Press release

4 Mar 2021 London, GB

UK new car sales fall again in February as showroom closures continue to affect activity – EY ITEM Club comments

The difficult start to 2021 continued for the car sector as new sales were affected by the ongoing closure of showrooms.

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Related topics Growth COVID-19
  • The difficult start to 2021 continued for the car sector as new sales were affected by the ongoing closure of showrooms.
  • New car sales fell 35.5% year-on-year (y/y) in February with sales of 51,312 marking the weakest February performance since 1959.
  • New car sales had previously fallen 39.5% (y/y) in January so were down 38.1% (y/y) over the first two months of 2021.
  • Private car sales declined 37.3% (y/y) in February, as they had done in January, adding to evidence of heightened consumer caution during the current lockdown. Fleet sales were also down significantly (33.5% y/y).
  • Showrooms will stay closed through March – a key month for new car sales given number plate changes. While the sector will look to lift sales through initiatives such as click and collect, there is a limit to how much the impact on sales can be reduced.
  • The car sector will be hoping that showrooms re-open as planned from 12 April, and that consumer and business confidence will increasingly be buoyed over the coming months by the roll-out of the COVID-19 vaccines – and that this lifts both consumers and businesses’ willingness to buy new cars.
  • Many consumers look to be relatively well placed to buy a car given the very high household savings ratio seen over Q2 and Q3 2020. Much is likely to depend on how well the labour market holds up over the coming months.

Howard Archer, chief economic advisor to the EY ITEM Club, comments:

“The SMMT reported that new car sales saw another substantial decline in February, falling 35.5% year-on-year to 51,312 vehicles. The sector continued to be significantly affected by showrooms being closed during lockdown. This was the lowest February level for car sales since 1959.

“Sales had earlier declined 39.5% year-on-year to 90,249 vehicles in January, which had been the weakest January performance since 1970.

“Consequently, new car sales were down 38.1% year-on-year over the first two months of 2021 at 141,516 vehicles.

“It is notable that the year-on-year declines in new car sales in both January and February were larger than the 27.4% year-on-year fall seen in November. This adds to the evidence that the latest lockdown is having a greater negative impact on the UK economy than similar measures did in late-2020.

“While COVID-19 restrictions have taken a toll on new car sales since early-2020, the softness has run deeper than that. A number of other factors appear to have weighed on sales: consumer and business caution over making major purchases, reduced demand for diesel cars amid environmental concerns and uncertainties over policy, and stricter emission regulations affecting supply at times.

“Indeed, new car sales only achieved one monthly year-on-year gain in 2020 (11.3% in July) when there was a strong element of pent-up demand as people who had wanted to buy new cars since March were finally able to get to showrooms across the UK.

“Consequently, new car sales fell 29.4% over 2020 with the total 1,631,064 vehicles being the lowest since 1992. Furthermore, the sales drop of 29.4% was the largest since 1943.”

Private new car sales saw another significant fall in February falling 37.3% year-on-year

Howard Archer continues: “Private new car sales were particularly weak in February, falling 37.3% year-on-year to 21,364 vehicles. This followed a similar decline of 38.5% year-on-year in January and adds to signs that consumers are displaying heightened caution at the start of 2021.

“Private new car sales were down 38.0% over the first two months of 2021.”

Fleet sales saw significant 33.5% year-on-year fall in February

Howard Archer adds: “New car sales to the fleet sector also saw a significant decline in February: they fell 33.5% year-on-year to 29,311 vehicles after a decline of 39.7% year-on-year in January. Fleet sales were down 37.6% over the first two months of 2021.”