Special Report: Stellar year for UK car industry as sales reach century-high

ANNUAL figures have shown British buyers registered more cars during 2016 than in any other year this century.

Latest figures from the Society of Motor Manufacturers and Traders show annual registrations climbed for the fifth year in a row to almost 2.7 million vehicles.

This was despite a dip during the final month of the year.

The SMMT data shows the market experienced uplifts in 10 out of the last 12 months; disappointingly December’s 178,022 was down 1.1% on the same month in 2015.

Nevertheless, it was just a minor blip during an otherwise stellar year for the car industry.

The SMMT said buyers were attracted by a range of new car models and attractive finance deals, helping push registrations up to 2,692,786 – a 2.3% rise on the previous year and broadly in line with expectations.

The UK new car market is one of the most diverse in the world, with some 44 brands offering nearly 400 different model types – and 2017 looks set to be another competitive year with almost 70 new launches already planned over the next 12 months.  

Fleets were responsible for most of the growth, with demand growing to a record 1.38 million units. The private market remains at a historically high level, with more than 1.2 million private buyers registering a new car in 2016, although demand did fall over the latter three quarters.

The competitive range of affordable finance is likely to be a crucial factor in driving private demand as consumers look to take advantage of low interest rates and flexible payment options.

Diesel and petrol-fuelled cars saw their market shares rise by 47.7% and 49% respectively. However, alternatively fuelled vehicles (AFVs) experienced a strong uplift in demand, up 22.2% across the year. Plug-in hybrids and petrol electric hybrids, in particular, experienced significant growth, with demand up 41.9% and 25.1% respectively. Meanwhile, more than 10,000 motorists chose to go fully electric in 2016 – up 3.3% on 2015.

Mike Hawes, SMMT chief executive, said: “Despite 2016’s political and economic uncertainties, the UK’s new car market delivered another record performance as car makers offered an incredible range of innovative and high tech models.

“2017 may well be more challenging as sterling depreciation raises the price of imported goods but, with interest rates still at historic lows and a range of new models arriving in 2017, there are still many reasons for consumers to consider a new car in 2017.

“Looking longer term, the strength of this market will rest on our ability to maintain our current trading relations and, in particular, avoid tariff barriers which could add significantly to the cost of a new car.”

Despite the growth, it was a mixed year for many manufacturers; although happily for the West Midlands, both Jaguar and Land Rover enjoyed very positive results.

Bucking December’s overall decline, Jaguar managed an impressive 31.3% increase, with registrations up to 2,520 (December 2015: 1,919).

However, the results for the year as a whole were even more impressive.

Driven by the popular of the XE and the F-Pace – which between them accounted for 62% of all sales – registrations jumped more than 45% to 34,822 (2015: 23,954) and the brand increased its market share to 1.29% (2015: 0.91%).

This means Jaguar sold more vehicles in a calendar year than ever before, surpassing a 12-year record.

Land Rover couldn’t quite match the performance of its stable-mate but were nevertheless, still strong.

The brand managed to sell just one vehicle more (4,967) than it did in the same month in 2015 (4,966), however, for the year as whole, sales rose to 79,534 (2015: 66,574), an increase of 19.5%.

Combined, JLR sold 117,567 vehicles (according to its own figures, rather than those of the SMMT) during 2016, up 17% on 2015. That equates to one of its products being registered every 4.5 minutes in the home market.

Commenting on the performance, Rachael Thompson, Jaguar Land Rover UK Sales Director, said: “We are absolutely delighted with this result, it’s been an incredible year for both Jaguar and Land Rover in the UK. It shows that we are creating vehicles that excite, appealing to loyal buyers and bringing new customers to these two great brands.”

She said the Jaguar F-Pace was evidence of this, with more than 8,000 of the crossover vehicles finding their way onto UK driveways since the model’s launch in April.

She added that for Land Rover, the Range Rover Evoque continued to break records, enjoying its best year yet, with sales up by an impressive 31% on 2015.

Main rival BMW had a more steady year by comparison, with an annual total of 182,593 reflecting a 9% increase on the prior year (167,391).

“BMW Group had a tremendous year in 2016 breaking records with both its BMW and MINI brands in the UK, with sales exceeding 250,000 vehicles for the first time and establishing BMW as the leading premium brand in the UK,” said Graeme Grieve, Chief Executive Officer of BMW Group UK.

“Our results have been driven by strong growth from the corporate sector where we have increased sales of both brands.

“Although the 2017 economic outlook remains challenging, we have a significant number of new model introductions and are looking forward to another strong year.”

Its own rivals, Audi (6.36%) and Mercedes Benz (17%) both enjoyed stronger years in terms of percentage growth although both sold fewer models; Audi (177,304) and Mercedes Benz (169,828).

Elsewhere, Ford saw its market share reduced to 11.82% compared with 2015’s 12.73%.

This was despite claiming the year’s best-selling model with the Fiesta (left).

Overall, sales dipped 5% to 318,316 (2015: 335,267). Nevertheless, it was the only manufacturer to claim a four-figure market share.

Traditional rival Vauxhall could only manage a 9.32% share as sales dipped 7% to 250,955 (2015: 269,766). This despite the firm having both the Corsa (2nd) and Astra (6th) in the list of top ten best-sellers for the year.

In the luxury sector, both Aston Martin and Bentley enjoyed a strong 2016; with the Gaydon-based manufacturer seeing a 4.5% sales hike over the year, while the Crewe-based firm enjoyed a very happy New Year with registrations up 41%.

Commenting on the overall results, Keith Parry, Relationship Director for Motor Retail at Barclays in the Midlands, said: “Achieving a record annual total for new car registrations in 2016 was no mean feat, and the industry should be rightly proud of its achievements last year.

“Despite facing a number of macroeconomic headwinds, by delivering quality ranges that appealed to buyers alongside competitive finance deals, sellers were able to top the already impressive numbers posted in 2015.
 
“Private purchases were broadly in line with the previous year, with a 4.8% increase in fleet sales driving the industry to its best-ever overall result.
 
“As the slightly softer December data suggests, we’re not going to match the record figures this year. Currency moves following the EU referendum vote and wider economic developments are starting to feed through and are likely to lead to some price increases, making it difficult for sellers to replicate the most attractive offers we saw over the last 12 months. However, if the industry retains its commitment to quality and is able to match the tremendous efforts made in 2016, it can still succeed this year.”

The strong sales is also good news for region’s two main engine production centres – BMW’s Hams Hall plant and JLR’s factory at i54, near Wolverhampton, which produces the new Ingenium unit going into many of the group’s new products.

It is also good news for the thousands of component firms which form part of a strong supply chain – both in the West Midlands and elsewhere.

All will be hoping that success can continue for as long as possible, although the fall-out from Brexit still makes predictions difficult.