LONDON Jan 5 British new car sales hit a record
of 2.7 million units in 2016 despite fears that the Brexit vote
could hit demand, although there are signs that registrations
will fall this year, preliminary industry data showed on
Full-year sales beat the previous record of 2.63 million set
in 2015 and overcame expectations from some analysts that the
June 23 referendum result would lead to a slump in 2016.
However, demand in December fell by over 1 percent, only the
third year-on-year drop in nearly five years, the Society of
Motor Manufacturers and Traders (SMMT) said, pushed down by the
first fall in fleet car demand for nearly a year.
Consumer spending has been the main motor of economic growth
since the Brexit vote, although car sales to individual
consumers have fallen in every month since April, compensated
until December by business demand, which lifted overall figures.
The SMMT, which is due to publish full data at 0900 GMT,
said it expected registrations to fall by 5 percent this year as
it becomes harder to keep beating record sales and that the fall
in the pound caused by Brexit vote could also affect demand.
"The strong pound in terms of imports (has) enabled
manufacturers to offer some very compelling incentives," SMMT
CEO Mike Hawes said.
"With the weakening of the pound, that margin has diminished
so the really attractive offers won't be as readily available
and that is more likely to flow through to the purchase
pattern," he said.
Over 85 percent of cars sold in Britain, Europe's second
biggest car market, are imported with dealers using cheap
finance deals, interest-free offerings, added extras and free
insurance as a way to tempt consumers.
But in recent months, several car manufacturers have raised
their prices in Britain to offset the fall in the value of the
pound against the dollar and the euro.
Hawes said he expected a "lumpy" performance in 2017 but
that sales in March, generally the biggest sales month of the
year as new licence plates are introduced, will not be affected
by the formal start of EU divorce talks due in the same month.
"There will be a lot of attention and noise around that.
Does that translate into consumer purchasing patterns? Probably
not immediately," he said.
(Reporting by Costas Pitas, editing by David Evans)