New car sales down 89% in May ... which is actually an improvement on April

THE CORONAVIRUS pandemic continues to wreak havoc on the car industry with sales of new vehicles falling 89% in May compared with the same month last year, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

The introduction of click and collect sales midway through the month mitigated a repeat of April’s car sales near-moritorium, when registrations fell 97.3% year-on-year. With car dealerships in England only allowed to re-open their showrooms from June 1, May’s figures show 20,257 sales, with 12,900 of those being private buyers (the rest going to fleet purchasers) — 163,477 fewer than the same month in 2019.

Over the first five months of 2020, half a million cars were registered compared with more than a million at the same point last year.

Alex Buttle, director of car selling comparison website Motorway.co.uk, said: “It’s not exaggerating to suggest it’s unlikely we’ll see monthly new car sales as low as these again in our lifetime.”

The industry will have its fingers crossed that June’s figures will show a return to some semblance of normality, after a full month of physical dealerships being open to customers in England. However, forecourts in Scotland, Wales and Northern Ireland remain closed for now.

All fuel types apart from one saw a decline in sales. Diesel took the biggest hit, with 93% fewer cars sold. But pure-electric cars (known to the SMMT as battery-electric vehicles, or BEVs), saw an increase in sales of 21.5%, showing the rapidly increasing popularity of plug-in models.

The best selling car in May was the Tesla Model 3, which was also the bestseller in the previous month. The electric car, the entry-level version of which comes with 254 miles of range and a £40,490 pricetag, sold 852 units.

Car makers will hope that the worst is now over, with some British car makers brought to their knees by the financial implications of the coronavirus lockdown. Sky News reported this morning that Aston Martin (a company already facing turbulence before the pandemic) is looking to cut 500 jobs from its workforce, equivalent to more than a fifth of its workforce.

McLaren had already announced that it would cut 1,200 people, nearly a third of its staff, amid financial struggles on multiple fronts — as well as the sales of its supercars falling, its F1 team has missed millions in revenue due to the delayed start of the F1 season.

What are the experts saying?

Mike Hawes, SMMT chief executive, said: “After a second month of shutdown and the inevitable yet devastating impact on the market, this week’s re-opening of dealerships is a pivotal moment for the entire industry and the thousands of people whose jobs depend on it.”

He added that he was optimistic pent-up demand would show itself in higher figures in the third quarter of the year. “Customers keen to trade up into the latest, cutting-edge new cars are now able to return to showrooms and early reports suggest there is good business given the circumstances, although it is far too early to tell how demand will pan out over the coming weeks and months.”

Car selling website bosses agreed, saying interest in purchasing cars seemed to be recovering. Buttle, of Motorway.co.uk, said: “Ignoring May figures, which are exceptionally low due to lockdown, there are more positive signs in early June that sales will pick up quickly, and we could be looking at a surge in new and used car sales in Q3.

“All that pent-up demand building over the past two months is resulting in strong buyer and seller activity in both markets. Motorway.co.uk has seen a surge in seller demand ever since car showrooms have opened their doors, suggesting many people are looking at upgrading their vehicles in the coming weeks.”

James Fairclough, CEO of AA Cars, said: “The good news for June is that forecourts and showrooms have now started to reopen this week in England, and dealers have been working hard to introduce stringent hygiene and social distancing measures to allow safe customer visits and test drives.

“There are encouraging signs for the industry that latent demand has been building during the lockdown period and boosted by people who usually commute by public transport, now considering the purchase of a car.”

He also said that traffic on AA Cars’ website had increased, but noted recovery in sales may not be swift due to the financial effect of coronavirus on consumers.

Karen Hilton, chief commercial officer at heycar, called on the government to make clear what help it was willing to offer the industry: “There are loud calls for stimulus to drive the industry — such as scrappage schemes — as we move out of lockdown.

“To help guide customer confidence, it would be helpful if the government set out its position on future support for the industry. However, it will take time to agree the detail of this, which doesn’t help customers who want a car now or dealers who want to sell cars now.”

Hilton predicted the used car market could become a more attractive prospect to car buyers, with some manufacturers predicting delays on the deliveries of new cars.

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