4th June 2015
While new car sales growth slowed down to 2.4% year-on-year in May according to Society of Motor Manufacturers experts believe the economic fundamentals still look largely healthy for the motor industry.
The latest number marks a fall from April’s gains of 5.1%.
Car sales, often viewed as a barometer of economic progress, have now risen for 39 consecutive months and the gains are now coming off a very high base. It is hoped that the number will stabilise at an elevated level over the coming months.
May witnessed 198,706 units being sold, while car sales were up 5.7% year-on-year through the first five months of 2015 at 1,119,072 units. This follows an overall increase of 9.3% in 2014 when car sales reached a 10-year high of 2,476,435 units.
Howard Archer, chief UK and European economist at IHS Global Insight said: “Private car sales should be supported by improving real earnings growth, rising employment and elevated confidence. Meanwhile, likely decent economic growth over the coming months and relatively healthy business confidence should continue to supporting growth in sales of fleet cars.”
While May’s gain of 2.4% year-on-year was down from gains of 5.1% in April and 6% in March, when sales were at a record 492,774 units as number plates changed, Archer believes May’s total “is still a highly respectable performance given the length of time that car sales have been growing”.
He added: “It seems unrealistic to expect car sales to keep churning out strong growth rates through the rest of the year given that they are now at such an elevated level. In fact, having led growth in the sector in 2013 and 2014, private car sales growth has been limited to 1.3% year-on-year through the first five months of 2014 and to 1.2% in May itself.”