Rising consumer confidence, cheap fuel and easy credit helped trigger a record 2.63m new UK vehicle registrations last year. Just one day after the US motor industry beat its own record set in 2000, official data from the Society of Motor Manufacturers and Traders revealed that 6 per cent more cars rolled off British dealership forecourts in 2015. While impressive figures were widely expected, an uncharacteristically strong December saw them smash expectations.
Mike Hawes, chief executive of the trade body, attributed this success mainly to growing consumer confidence, wage growth, low unemployment and plummeting petrol and diesel prices. But a range of other factors also contributed towards this record-breaking performance.
Firstly, a cheaper borrowing environment driven by ultra-low interest rates means about 80 per cent of new car registrations are backed by finance packages. The depreciation of the euro versus sterling shouldn't be underestimated, either. Currency swings have made Britain a more attractive market for European manufacturers, who've capitalised on this situation by offering attractive discounts on new models.
Among the biggest names to top the sales table were Daimler's (DE:DAIX.N) Mercedes vehicles, fellow luxury car maker BMW (DE:BMW) and Japanese manufacturer Nissan (JP:7201). Interestingly, even troubled German giant Volkswagen (DE:VOW3) emerged relatively victorious from its reputation-damaging emissions scandal, with sales of its core marque rising 4.2 per cent to 223,784. Audi sales also rose during the year, although VW's other brands - Skoda and SEAT - both posted declines.
But impressive figures from both sides of the pond weren't enough to lift the gloomy mood surrounding equity markets. Sluggish global economic growth in key car markets, such as China, continues to weigh on sentiment, hence why shares across the sector remained in the doldrums.
Shares in supply chain specialists such as Carclo (CAR), GKN (GKN) and Ricardo (RCDO) were down in early morning trading, and this was similarly the case for UK car retailers such as Vertu Motors (VTU), Pendragon (PDG) and Inchcape (INCH), together with manufacturers Daimler, BMW and Nissan.
