New registration plates boost UK March car sales

The launch of the new "15" registration plate helped the UK ring up its best March car sales ever, extending the industry's record run of growth into a fourth year.

Car sales in the UK are powering ahead thanks to good access to credit, innovative financing packages and widespread discounting by carmakers, along with steadily rising consumer confidence and robust economic growth.

Dealers across the country sold 492,774 new cars last month, making it not only the best March on record but also the best monthly performance since the UK switched to a biannual plate-change system in 1999. Before that, sales were concentrated in August, when people flocked to forecourts for the new plates and routinely pushed monthly sales over 500,000.

March is now the most important month for car sales in the UK, accounting for almost a fifth of annual sales. For manufacturers, it offers a good indication of how their cars will sell for the rest of the year.

Vehicle sales are also a key barometer of economic sentiment, and the latest data add to the swelling optimism around the British economy just weeks before May's UK general election. Statistics released on Tuesday showed activity in the UK's dominant service sector accelerating at the fastest pace since mid-2014, prompting expectations of a strong first quarter of overall growth in the economy.

The March car sales come against the backdrop of rapidly recovering registrations in Europe. Each of the European Union's big five markets recorded strong growth last month, with France and Germany up almost 10 per cent year on year, Italy up 15 per cent and Spain - helped by a scrappage scheme - up more than 40 per cent in March.

For 2015 as a whole, the UK Society of Motor Manufacturers and Traders is predicting modest growth of 1-2 per cent in UK registrations this year, versus 9 per cent growth last year.

"We expect a more stable market over the year ahead," said Mike Hawes, chief executive of the SMMT. "But the fundamentals are still there: there's still economic confidence, there's still relatively low interest rates which makes for cheap finance packages . . . and there's lots of new technology in the cars."

But he added: "It must be said, this can't go on forever."

Private sales have already begun to slow, with much of the momentum coming from business and fleet buyers, and dealers are growing concerned that carmakers are pushing the market too hard, offering heavy discounts that are depressing margins.

The UK - now past pre-recession levels - remains a darling market for manufacturers who have been struggling with low capacity utilisation in their European plants, anaemic sales growth on the continent and the effects of the looming financial crisis in Russia.

The strong pound versus the euro also makes the UK an attractive market as the carmakers with a cost base in the single currency will achieve a better margin on sales made in sterling.

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