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Auto industry lauds furlough extension as new car registrations fall

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Saleha Riaz
·3-min read
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SMMT said February is generally a 'traditionally weak month for new vehicle uptake' but this year was particularly bad due to the pandemic and showroom closures. Photo: Getty Images
SMMT said February is generally a 'traditionally weak month for new vehicle uptake' but this year was particularly bad due to the pandemic and showroom closures. Photo: Getty Images

The UK new car market declined by 35.5% in February as 28,282 fewer units were registered, the Society of Motor Manufacturers and Traders (SMMT) revealed, as it praised the government's announcement to extend the furlough scheme to September.

The organisation said February is generally a “traditionally weak month for new vehicle uptake” but this year was particularly bad due to the pandemic and showroom closures. The industry recorded its lowest February uptake since 1959, with 51,312 new cars registered.

The SMMT praised Chancellor Rishi Sunak’s decision to extend furlough in Wednesday's budget announcement, which it said was “vital given the massive fall in vehicle demand.”

“With the country facing ongoing restrictions until at least 12 April, the automotive industry expects a challenging March, traditionally the sector’s most important month which would typically account for one in five annual registrations,” it added.

Chart: SMMT
Chart: SMMT

With showrooms closed nationwide since 5 January – and in many parts of the country, since December – both private and fleet sector demand fell, by 37.3% and 33.5% respectively.

All vehicle segments saw declines save for luxury saloons, which recorded a 3.8% increase.

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Plug-in vehicles continued to enjoy growth, with battery electric vehicles and plug-in hybrid electric vehicles taking a combined 13% market share for the month, up from just 5.7% in February 2020.

However, increasing uptake of these new technologies to the levels required by 2030 “remains a mammoth task,” SMMT said.

In December, the UK government announced it wanted to reduce emissions by at least 68% by 2030, compared to 1990 levels.

SMMT pointed out that the new budget announcement “proving a missed opportunity given the lack of measures to support the market overall and notably the transition away from pure petrol and diesel cars and vans.”

The data also showed there has been £23bn ($32bn) worth of fewer registrations since March 2020 and SMMT has revised its market outlook to 1.83 million new car registrations in 2021, down from the 1.89 million predicted in January. Most of these losses are expected to occur in March.

READ MORE: Worst start to the year for UK car sales since 1970

Ian Plummer, commercial director at Auto Trader, said that "confirmation from the prime minister that forecourts will have to remain closed during the key sales month of March was disappointing... With UK car production down nearly 30%, due in part to the closures, the government needs to recognise the value in driving car sales as well as local production, both of which contribute major tax revenues the Treasury can surely ill afford to curb."

Mike Hawes, SMMT CEO, said the February decline was “deeply disappointing… More concerning, however, is that these closures have stifled dealers’ preparations for March with the expectation that this will now be a third, successive dismal ‘new plate month’.”

“It is essential that showrooms reopen as soon as possible so the industry can start to build back better, and recover the £23bn loss from the past year,” he added.

Meanwhile Karen Hilton, chief commercial officer at heycar, said the closure of forecourts "had prompted the most significant shift in car-buying behaviour in a generation. The result has been that thousands more consumers have turned to online platforms to purchase a vehicle."

“And as physical sites re-open from April 12, there is also a string of welcome economic indicators that consumer spending will bounce back too," she added.

She also said The Bank Of England’s recent Monetary Policy Report revealed that savers had "squirreled away £125bn during the pandemic... At heycar we’re seeing strong evidence that car-buyers are looking to spend some of these savings."

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