New UK car sales rose for the first time this year in July as dealerships enjoyed their first full month of trading since reopening after lockdown.
According to new figures from the Society of Motor Manufacturers and Traders (SMMT), registrations rose 11.3 per cent last month as pent-up demand and special offers tempted consumers to splash out.
Although the rise was far better than in the same month last year, sales this year are still down 41.8 per cent in total.
The SMMT warned that for the full year it was expecting sales to sink around 30 per cent – representing approximately £20bn in lost sales.
Private owners powered the jump in sales with a 20 per cent increase in registrations, with eight out of 10 major manufacturers provide special incentive deals for buyers.
Deloitte’s head of automotive Michael Woodward said that it was likely that significant discounting would continue over the next few months as manufacturers return to full capacity.
“This could help maintain higher level of sales, at least in the short-term”, he added.
SMMT chief executive Mike Hawes said that though the data was positive, he would have to wait to September to see if it was part of a long-term trend or just a one-off spike.
“Although this month’s figures provide hope, the market remains fragile in the face of possible future spikes and localised lockdowns as well as, sadly, probable job losses across the economy”, he added.
“The next few weeks will be crucial in showing whether or not we are on the road to recovery.”
Seán Kemple, managing director at Close Brothers Motor Finance, commented: “The car market was turned upside down in July.
“The bounce back from near-zero sales in April to an 11% uplift in July reflects the momentous release in pent-up demand that we’ve seen in the past couple of months.
“We usually see a summer slump, but 2020 has been anything but normal; July’s sales have instead accelerated from June.”
According to Close Brothers, dealer confidence has improved significantly since reopening, with 71 per cent of dealers feel confident in the longer-term recovery of the sector.
However, analysts at Pantheon Macroeconomics said a recovery in demand to pre-Covid levels was not currently in sight.
“While some people likely will purchase cars to avoid using public transport, many existing owners will wait longer to trade-up to a new model, given the current weakness of the labour market”, they said.
According to the GfK composite index of consumers’ confidence, new car sales will eventually settle about 10 per cent below last year’s average later this year.
More than 13,000 jobs have already been lost as a result of the pandemic, with fears that many more could go the same way in the coming months due to further uncertainty over a second wave and a no-deal Brexit.
Last week the SMMT reported that car production had fallen by 42.8 per cent so far this year, the worst performance since 1954.