Press release

4 Sep 2020 London, GB

David Borland, EY UK & Ireland Automotive Leader, comments on today’s SMMT new car registration figures for August

August is one of the slowest months of the year for car registrations.

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Adam Holden

Senior Manager, Media Relations, Ernst & Young LLP

Passionate media relations and public relations professional helping to provide insight and clarity to complex business issues. Husband and father to twin boys, and a golden retriever.

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“Historically, August is one of the slowest months of the year for car registrations. Although today’s SMMT figures show the passenger car market declined by 5.8% compared to last year, this headline figure masks strong performance in used car and aftersales, with the return of MOTs providing much needed revenue to dealers.

“There was a continued decline of diesel vehicle sales of -39% compared to August last year, whilst battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) increased 77% and 221% respectively. Despite the large monthly gains for electrified vehicles, BEVs still only account for 4.9% and PHEVs for 3.3% of the market in the year to date, highlighting the ongoing challenges in the way of meeting decarbonisation targets.

UK outperforming Europe

“The UK figures contrast with the European market, where early reports show a reverse of the recovery seen in June and July, with France -20%, Germany -20% and Spain -12% compared to August last year. This is in part due to a reduction of pent up demand and consumer appetite with second wave risks, plus a tail off from incentive schemes that were launched post-lockdown to stimulate the market.

Industry will need to achieve over 40% of its sales in remainder of 2020

“March is traditionally the strongest month in the year for sales in the UK, but the industry saw year-on-year declines of 44% in March 2020 due to the fallout from the pandemic. September is now likely to be critical, with original equipment manufacturers (OEMs) and dealers putting in place offers and incentives to build on the positive momentum since lockdown.

“With the SMMT predicting a full year of approximately 1.6 million registrations, it leaves just under 700,000 units, or 43%, to go in the last four months of 2020. This may sound a tall order, but 792,000 units were registered over the equivalent period in 2019 and if the market continues to recover, then it could be achievable. That said, it will still leave the market down 30% on 2019 so we need to keep this in perspective.

“Challenges will arise from the uncertainty around further waves of the pandemic, local lockdowns and the impact on consumer appetite for spending on large ticket items. We also cannot forget the impact of the ongoing Brexit discussions. That could lead to more delays on car purchases later in the year, or it could trigger an urgency to drive sales before any incremental costs are added to cars and parts in 2021.

"2020 continues to be a year like no other in the automotive sector, but the industry has proven resilient in the past and it will continue to do so despite the unprecedented challenges.”