Everyone has got something bad to say about 2016, whether their favourite rocker bit the dust or referendum results and election shocks gave them the big old blues. But here’s a happy bit of news: 2016 was a booming year for the motor trade. Whilst both new and used cars were changing hands, it was the sales figures of new cars in particular which made a mark in the record books.
While some people held concerns that the automotive industry – along with numerous other sectors – might suffer at the hands of the Brexit vote, the figures have so far proved a pleasant surprise. In total, a record 2.69 million new cars were sold in 2016 across the UK, defying the negative predictions. The Society of Motor Manufacturers and Traders (SMMT) confirmed these figures, which are 2% higher than the previous year.
So what’s the reason behind the rise? Against the odds, car dealerships have been fitting more trade plates; more credit cards have been swiped; more key fobs have been handed over; more insurance policy paperwork has been sent out… all regardless of the economic forecasts. What gives?
Well, the statistics don’t reveal the full picture, as is often the case. It seems that the increased sales are mostly due to big purchases made by businesses for their fleets. Domestic sales actually showed a decrease, with each month from April to December showing lower private car sales than in 2015. So while new car sales in total were up on previous years, private buyers were actually holding onto their pennies with a bit more caution.
2016 sales have bolstered the industry, but some economists predict that a weakening pound will bring about a slump in 2017, as people’s salaries lose value and the price of cars increases to balance the change. As a result, sales might drop by around 5%, or possibly even more than that. Not only could the fluctuating value of sterling have an impact, but increasingly poor interest rates on unsecured loans could also make it more difficult for consumers to buy cars in the near future.
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Further concerns arise when our future position in or out of the EU is considered. Whilst initial worries about Brexit’s impact may be temporarily allayed by the SMMT’s release of such impressive sales figures last year, it’s impossible to know what could happen if we lose free trade with the EU. The cost of a single car could rise by about £1500, according to a spokesperson from the SMMT. On luxury vehicles, that’s a not unnoticeable 1-2%, and on entry-level hatchbacks and small family cars, the difference is even more damaging with it being roughly 10% more expensive.
But it’s not all bad news, as the UK is almost unique in the vast variety of vehicles available, which should help keep the car trade afloat. The SMMT has highlighted the fact that almost 400 models are on sale in the UK’s new car market, from a total of 44 different brands.
Nobody has a crystal ball to see what will happen in 2017, and with so many different potential circumstances for the UK’s position in trade, all we can do is keep our fingers crossed and be glad of the good sales ringing up the tills in 2016.