New car sales in UK plunge by 44% as coronavirus bites

Britain’s new car registrations plummeted by 44% in March, a steeper fall than during the financial crisis, as the coronavirus crisis led to showroom closures and sent sales tumbling.

Sales in March were 203,000 down on the same month a year earlier, according to data released by the industry body, the Society of Motor Manufacturers and Traders (SMMT).

March is traditionally one of the strongest months of the year for new car sales because of the release of new number plates. However, this was the weakest March since the late 90s, when the twice-yearly number plate change was introduced.

Britain’s car industry was already struggling before the pandemic – hit by a combination of falling sales, a shift away from diesel vehicles and Brexit uncertainty.

Income subsidies

Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.

Loan guarantees for business

Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.

Business rates

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Cash grants

Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.

Benefits

Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.

Sick pay

Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.

Other

Local authorities to get a £500m hardship fund to provide people with council tax payment relief.

Mortgage and rental holidays available for up to three months.

The figures are a stark indication of what happens when economies grind to a halt, said Mike Hawes, the chief executive of the SMMT.

“How long the market remains stalled is uncertain but it will reopen and the products will be there. In the meantime, we will continue to work with government to do all we can to ensure the thousands of people employed in this sector are ready for work,” he said.

Dramatic falls in new car sales have been reported in other European countries that introduced lockdowns earlier than Britain, including Italy, where sales fell 85% in March, France, down 72%, and Spain, which was 69% lower.

The second quarter will be the most difficult for the auto industry, according to the investment bank JP Morgan, which has downgraded its global car production forecast for Europe, the Americas and China from 9% to a 19% fall compared with 2019.

Forecasts suggest the continued closure of car plants across Europe and North America will cost the auto industry more than $100bn (£82bn) in lost revenues if the shutdown lasts until the end of April.

All major European carmakers have suspended production because of disruption caused by the spread of the coronavirus and if this continues as expected until the end of April, this will account for €66bn (£58bn) in lost sales in Europe, or 2.6m cars. In North America it would lead to lost sales of about $52bn (£42bn), or 2m cars.

The calculations have been made by Ian Henry, the owner of the consultancy AutoAnalysis, who produces forecasts for the SMMT, along with the automotive team at consultancy GlobalData.

Assembly lines ground to a halt in March as the lockdown across Europe disrupted global supply chains, and analysts predicted large falls in demand in all key markets.

All volume manufacturers from BMW to Toyota and Nissan to Jaguar Land Rover sent their workers home after the worsening outbreak on the continent led companies to examine the health implications for their workers.

The story was repeated across North America as the Detroit carmakers, including General Motors, Ford and Fiat Chrysler, shut down their plants.

Auto firms initially closed their sites for a number of weeks, saying they would keep the situation under review, but the shutdown is anticipated to last longer than first expected.

Henry predicts that each additional week of plant closures in Europe will cost the industry an extra €8bn (£7bn) in lost production value and similarly $7.5bn (£6bn) in North America.

International supply chains complicate the question of when car plants can reopen, Henry said, while it is also difficult to predict when consumers will starting buying cars again.

“What will be the state of consumer demand after this?” Henry said. “Will the man in the street want to buy a new car? A huge proportion of cars go to companies and fleet managers won’t be looking to buy cars for executives.”