New cars have always been a sign of affluence and a flashy new vehicle, whether a Porsche or a Hyundai, can impress even the most staid consumer. Economic factors may indicate a country’s financial stress, but car lovers are not faint-of –heart and don’t scare easily. So it comes as no real surprise that the number of new car registrations in Britain hit an all-time high last year.
With increased consumer confidence, boosted by low inflation, rising wages for many households, falling unemployment and the attraction of cheap car loans, total figures for car registrations for 2015 hovered around the 2.63 million mark. This beats the previous record for registrations in Britain when 2.58 million new cars were sold in 2003. Exact figures are due out Thursday when the Society of Motor Manufacturers and Traders, an industry body, will publish the data.
Britain is Europe’s second-biggest auto market after Germany but car sales fell sharply after the 2007-8 financial crisis. They have gradually recovered, returning to pre-crisis levels at 2.48 million in 2014.
Analysts attribute the high sales figures to low interest rates offered on car loans to consumers by banks and lending institutions. 75 percent of new car purchases are now made on credit in Britain with many customers effectively renting a new car, typically for three years, before trading it in for a new model using a scheme known as a personal contract plan (PCP). This is similar to leasing plans offered in the U.S.
The increased numbers come despite a drop in sales for Volkswagens, which account for around 20 percent of British car sales.
The increased auto sales run contrary to the message being sent out by Chancellor of the Exchequer George Osborne who is comparing the Pound Sterling to its weakest level since June 2010. According to Osborne, Britain is not prepared to deal with the “dangerous cocktail†of global threats that he claims faces the British economy this year.
