New car demand up but pressure remains on manufacturing profit margins

vauxEllesmere300With new car registrations passing the one million mark in June, the UK continues to defy gravity, showing 10% growth in the first half of 2013 to 1,163,623 units. Over June itself, the UK new car market saw the 16th successive monthly rise, up 13.4% to 214,957 units.

Private, fleet and business sectors grew from January to June, but private demand increased the most over the first half of the year, up 17.1%, after a 21.3% rise in June.

SMMT interim chief executive Mike Baunton said the numbers were a clear indicator that manufacturers were “delivering desirable new products with tangible cost savings from the latest fuel-efficient technology coupled to a wide variety of competitive finance offers”. While there remained potential challenges ahead, the market was on course to perform well ahead of 2012 levels.

David Raistrick, UK Automotive Leader at Deloitte said that with manufacturing production levels at a two year high and the 16th consecutive month of new car sales growth in the UK, July had got off to a good start but in continental Europe, car manufacturers were looking for indicators that the painful market contraction was lessening. “With Germany, Italy and France all reporting lower rates of decline when compared with last month, there is the suggestion that the bottom may have been reached,” he added.

“The challenge going forward is that the budget end of the market remains the growth area for the European mainland with pressure remaining on manufacturers’ profit margins.”

This material is protected by copyright Ken Hurst 2013.

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About Ken Hurst

Ken Hurst began his career as a journalist in London over 30 years ago, working on a range of publications before moving on to weekly newspaper production in the newly-independent Zambia of the 1970s. He returned to the UK where his work included spells on newspapers and magazines, before moving to head up Norwich Union’s corporate affairs division. In the 1990s he moved on to freelance, co-own and publish the B2B audio magazine Sound and front the BBC radio Yesterday’s Papers programme. There followed six years as Business Editor at Britain’s biggest selling regional daily newspaper, The Eastern Daily Press, where he led an award-winning team and for whom he still writes a weekly socio/political comment column. Subsequently, he was Group Editorial Director at CBM, responsible for its UK and US magazine output – including The Manufacturer magazine – research-driven industry reports and live events content. Currently he is Contributing Editor at Works Management magazine publisher Findlay Media and Chairman of the consumer publishing house TNT Multimedia Ltd. He is a Fellow of the Royal Society of Arts and of the British Association of Communicators in Business.
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