The Society of Motor Manufacturers and Traders (SMMT) has upgraded its sales forecast for 2014, as a demand for new cars has hit a record of 29 months continued growth. The industry body decided that because of the requirement of new vehicles in Britain, they should raise their prediction on how many motors will be sold this year by 50,000 to 2.45 million.
UK dealers are able to boast sales figures of 172,907 new cars in July, which is up by 6.6 percent on the same month last year and represents 29 consecutive months of rising sales. Chief executive of the motor industry trade body, Mike Hawes said
“July saw the new car market extend its record period of growth to a 29th month, as confident consumers took advantage of an array of new products and attractive finance deals on the latest fuel-efficient new cars. The continued positivity has led to an uplift in the SMMT full-year forecast to 2.45 million passenger car registrations, a rise of 8.1 percent. However, the more moderate growth of the last three months shows that overall demand is beginning to stabilise.”
So far during 2014, there have been 1.46 million new cars registered in the UK, which represents an increase on the same period last year of 10.2 percent. In July, it was revealed that the Ford Fiesta has remained the most popular car in Britain, with sales figures of 8,854, taking the total sold so far this year to 79,007. Ford also took second spot with its mid-sized Focus that sold 6,013 in July and has amassed 50,767 sales in the first seven months of this year. The Vauxhall Corsa’s sales came in third place, with monthly figures standing at 5,467 and year-to-date sales reaching 47,752.
It has been a wonderful period of success for the automotive industry, which has been one of the strongest performing areas of the British economy since the economical crisis has begun to subside. Originally, this impressive achievement had been driven by stimulus measures, such as the government’s 2009 scrappage scheme, which offered generous deals on old vehicles for people who were buying new ones.
However, there has now been a renaissance in the field of British car design and engineering, which has seen the demand for UK models surge across the world. There has been a particularly strong demand for prestigious vehicles, such as Jaguar and Land Rover, both of which have introduced a series of innovative models over the past few years. These have included the Jaguar’s XF saloon and F-Type sports car, whilst Land Rover has had to fight to meet their customers demand since they introduced the “baby” Range Rover Evoque. A spokesperson for Jaguar Land Rover said
“We are the UK’s largest premium automotive manufacturing business, employing around 28,000 people in the UK. A combination of significant investment; including £3.5bn into product development and capital expenditure in 2014/15, and being the UK’s biggest investor in R&D in the manufacturing sector, has enabled us to deliver the right products at the right time propelling Jaguar Land Rover through the recovery. Our success has been delivered through having the strongest model line-up in the company’s history including the recent launches of Range Rover Evoque, Range Rover and Jaguar F-Type. Maintaining this momentum, the company aims to deliver fifty new product actions over the next five years.”
The UK car industry can boast that some 160,000 people are directly employed across the entire industry, with another 770,000 jobs being supported by it. However, despite the long growth trend that is being enjoyed, Chief UK and European economist at HIS Global Insight, Howard Archer, warned there might be issues in the future which could have a knock-on effect on car sales. Archer said
“Private car sales are undoubtedly being buoyed by attractive offers and finance packages as well as by appealing, fuel-efficient new models. Furthermore, there are clearly a significant number of people who held off for an extended period from replacing their car due to the difficult and uncertain economic circumstances who are now more willing or able to act. A concern for car manufacturers is that current muted earnings growth threatens to be a constraint for car sales while some consumers will also be worried by the prospect that interest rates will start to rise before long.”
There is also the threat that the increasing political tensions with Russia could impact on the UK and overall European sales, as the prospect of the nation having sanctions imposed on it over its military actions in the Ukraine and its possible involvement in the shooting down of Malaysia Airlines flight MH17. SMMT has revealed data showing that in 2013, 9.5 percent of the UK car exports by volume went to Russia, which is down from 10.6% on the previous year. The value of exports by the UK vehicle industry was £34 billion in 2013, whilst in 2012 it was £30.6 billion. However, a spokesperson for SMMT concluded, “One of the UK automotive industry’s key strengths is its diversity and worldwide appeal; although volumes exported to Russia have grown in recent years, it is one of 150 global markets for our unique mix of volume, premium and niche vehicles. UK car production is expected to break all-time records by 2017, and the UK’s reputation for engineering excellence has seen the average wholesale value of an exported car double in the past decade from £10,200 in 2004 to £20,640 in 2013.”