Record six months for new car market – fact or fiction?

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It’s been claimed that the first six months of 2016 is a record for the new car market. Many newspaper and online reports will refer to the 1.42 million new car registrations as sales but actual sales, or new car transactions rather than registrations, may be as low as 1.21 million. Industry sources suggest that the level of pre-registration activity this year is somewhere between 10 – 15% of total registrations no matter what the Society of Motor Manufacturers (SMMT), which reports the industry figures and some manufacturers, may claim.

2016’s car dealer

Pre-registration activity is reported to have been much higher during June as dealers struggled to achieve their sales targets before the end of the month during the uncertainty caused by the EU Referendum. Compounds around the country full of registered cars with no homes to go to would support these reports.

Is this a problem? Probably not as manufacturers need to shift cars they have built and dealers can gain financially by pre-registering cars which will help achieve a sales target imposed by the manufacturer and earn a bonus payment. The dealer then has a ready-made used car to sell – actually it’s a new car with delivery mileage.

However, with incentives on new cars and the financial attractions of a PCP deal too good to ignore, plus the upcoming plate change in September, the pre-registered vehicle enters a tough market. Dealers have many tools at their disposal to gauge demand for a car and to help determine the right price for that car but if these aren’t used and the price is wrong then the car can be stuck on a dealer’s forecourt eroding the profit opportunity week by week.

Pre-registration activity isn’t new, it’s been a part of new car sales culture for several decades. The sudden surge of registrations in the last few days of a month has been a feature of many manufacturers’ sales ‘success’ at least since the beginning of the 1990s.

Does any of this really matter? Probably not for the UK country managers and sales directors who can tell their masters in France. Germany, India, Italy, Japan, South Korea or the USA that sales are on the increase. And certainly not for consumers who have more choice. But spare a thought for the franchised dealers who are caught between a rock and a hard place.

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