New car sales in the UK reached an all-time high in March with more than half a million vehicles registered, bringing the total for the first three months of the year to 820,016, also a record for a quarter.

Upcoming tax changes

A desire to beat upcoming tax changes led to the rush to dealers with the 562,337 vehicles registered in March representing an 8.4 per cent increase on the same month last year. It was the highest monthly sales total recorded by the Society of Motor Manufacturers & Traders (SMMT) since it started collecting data 41 years ago.Mike Hawes, the SMMT chief executive, said, “These record figures are undoubtedly boosted by consumers and businesses reacting to new VED (vehicle excise duty) changes, pulling forward purchases into March, especially those ultra-low emission vehicles that will no longer benefit from a zero-rate fee.“This bumper performance probably means we will see a slowdown in April, exacerbated by the fact there are fewer selling days this year given Easter timing. Looking ahead to the rest of the year, we still expect the market to cool only slightly given broader political uncertainties as there are still attractive deals on offer.”

Surge in sale of alternatively fuelled vehicles

Although a record total of 244,263 diesel cars were sold last month, there was also a 31 per cent surge – to 22,818 – in purchases of alternatively fuelled vehicles, which will not be affected by the new tax increases.Demand from fleets and businesses was also strong, with registrations up 12.6 per cent and 11.9 per cent respectively. Sales to private buyers were up 4.4 per cent, reversing the downward trend seen in February.Howard Archer, chief UK and European economist at IHS Markit, described the record sales as “a last hurrah” for the car industry before a decline over the rest of the year as the economy weakens and inflation takes its toll on consumer spending.

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Mr Archer said, “March’s car sales performance is all the more impressive given increasing signs that the economy may now be stuttering largely due to the increasing squeeze on consumers’ purchasing power coming from markedly higher inflation and muted earnings growth.“The sharp weakening of the pound makes it more difficult for car dealers to offer attractive deals on imported cars – with the result that some car manufacturers have raised prices and more increases seem inevitable during 2017.”Samuel Tombs at Pantheon Macroeconomics said that the shift in the timing of purchases because of the imminent VED increases would mean that registrations would probably fall back sharply during the spring. He said consumer confidence had declined to levels consistent with sales declining by at least five per cent this year.For related news and features, visit our Enterprise section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit  

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