A record number of new cars, 2.69m, were sold in 2016 in the UK, according to the Society of Motor Manufacturers and Traders (SMMT), despite December experiencing a slight, 1.1%, dip in sales.
2015 was the first time UK new car sales surpassed 2.6m in its history, however its 2.63m sales record only lasted one year.
The SMMT credited much of this growth to a range of new car models and attractive finance deals. It said: “The UK new car market is one of the most diverse in the world, with some 44 brands offering nearly 400 different model types.”
The headline growth rate did hide some changes to the market. All of the growth for the year came from the fleet market, which grew 4.8% year-on-year, to 1,380,750.
In contrast, the private market experienced a slight 0.2% contraction to 1,206,250. As a result, its market share fell from 45.9% to 44.8%.
Despite this, the SMMT remained upbeat about the impact of finance on car sales, and noted the competitive range of affordable finance was a crucial factor driving private demand as consumers were able to take advantage of low interest rates and flexible payment options.
Alternative fuelled vehicles (AFVs) continued on their upward trajectory, selling 88,919 vehicles – 22.2% more than in 2015. Despite this growth its market share remained small at just 3.3%.
Petrol car market share also increased, thanks to 2.7% growth over the year to 1,318,707. While diesel cars sales also grew slightly (0.6%), diesel market share slipped from 48.5% in 2015 to 47.7% in 2016, with 1,285,160 sales in the year.
Mike Hawes, SMMT chief executive officer, remained upbeat about 2016, and but warned 2017 may prove more challenging. He 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."
Richard Jones, managing director of Black Horse mirrored this more cautious note around 2017, pointing to the prospect of rising import prices, greater uncertainty in underlying consumer demand, and a lack of clarity as to changes in pre-registration activity as reasons 2017 might be more challenging than 2016.
Despite this, he noted: “The industry enters the year in good shape overall, delivering good value to customers. I believe that dealers will continue to adapt to future conditions and to the changing shape of how customers want to interact with them in car buying and usage.”
Each of the three top selling brands sold less cars in 2016 than they did in 2015. In the case of Ford, the largest manufacturer in the UK by volume, sales fell 5.06% year-on-year to 318,316. This was enough, however, to retain a double digit market share of 11.82% for 2016.
Vauxhall sales fell by 6.97% year-on-year to 250,955 for 2016, and Volkswagen sales fell 7.49% to 207,028 over the same period.
Although the top three all retained their positions at the top, the gap between third placed Volkswagen and fourth placed BMW more than halved for the year. For their part, BMW sold 182, 593 cars in 2016 – 9.08% more than in 2015, and under 25,000 less than Volkswagen.
Audi rounded out the top five with 177,304 cars sold over 2016, 6.36% more than 2015.
Mercedes-Benz was arguably the biggest winner in the top ten sellers, with sales increasing 16.92% year-on-year to 169,828, leap-frogging Nissan – which sold 152,525, 0.92% less than last year.
Peugeot (98,529 sales), Toyota (96,746 sales) and Hyundai (92,419 sales) rounded out the ten bestselling manufacturers in 2016.