London – Despite a healthy 3.2-percent growth in the UK’s new car demand in the first half of 2016, fears are growing that the market has already peaked and is on a downward slope, particularly following the UK’s vote to leave the EU on 23 June.
The Society of Motor Manufacturers and Traders (SMMT) announced on 6 July that record growth was achieved within the first six months, although the market had “undoubtedly cooled over the second quarter.”
With 1,420,636 new cars registered over the first half of the year, growth was reported across all fuel types, with diesel and petrol registrations growing 2.3 percent and 3 percent respectively in the year-to-date.
However, commenting on the SMMT figures, head of KPMG automotive, John Leech, expressed his concerns over the “falling consumer confidence since the EU referendum.”
New car sales, according to Leech, were down 0.8 percent in June, marking the third months that consumer demand had softened.
According to Leech, manufacturers are evaluating their positions carefully – although the industry is in good health and able to support the market.
The decline in Sterling, he added, is widely forecast to persist for many months and “therefore we can expect prices to rise and volume expectations to be tempered, particularly in the mass-market sector.”
However, personal contract purchase (PCP) car finance is continuing to underpin the market and should ensure the market does not sharply contract.
In light of the recent developments, the SMMT urged the government to take “every measure” to restore business and economic confidence to avoid the market contracting in the coming months.
KPMG has forecast that the new-car market will likely fall in the second half of 2016 by around 4 percent, leaving the full year at or around 2015 levels.