David Raistrick, UK Manufacturing leader at Deloitte, the business advisory firm, comments on the latest new car registration figures:

Car retailing sector puts on brave face ahead of uncertain year

The slight dip in December’s new car registration figures, and the total for 2011 (4.4% down on 2010) is broadly as expected, reinforcing our forecast that 2012 is likely to be a difficult year for the automotive sector. Despite putting on a brave face, the market is far from settled and various economic and environmental factors could severely impact organisations operating in this sector.

We’ve been working closely with the RMI National Franchised Dealers Association (NFDA) on a number of areas to understand and anticipate market movement and we believe total new car registrations for 2012 will be relatively low – around the 1.84m mark. There is no doubt that 2012 is going to be a tough year. I expect there will be a levelling off for sales in new and used car sales, both in the UK and more widely across Europe. Notwithstanding this, the low volume of new car sales over the last few years should ensure residual values remain firm despite tough trading conditions.

During 2011 the market saw a decrease in retail sales, which was balanced by an increase in fleet sales. For the coming year, I see retail sales being down slightly, but with fleet sales remaining broadly static at 2011 levels.

The position across Europe is diverse, with many countries predicting a drop due to local economic uncertainty. Germany in particular stands out from the pack with strong forecasts for new car sales in 2012, which builds on an already strong new car registration base in 2011.

Bursts of positivity in car manufacturing sector struggles to calm uncertainty

A number of manufacturers continue to do well with Nissan this week reporting record figures for their production plant in Sunderland; Ford reporting one of their strongest years in North America and other manufacturers recording similar successes.

At the same time, the latest PMI figures report a further decline in December. Whilst this decline was less than expected, due to new orders from Germany, China and eastern Europe, there is progressing uncertainty about the eurozone and how the outcome will impact UK production, export and import markets. The vital aspect here is the state of the long term order books for UK manufacturers and whether demand will continue to exceed delivery.

It’s encouraging to see some sectors within manufacturing still growing strongly, but there continues to be risk, and survival will depend on how manufacturers and retailers expect, plan for and manage this risk.