Figures from the Society of Motor Manufacturers and Traders (SMMT) show that new car registrations were down 34.9% year-on-year in June as one in five dealerships remained shut due to the coronavirus pandemic.
The industry body notes that although the 145,377 registrations recorded in June were substantially less than in the same period last year, they were a marked improvement on May, when the year-on-year decline was 89.0%.
Car dealerships in England were allowed to reopen on 1 June, enabling the retail sector to gradually restart operations, but roughly one fifth have remained closed, according to the National Franchised Dealers Association.
Dealerships in Wales and Scotland weren't allowed to open until the end of the month.
The latest decline means the market is 616,000 cars - 48.5% - down compared with the first six months of 2019. The SMMT said that roughly 240,000 private sales have been lost since the government’s stay-at-home directive was implemented in late March, “resulting in an estimated £1.1 billion loss to the Treasury in VAT receipts alone”.
Private sales were down 19.2%, with orders made before lockdown accounting for 72,827 registrations, roughly half of the total for June. Fleet sales were worse affected, falling by 45.2% to 69,398 units.
Demand for combustion-engined cars was hit hardest, with petrol car registrations dropping 39.9% and diesel 59.8% year-on-year. The opposite is true, however, of alternatively fuelled vehicles; compared to June 2019, demand for plug-in hybrids grew 117.0%, while some 261.8% more pure-electric vehicles found homes. Of the 145,377 cars registered last month, 8903 were fully electric.
The Tesla Model 3 features in the top-ten best-sellers list for the third month running, having been the best-selling car overall in April when 658 UK customers took delivery of cars ordered before lockdown started. In June, 2517 Model 3s were registered, making it the ninth best-selling car, above the Volkswagen Tiguan, Europe's most popular SUV, at number 10.
The SMMT said there remains a degree of uncertainty as to the level of demand for new cars in the UK, as not all dealerships are open. However, it predicts that “automotive is likely to lag behind other retail sectors”, because consumers are less likely to make large expenditures as the UK emerges from lockdown.
SMMT chief executive Mike Hawes said: “While it’s welcome to see demand rise above the rock-bottom levels we saw during lockdown, this is not a recovery and barely a restart. Many of June’s registrations could be attributed to customers finally being able to collect their pre-pandemic orders, and appetite for significant spending remains questionable.
“The government must boost the economy, help customers feel safer in their jobs and in their spending and give businesses the confidence to invest in their fleets. Otherwise it runs the risk of losing billions more in revenue from this critical sector at a time when the public purse needs it more than ever.”
Last month, the SMMT warned that one in six UK automotive jobs were under threat following a wave of job losses at various large firms including Aston Martin, Bentley and McLaren. The body is calling on the government to provide an industry support package to drive demand and ease cashflow, with suggested measures including emergency funding, business rate holidays, VAT cuts and policies that boost consumer confidence.
Earlier reports that the government was planning to introduce a nationwide scrappage scheme - boosting demand for new electric and hybrid cars by offering consumers up to £6000 for older models - have been described as ‘unlikely’ by a government source.