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1.63 million new cars hit UK roads in 2020 according to figures released by the Society of Motor Manufacturers and Traders (SMMT). With over 680,000 fewer cars registered, 2020 produced the lowest annual registration total since 1992.
The national lockdown between March 23rd and June 1st accounted for a significant proportion of the losses, with the market down over 615,000 units by the end of June. A further lockdown in England in November, together with enhanced restrictions periodically affecting the other three nations of the UK, added to an already challenging new car market. Dealers introduced ‘click and collect’ services part way through Lockdown-1, and enhanced online sales solutions enabled dealers to satisfy pent-up demand. These developments will already be paying dividends as the UK once again finds itself in a national lockdown, expected to last until the beginning of March at the earliest.
The wholesale used car market was somewhat subdued in December, with little evidence of a serious bounce-back following November’s lockdown. That was not surprising as December tends to be one of the weaker used car retail months, with Christmas shopping higher on the public’s priority list. The first-time conversion rate was slightly better than November’s at 72.4%, although that was almost 13 percentage points lower than December 2019.
As we look to the year ahead and consider what is in store for the new and used car markets, COVID-19 remains the biggest challenge. Thankfully, the UK Government achieved an 11th hour Brexit trade deal, averting import tariffs, so that is one less problem for the new car market to contend with.
It is encouraging to see the rapid roll-out of COVID-19 vaccines, however, it is likely to be several months before the UK sees significant coverage, making further restrictions likely. The identification of a new, more easily transmissible variant of COVID-19 is a worrying development and has led to the latest national lockdown. This will undoubtedly affect new car registrations in at least January and February, and the impact will be considerable when compared to last year’s numbers, as the effects of COVID-19 did not impact that period. As we move through March and into the second quarter, which last year was badly affected due to Lockdown-1, registration totals should begin catching back lost ground and by year-end could reach around the 2 million mark.
The used car market should burst back into life once the Government gives a firm indication that the latest lockdown is to end. Until then, Glass’s expects continuing lack-lustre activity. Despite the challenges that lay ahead, the outlook for the used car market remains upbeat, with no crash in used car values expected.