January 07 ,2016 | by Claire Payne

Could record car registrations point to economic recovery?

Record car registrations

The UK economy is showing real signs of recovery if sales of new cars are considered to be a pointer.

Registrations for new vehicles hit are cord high of 2.63 million in 2015, up about six per cent on 2014, according to the Society of Motor Manufacturers and Traders (SMMT).

December 2015 looks to have been the best December on record too, with 180,000 new cars registered.

Fourth consecutive year

The new figures do not come as too much of a surprise, as it is the fourth consecutive year of growth.

The previous record year for sales was 2003 when 2.58 million new cars were sold. The new figures represent a victory for the industry after sales fell dramatically following the 2007-2008 financial crisis.

Macro economics

The strengthening of sterling against the euro has made it cheaper to import cars from the likes of France and Germany, while low interest rates have benefited consumers.

The availability and cost of finance has also had an impact, with around 80 per cent of cars bought using some form of finance and 60 per cent bought using personal contract purchase plans (PCPs), a form of leasing, according to SMMT.

More than 85 per cent of Ford's showroom sales are on PCPs, which work on a three-year buying cycle, keeping demand for cars high, which is why they are credited with having boosted vehicle sales over the last few years.

BBC Industry Correspondent John Moylan said that, because the annual car sales averaged 2.3 million before the financial crisis, the industry still does not know what the new norm will be, but that the Ford of Britain Chairman told the BBC overall sales would hit 2,8 million this year.

Claire Payne

Claire Payne is a journalism graduate and News Writer for LSBF. She writes about SMEs, education and careers, entrepreneurship, women in business, and sustainability.

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