Car market maintains growth in April

Registrations posted the best growth of the year in April with a 5,505 unit rise, according to the Society of Motor Manufacturers & Traders (SMMT). Three additional processing days in the month, due to the early Easter this year, may have helped sustain growth for a second successive month which created the highest April volume since 2005.

Registrations over the first four months of 2008 were virtually unchanged on last year’s performance, despite concerns over the strength of the economy.

Forecast cut due to economic concerns

Whilst the annual moving rate has risen to 2.404 million units – on par with the full year 2007 volume, the forecast for the total 2008 new car market has been trimmed to 2.335 million units, some 70,000 units below the current level.

Concerns that GDP growth may slow to around half the level it reached in 2007, combined with rising cost pressures on both consumers and businesses, have heightened uncertainty that the current robust nature of new car demand will continue.

Robust fleet market bolsters demand

The recent growth in the new car market has been bolstered by improved demand from fleet buyers and only a relatively modest dip in private sector registrations.

Fleet demand rose by 7.5% in April, its strongest rate since October 2007.

The private sector slipped by just 1.2% in the month and by 2.2% over the year-to-date, despite concerns over consumer confidence.

Focus sweeps the board in April

Ford’s Focus maintained its best seller slot in April and also outsold the VW Golf to become the top selling diesel model. Vauxhall outpaced Ford to be the best selling brand in April with four models in the top ten.

Mini and executive segments posted the strongest growth rates in April – up 43.7% and 37.8% respectively, whilst the lower medium segment had the largest volume gain. MPVs continue to show best growth over the year-to-date.

Diesels take record share in April

Diesels continue to see their market share and volumes rise as buyers consider the financial benefits. Registrations accounted for a record 45.4% of the market in April, following a 20% gain in volumes. Diesel demand is expected to rise further in 2008 and 2009, and the forecast volumes have been revised upwards.

Demand for alternatively fuelled vehicles (AFV) also rose, up 8.4% in April and by 14.4% in the year-to-date.

Economic analysis

The recent rise in fuel prices has hit consumers in the pocket, by providing a constant and visual reminder of rising cost pressures.

The Budget saw the planned fuel duty rise postponed until October, but motorists were targeted with further rises in costs, notably in 2009/10 through a revised VED system with higher rates and a first registration fee.

The growing economic gloom reflected poorly on Labour and consequently it fared badly in the local elections. Eyes are now on the party, and the Bank of England, to see if the situation can be turned around and confidence restored.

“With fuel prices sky-high, consumers are looking for efficient motoring they can afford. The latest registration figures show diesel-powered vehicles have hit their highest monthly market share on record, alongside a stronger focus on super-efficient small cars,” said Paul Everitt, SMMT chief executive. “The motor industry has invested in a wide variety of new technologies and exciting designs to ensure motorists have a wide choice and can continue to maintain their mobility, save money and reduce their carbon foot-print.”