Yahoo Finance 'Revenge buying' drives surge in sales of 70-plate new cars
Consumers unable to splash out on foreign holidays are spending big on cars, boosting the industry on the first day that new “70-plate” registered vehicles are available.
Dealers have reported massive demand for new cars at odds with wider economic gloom as worries about the long-term impact of coronavirus grow.
Daksh Gupta, chief executive Marshall Motor Holdings, said: “It’s very busy and my best guess is that it could be 20pc to 30pc up on the same month a year ago.”
Last month Mr Gupta coined the term “revenge buying” of cars by motorists frustrated by the pandemic and looking to treat themselves to a major purchase.
The boss of the 117-dealership chain added that September would be “critically important” for the industry as it will be “the only peak month of the year”.
This is because sales in March, the other month when registration plates update, were curtailed by the lockdown.
The sentiment was echoed by Robert Forrester, chief executive of Vertu Motors. “Demand from private motorists is exceptionally strong, up 20pc year on year so far," he said.
“It’s a very positive sign. It’s blinking obvious that people have got money and a very sizeable number of them are not worried about redundancy, have not spent lots on foreign holidays and are putting that money towards a new car.”
Sales could even be hampered by a lack of supply, with manufacturers only slowly getting back up to pre-pandemic production levels, according to Mr Gupta and Mr Forrester.
The Society of Motor Manufacturers and Traders has noted a “pent-up demand” for cars after Covid-19 forced dealers to shut for more than two months.
It's the 1st of September and that means #NewRegDay! Busy, busy, busy! @MarshallGroup love this day! #70Reg #marshallmoments pic.twitter.com/y5nr6chO8l
— Marshall Motor Group 🌈 (@MarshallGroup) September 1, 2020
In the months from March to June, new car registrations fell by 44pc, 97pc, 89pc and 35pc respectively, before rebounding 11pc in July, the first full month of forecourts being open. Sales figures for August will come out later this week.
Sue Robinson, director of the National Franchised Dealers Association, said 86.5pc of the body’s members had now reopened and added that some brought staff back from furlough early to cope with demand.
However, total sales for the month may not be as high as normal despite the interest from private motorists.
This is because fleet buyers such as large companies and car rental businesses are not buying at their normal rate.
So-called “tactical registrations” such as manufacturers and dealers registering new cars at the end of the month to meet targets are also unlikely to happen.
This could give a truer picture of how consumers feel about the economy, without such factors to skew demand, Mr Forrester added.
Despite early positive indications, the industry is yet to call an end to the battering it has taken from Covid-19.
The SMMT’s most recent sales data found that only 828,000 new cars were sold in the year to the end of July, the most recent data available, meaning the market is down 42pc - almost 600,000 cars - on the same point a year ago.
Its latest prediction is for a 30pc fall in sales this year, down to about 1.8m new cars, representing more than £20bn of lost business.
