John Leech, KPMG’s UK Head of Automotive comments on the new car registrations figures for October published by the SMMT today:
“The UK new car market grew by 4.0% in October 2013, compared to 12.1% growth in September and 15.7% growth year to date for 2013.
“Today’s numbers suggest that the tremendous growth we have seen in the UK new car market over the last few months is starting to return to a more sustainable growth path. And for the first time in over a year, the three other main European markets have had a similar experience, with new registrations in Germany growing by 2%, France by 3% while registrations in Italy fell by 5% due to a VAT increase taking effect.
“This slower pace of growth seems much more sustainable especially considering the potential impact the huge growth rates in new car registrations might have on used car prices. One feature of the recent increase in new car retail sales has been the availability of cheap finance from car manufacturer-funded personal car plans (PCPs). Cars sold on a PCP tend to churn faster as they approach their third birthday as consumers are faced with the choice of a large balloon payment to retain the vehicle or a replacement new car on another PCP. It is hoped that a slower pace of new car sales will avert a used car price crash such as the one seen in 2008.
“With improving UK economic conditions and rising house prices having a positive impact on consumer confidence we continue to forecast that strong private demand will see new car registrations grow by 5% in 2014 and beyond.”
For further information please contact:
Katrin Boettger, KPMG Press Office
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