (SMMT).

The March market bettered expectations by over 25,000 units and was 5.9% or 25,321 units up on the 1999-2007 average for the month of 426,321 units.

The strong March registrations brought quarter one volumes on par with last year’s strong level.

Encouraging quarter one, but outlook cautious

The strong 2008 performance means that quarter one is almost 20,000 units ahead of the forecast. SMMT is to review the full year 2008 forecast of 2.345mn units during April.

Whilst economic data shows unemployment remains low and retail sales are still positive, the forecasts for headline GDP growth this year suggest a significant softening. This may affect new car demand.

March last year accounted for 18.7% of annual demand.

Private market on par with 2007

The private sector recorded a modest softening of demand in 2008, with a dip of just 1.4% in March and 2.4% over the first quarter. Volumes are well above expected levels.

Fleet and business demand both improved during March to give modest gains in the first quarter.

Focus edges Fiesta in March

Ford took the top two slots in March, with the Focus regaining its position as the best selling model in the UK.

March’s top ten featured five superminis, the Fiesta being the highest placed. Supermini registrations rose by 4.3% in March, as demand for small, efficient, low cost cars rose.

Nissan and smart were among the brands that did well in March.

Demand for diesels and alternatively fueled vehicles rises

As consumers move to purchase more efficient, lower CO2-emitting vehicles, registrations of diesels and alternative fuelled vehicles (AFVs) have risen.

Diesel registrations have risen by 22,821 units in quarter one, and took a 41.9% market share, up from 38.4% a year ago. The VW Golf remains the top selling diesel model.

AFV demand was up 14.7% in March and were up 15.1% in the first quarter with Toyota Prius the best seller.

Economic analysis

In the Budget on 12 March the Chancellor trimmed the headline GDP forecast for 2008 and 2009, to 1.75-2.25% and 2.25-2.75% respectively, but also revised the outlook for consumer spending.

At present new car demand and private sales in particular have been resilient. However, with consumer spending predicted to ease from 3% in 2007 to 1.25-1.75% this year, it is prudent to be aware of the possibility for a sudden change in consumers’ ability and willingness to sustain new car purchases at current levels.

“March continues to be the biggest month for new car registrations and this year has proved to be better than anticipated,” said Paul Everitt, SMMT chief executive. “We expect 2008 to be a challenging year, but registrations to date are in line with industry forecasts. The latest figures demonstrate the progress made by industry in delivering lower carbon cars and the wide range of opportunities there are for consumers to save money and reduce their carbon footprint.”