Like many sectors, sales on cars and car finance was dramatically reduced by the Coronavirus pandemic. New car registrations in April 2020 nearly completely disappeared, with May 2020 and June 2020 showing year-on-year reductions of 89% and 35% respectively.
However, as showrooms have opened again and more people start to think about returning to the workplace, demand for used cars and finance and new car registrations has started to increase.
Used car sales have taken off ahead of new car registrations, with uplifts in sales starting in June. The number of finance deals to buy a used car in June 2020 compared to last year has increased by 2% and the total amount borrowed increased by 9%. This latest data from the Finance & Leasing Association (FLA) also supports data released by Auto Trader, stating a 90% increase in the number of leads sent to sellers during the month of June while car supermarket Motorway.co.uk has seen its used car sales increase by a third compared to its peak level pre-Coronavirus.
New car registrations in July are ahead of last year’s numbers according to figures from the Society of Motor Manufacturers and Traders (SMMT), a motor industry trade association. It describes this increase as ‘pent up’ demand, both from delayed purchasing decisions by consumers, but also reflecting the time dealerships needed to fully re-open safely. The total level of new car sales in 2020 so far remains behind 2019 levels, with the SMMT expecting sales to be 30% down at the end of 2020, equivalent to £20bn in lost sales.
Mike Hawes, SMMT chief executive, said:
“July’s figures are positive, with a boost from demand pent up from earlier in the year and some attractive offers meaning there are some very good deals to be had. We must be cautious, however, as showrooms have only just fully reopened nationwide and there is still much uncertainty about the future.
“By the end of September, we should have a clearer picture of whether or not this is a long-term trend. 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. The next few weeks will be crucial in showing whether or not we are on the road to recovery.”
The levels of finance for new cars in July is not yet available from the FLA, but data for June showed lending remained nearly a fifth down on last year.
Commenting on the car finance figures, Geraldine Kilkelly, head of research and chief economist at the FLA, said:
“The consumer used car finance market led the recovery in June as showrooms began to re-open. Monthly new business volumes in this market were back to normal levels following the record low reported in April. The consumer new car finance market has taken a little longer to bounce back, but new car registrations figures suggest the market returned to growth in July.”