Press release

6 Apr 2021 London, GB

UK new car sales low in key month of March despite annual rise of 11.5% – EY ITEM Club comments

UK new car sales low in key month of March despite annual rise of 11.5% – EY ITEM Club comments

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Nick Cosgrove

Senior Manager, Media Relations, Ernst & Young LLP

Professional services corporate communications specialist. Reluctant dog owner and long-suffering Watford fan.

Related topics Growth
  • New car sales recorded their first annual growth since August 2020 in the key month of March, but performance was still weak overall as car showrooms remained closed
  • This March’s year-on-year 11.5% gain came against a very low base as new car sales had fallen 44.4% year-on-year in March 2020 during the first lockdown
  • The 283,964 new cars sold in March 2021 were 36.9% below the 2010-19 average of 450,189 for March
  • New car sales had previously seen annual declines of 35.5% in February and 39.5% in January, so were down 12.0% year-on-year over the first quarter of 2021
  • March’s rise in car sales was due to fleet sales rising 28.7% year-on-year. Private sales declined 4.1%. It is likely that fleet purchasers were more comfortable than private buyers with buying new cars without visiting showrooms or using ‘click and collect’
  • The car sector will undoubtedly be hoping that showrooms re-open as planned from 12 April, and that consumer and business confidence will be buoyed over the coming months by a successful COVID-19 vaccines roll-out – and that this lifts both consumer and business 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 2020. Further welcome news for the car sector is the resilience of the labour market and the likelihood that unemployment will peak at a much lower level than had been forecast   

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

“The SMMT reported that new car sales saw their first year-on-year increase since last August, as they rose 11.5% in March.

“However, this increase did not make up for a historically very weak performance, with car showrooms remaining closed amid lockdown. March’s rise also came against a weak base as new car sales had fallen 44.4% year-on-year in March 2020 when the first lockdown was introduced. To put the March 2021 performance into perspective, the 283,964 new car sales were 36.9% below the 2010-19 March average of 450,189.

“The SMMT reported that some support for new car sales this March came from ‘click and collect’, which has been made possible by manufacturers and their networks successfully investing in digital channels.

“New car sales had earlier declined 35.5% year-on-year to 51,312 vehicles in February, and 39.5% year-on-year to 90,249 vehicles in January. These had both been long-term lows for the respective months. Consequently, despite March’s gain, new car sales were down 12.0% year-on-year over the first quarter of 2021 at 425,525 vehicles. 

“While COVID-19 restrictions have had a significant impact on new car sales since early-2020, a number of other factors appear to have also been in play: 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.

“New car sales only achieved one monthly year-on-year gain in 2020. As a result, new car sales fell 29.4% over 2020, with the total 1,631,064 vehicles sold being the lowest since 1992. Furthermore, the sales decline of 29.4% was the largest since 1943.”

Private new car sales saw another decline in March, falling 4.1% year-on-year 

Howard Archer continues: “Private new car sales were still particularly weak in March, falling 4.1% year-on-year to 126,850 vehicles. This followed year-on-year declines of 37.3% in February and 38.5% in January. Private new car sales were down 18.3% over the first quarter of 2021.”

Fleet sales strongest sector in March, rising 28.7% year-on-year 

Howard Archer continues: “New car sales to the fleet sector markedly out-performed those to the private sector, as they rose 28.7% year-on-year to 151,360 vehicles. This followed annual declines of 33.5% in February and 39.7% in January. Fleet sales were down 5.9% over the first quarter of 2021.”