Registrations Stall
New Registrations In September Fall
Market Declines For 5th Consecutive Month
The Society of Motor Manufacturers & Traders (SMMT) published a gloomy report today calling for action from the Labour government. Only 5 manufacturers can boast higher registrations this September when compared to the same period last year - Audi (+1.38%), Hummer (+25%), Jaguar (+3.56%), MG (+800%) & Smart (+9.26%). The entire range of manufacturers in fact saw a fall in registrations of 21.2% - that’s a massive 88,995 units for September alone!
The fall in registrations in September marks the fifth consecutive month that this has been the case - the can market is obviously troubled.
Figure 1: Registrations & Production Figures, 1995 to 2009 (forecast)
|
Year |
Registrations |
Production |
|
1995 |
1,945,366 |
1,532,084 |
|
1996 |
2,025,450 |
1,686,134 |
|
1997 |
2,170,725 |
1,698,001 |
|
1998 |
2,247,402 |
1,748,258 |
|
1999 |
2,197,615 |
1,786,623 (peak) |
|
2000 |
2,221,647 |
1,629,609 |
|
2001 |
2,458,769 |
1,492,146 |
|
2002 |
2,563,631 |
1,629,934 |
|
2003 |
2,579,050 (peak) |
1,657,558 |
|
2004 |
2,567,269 |
1,646,773 |
|
2005 |
2,439,717 |
1,595,697 |
|
2006 |
2,344,864 |
1,442,085 |
|
2007 |
2,404,007 |
1,534,567 |
|
2008 (forecast) |
2.26mn |
1.55mn |
|
2009 (forecast) |
2.16mn |
N/A |
When examining year-to-date, the market has seen a decline of volume equalling 7.53% - a staggering 146,096 units! Vansdirect would remind you that this only covers cars and pays no attention to vans which, arguably, is a more worrying reflection of the nation’s economy and indeed the reported fall in consumer confidence.
The SMMT as a result suggest that “UK consumer confidence is at its lowest level since 1974″ and also notes that the ”UK automotive industry is a source of high value employment and is critical to the long-term success of the economy. Government needs to use the Pre-Budget Report to set out its response to these challenging times and the measures needed to rebuild consumer confidence.”
In response to these concerns, the SMMT has called for the Government to consider:
- Review Budget 2008 VED changes - Abandon plans for a new ‘First Year Rate’ for VED from 2010/11, which is a hidden sales tax; mitigate the impact of VED rises and retrospective rebanding from 2009/10, which significantly increase motoring costs for families and lower income groups.
- Incentivise fleet renewal – Additional revenue raised through VED changes should be hypothecated and used to aid consumers with the transition to lower CO2 emitting cars. One measure could be the introduction of a scrappage incentive scheme that would encourage owners of older, less efficient cars to replace them with new, more environmentally friendly vehicles.
- Energy and fuel prices – The recent rise and fluctuations in energy and fuel prices have a significant impact on spending by manufacturers and households. Government should ensure that price falls are passed onto industrial energy consumers and motorists swiftly and use its discretion over the timing of fuel duty rises appropriately to boost consumer confidence in an economic downturn.
- During the current economic difficulties it is essential that public authorities (national, regional and local) continue to renew their vehicle fleets.
Moreover, the SMMT, on the back of research by the Centre of Economic and Business Research (CEBR), suggests the following short-term measures to boost consumer confidence and thus demand:
- Increasing disposable incomes – This would enable consumers to spend more and enjoy a better standard of living. Disposable incomes can be boosted by government through wage growth or reductions in tax or tax rebates. A fresh look at tax reductions and rebates should be considered. This means that the current fiscal rules need to be redesigned to allow an effective fiscal stimulus package (1.0% GDP) beyond the recently announced small scale injection.
- Creating the conditions to allow the Bank of England to reduce interest rates – A series of sharp interest rate cuts by the Bank of England would send a powerful message to consumers, reducing debt servicing costs, increasing disposable income and making spending and borrowing more attractive. This could be done without putting undue pressure on prices as the Bank’s latest inflation report forecasts that inflation and economic growth are to weaken over the next two years.
- Decreasing cost of living/inflation – Immediate price pressures on consumers could be relieved through measures to boost consumer confidence. A more flexible fuel duty system would keep the price of fuel close to the environmentally optimal price and reduce overall taxation levels when oil prices are high. This would insulate consumers from the double impact of higher fuel prices by retailers and higher tax charges. Government should also take measures to ensure that falls in energy costs and interest rates are passed on quickly to the consumer.
- Stabilising house prices and liquidity – Specific housing market measures need to address the current exodus of house buyers from the market. The measures need to stimulate demand, increase mortgage availability and reverse potential buyers’ expectations of future price declines.
Again, whilst all these recommendations are made with the car market in mind, Vansdirect urge all commentators to consider the commercial vehicle and van market. A person’s ability to find credit for their next van may be vital to secure the future of their business and thus support their family through these difficult times.
Let’s hope that the SMMT’s recommendations cause a murmur in the corridors of power and perhaps leads to action that is desperately needed by a flagging car and van market.
October 6th, 2008 at 2:28 pm
[...] Original admin [...]
October 6th, 2008 at 2:41 pm
[...] Read the rest of this great post here [...]
October 7th, 2008 at 2:21 pm
[...] Vansdirect recently reported on the SMMT’s assessment of falling car registrations during September 2008. Today, the same organisation published its assessment of the commercial vehicle market. [...]