Showrooms shifted 10.8 per cent more new vehicles than they did in 2012, with analysts pointing to windfalls from PPI compensation, attractive finance packages and a hunt for more fuel-efficient cars as the main drivers of growth.
The Society of Motor Manufacturers and Traders (SMMT), which had forecast 2.25m sales last year, expects the pace of growth to fall to around one per cent in 2014 following an “exceptional” 22 months of increasing sales.
“While the European market is only now showing signs of improvement, the UK has consistently outperformed the rest of Europe,” said chief executive Mike Hawes, though he doubts that the industry can surpass the record of 2.58m set in 2003 any time soon.
Three-quarters of private car sales are funded with some form of loan. “The real story in 2013 has been the success of the Personal Car Plan offered by car manufacturers – indeed the way the British buy cars has been truly transformed,” said John Leech, UK head of automotive at KPMG.
Hawes said there were also signs that drivers who have taken a share of the £13bn PPI compensation scheme are using their windfall to pay the deposit on a new car.
More than one in seven new cars bought last year were built in the UK. Full production figures are due out later this month.
The SMMT forecasted that more than 1.5m vehicles rolled off the production lines in 2013, and Hawes told journalists he believes production could return to the 1970s peak by 2017 – providing competitors in France remain subdued.