Analysis: Are car sales bouncing back?

It’s now just over a month since car dealerships in England were allowed to reopen, and while it’s too early to draw definitive conclusions, sales patterns are starting to appear. Here we investigate the most pertinent trends emerging in the car industry’s new normal.

Are dealers selling cars?

Emphatically, yes – although the used and nearly new car market is in far ruder health than the new car market, boosted by stock being immediately available rather than at the end of an indeterminable waiting list, subject to factories reopening and the speed at which they can build cars while observing social distancing protocols.

Already, though, it’s fair to say that opening dealerships was a catalyst in shifting fortunes for the car industry from rock bottom, with many of the big retail groups reporting sales activity that was up, year on year, throughout the month.

However, there are ongoing concerns regarding the pace at which new car registrations are picking up – a process that inevitably takes time due to stock limitations and lead times – and over how long the pent-up demand will last.

At present, data from our sibling website whatcar.com – which is polling more than 6000 would-be buyers every week – suggests there is a pipeline of interest that stretches well beyond this autumn.

Are new car discounts rising?

There is still no consistent picture of what is happening to new car discounting post-lockdown – largely because the aforementioned pent-up demand is ongoing, and we will only see the whites of the eyes of manufacturers and retailers when demand slumps.

What Car?’s Target Price data – which reflects the price its mystery shoppers can achieve as a fair price across the country – has highlighted some manufacturers that have increased discounts since the end of lockdown, but few by much.

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What’s next?

Most predict the full impact of the coronavirus won’t start to unfold until September, but the truth is that nobody knows. Until then, the industry remains on tenterhooks, largely assuming that at some point a crash will become a reality as furlough unwinds and mass redundancies become necessary.

Optimists point to the fact that those in employment will continue to be well insulated, while pessimists say the scale of the predicted job losses will be too great not to drag the economy down. For now, Society of Motor Manufacturers and Traders data, based on manufacturer predictions, suggests a 25% year-on-year fall in the market – disastrous if not catastrophic figures ahead of potential disruptions from Brexit.