Car industry ‘optimistic’ despite poor start to 2021

New car sales in the UK have taken a hit as a result of the county’s third national lockdown, with used car sales helping to prop-up the motor retail sector.

In the first month of 2021, new car sales were down by almost 40% when compared to the previous year.

In a recent Cox Automotive Market Survey, 70% of dealers cited the third lockdown had caused between 10 – 30% reduction in new car orders, whilst 17% indicated it had hit them as badly as up to 50%.

Philip Nothard, Cox Automotive UK’s customer insight and strategy director, said: “In Europe, January new car registration results were mixed. “France (-5.8%) and Italy (-14%) performed relatively strongly compared to Germany at -31.5% followed by the UK at -39.5%. Spain felt the heaviest impact from the COVID pandemic at -51.1%.  However, when looking at these figures, it’s important to remember that the outbreak in 2020 impacted at different times across Europe and each country responded at various levels.”

More than half (55%) of dealers believe the economic conditions will improve over the coming months, with only 23% feeling it could worsen.

In the used car market, trade values are easing as retailers become selective and hold back from increasing stock levels.

Cox Automotive’s Car Market Tracker shows that more than two-thirds of car dealers said used car sales were down by 10-30% in 2021.

Most of the used car sector operated more than 50% of usual seasonal performance and for many its business as usual, however.

Nothard said: “The sentiment from across the network is that there are ’pockets’ of weakness in retail which could be caused by increasing financial pressure - two-thirds of dealers reported an increase in both days in stock and overage vehicles. The advice given is to hold firm where possible.

“Many dealers acquired stock in Q4 of 2020 to be well placed for a fast start in 2021, although unfortunately some of this stock is now ageing. What’s clear is stocking the right car in terms of price point, model and good specification is key for the current trading conditions in 2021.”