UK car sales are likely to fall in 2012 but
the market will be more resilient than other EU nations, due in
part to comparative ease of access to cash and the strength of
fleet vehicles, according to automotive experts at Pricewaterhouse
Coopers (PwC).
According to Michael Gartside, senior analyst
with the company’s automotive forecasting service, the expected
decline in consumer spending will “push the UK new car market below
1.9m units in 2012,” down approximately 3% on 2011.
Go deeper with GlobalData
Though recessionary fears span the continent,
the UK car market may hold stronger than expected in most EU
nations including Poland, one of the more robust European
economies, where car sales fell 20% in November, and 8.7%
year-to-date.
“The UK is showing surprising resilience in
the face of increasing economic and financial headwinds, with the
SAAR (seasonally adjusted annual rate) in November standing at 2.14
million units, the highest level this year and the fourth
consecutive monthly increase,” says Gartside.
“Whilst this may appear to suggest a market
nadir has now been reached, we feel that the increasing risk of
recession within the UK, with declining consumer spending, is
likely to push the UK new car market below 1.9m units in 2012.”
Expanding fleets, not
monetarism
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By GlobalDataWhile continental lenders buckle from
decreasing demand from rising credit costs and liquidity
constraints, the “UK situation does not suffer such circumstance,”
says Giorgio Elefante, PwC Autofacts in Italy, though “monetary
expansive policy is probably not enough to offset opposite market
trends”.
Instead, the UK fleet and business leasing
vehicle sector is keeping car registrations comparatively
stable.
While private new car sales in the UK have
dropped 14.1% from 2010 to 2011, according to PwC, fleet
registrations have risen by 4.6% and business registrations by
1.2%.
“If you look at recent vehicle volumes, in
many respects, people would say that the market is still relatively
strong, relative to the size of the UK economy and the population,”
says Jason Wakelam, automotive deals partner at PwC.
“Over the last 12 months the private sales
have actually contracted but the thing that’s been keeping
everything up is fleet sales, the corporate market.”
Appetite and desire
Wakelam does not deny that the UK motor
finance market was heading for tough times and fears of a recession
in 2012 were “realistic”. The next year, he expects, will be one of
lenders questioning their appetite to risk lending money.
The question for him is the desire of
manufacturers to push both cars and the products to finance
them.
“As people face uncertainty around jobs and
falling net income in their pockets, I would have thought a number
of lenders would be thinking long and hard about their desire,
really, to challenge the vehicle manufacturers when it comes to
debt finance.
“You’ll see a lot more continued focus on
incentivising people to buy cars with regards to 0% finance, VAT,
cashback and everything else that goes with it.”
An extended interview with Jason Wakelam
of Pricewaterhouse Coopers will be published in January’s issue
of Motor Finance magazine.
richard.brown@vrlfinancialnews.com
