The latest forecast from the SMMT suggests new car sales of just below 1.9 million this year, 15% up on last year’s disaster but around 100,000 down on predictions from October, when Lockdown Three seemed like a sequel too far.
But while it’s impossible not to wince at the memory of the 2.69m sales made just five years ago, the forecast reflects an underlying positivity; 60,000 sales were lost year-on-year in January alone and February will be another tough month. March, with its emphasis on the plate change, usually accounts for 20% of all sales across the calendar year.
The fact that the industry thinks it can bounce back from all this disruption with just a 100,000 deficit from these usually crucial first three months speaks volumes about how they see the pipeline of opportunity.
Some of it will be driven by euphoria, not least from the soon-to-be-vaccinated older people who make up a significant proportion of the car-buying demographic, despite what all those adverts featuring buff twenty-somethings suggest.
Interest rates are low but property prices are strong, so it’s one way to enjoy cash that must have felt weirdly valueless since last March.
Likewise, since the Great Recession, the industry has become underpinned by the repeat lease cycles that most buyers enter into. Some 85% of private new car registrations are for PCPs, and the certainty is they will need replacing, be it with a new PCP or a used purchase.
It’s a cycle that keeps the industry’s wheels well oiled and which is underpinned by used car values staying resolutely strong, thereby protecting residual values.
So too, many will have saved money while locked in and still be restricted on making any big-ticket purchases, such as holidays. For a few months at least, if you’re intent on so-called revenge buying (essentially rewarding yourself for what you’ve been put through), it will probably come down to a new kitchen or a new car.
Electrified cars look set to be the big winners, with EV sales expected to grow 61.7% on last year’s remarkable total and PHEV sales 75.8%. Together, they’re predicted to account for 15.5%. That’s around 1% below diesel’s share, but the ravages of this year could switch that order.
By 2022, EVs will be knocking on the door of 20% of sales and the transition wholly undeniable. That said, mild-hybrid petrols will evidently continue to dominate for some time yet.
That’s good news on many levels, from reducing emissions to the industry prospering. But best of all, it’s reassuring that a sector that employs some 850,000 and pays £20 billion in direct taxes alone has the scope to thrive again.