For the second year running, UK car sales hit a record high in 2016 despite fears that the Brexit vote would affect demand.
Despite expectations from analysts that the result of the referendum would lead to a slump in car sales towards the end of 2016, sales reached 2.7 million – 70,000 more than were sold in 2015.
The Society of Motor Manufacturers and Traders (SMMT), who are expected to publish full data later today, predict registrations to fall by five percent in 2017 due to the fall in the pound and difficulty to continue beating record sales.
The SMMT’s Mike Hawes said 2016’s growth was due to “very strong” consumer confidence, low-interest finance packages and the launch of new models. He also added that the five previous years of increased sales had been fuelled by pent-up demand that developed during the recession of the late 2000s.
“The strong pound in terms of imports (has) enabled manufacturers to offer some very compelling incentives,” SMMT CEO Mike Hawes said.
“With the weakening of the pound, that margin has diminished so the really attractive offers won’t be as readily available and that is more likely to flow through to the purchase pattern,” he added.
Asked if the formal start of Brexit talks would affect car sales in March, Hawes said: “There will be a lot of attention and noise around that. Does that translate into consumer purchasing patterns? Probably not immediately,”
Although he is expecting a “lumpy” performance in 2017, March – the biggest sales month of the year – will most likely remain unaffected as new licence plates are introduced.
Overall, the impact of Brexit on the car industry was is so far, unclear.
Hawes warned that if the UK is unable to trade freely with the EU and tariffs are introduced, it would add about £1,500 to the price of each imported car.