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The growth in new car registrations last year needs to be put in the context of weak demand in Europe and favourable conditions for importers, an automotive industry expert has said.
The Society of Motor Manufacturers and Traders (SMMT) said this month that new car registrations rose 5.3% in 2012 to 2,044,609 – the highest volume since 2008, when the industry was about to become embroiled in the financial crisis. The SMMT said the market grew at its fastest rate since 2001, adding that “strong consumer demand” was responsible.
But Peter Cooke, professor of automotive management at the University of Buckingham, said: “The UK seemingly bucking the trend for the rest of Europe is a cause of interest.” Some have asked how many of the registrations in the SMMT data have been made by OEMs or dealerships, rather than new car buyers.
Cooke said: “We watch the used-car stocks held by a number of dealerships closely, and stocks of very low mileage or delivery mileage vehicles are growing substantially. This could have implications for consumer demand and used-car sales in the future.”
Cooke said that a strong pound relative to the euro had put manufacturers in the Eurozone at an advantage as they struggled with weak domestic demand. “They have simply produced more right-hand drive vehicles and shipped them in, many on special deals.” British carmakers, meanwhile, were exporting most of their product. Prestige brands such as Jaguar Land Rover had benefited from strong demand in the Far East and an improvement in demand in the US. “Exporting to markets outside the Eurozone is likely to leave you in a stronger position,” said Cooke.
He said that more people are starting to pay serious attention to the notion of Britain as a manufacturing nation once again. “But there are problems – banks are still not lending to small firms, and that’s a huge problem. The UK has to take steps to support smaller engineering businesses, or they may drop out. There has been a hollowing-out of manufacturing capability in some areas.
“We need to manufacture more sophisticated goods and be careful with energy policy: electricity is now very expensive,” said Cooke.