Amid the financial problems in the UK, the new-car registrations in the country still increased by 7.4% to 606,000 units in the first quarter, European industry association ACEA revealed. But before we gush about its growth potential, it’s best to delve deeper into why it was able to achieve 13 consecutive months of rising auto sales. The factors for the boost in sales include a banking controversy, elevated fuel prices, erosion of savings and broadening income inequality. Keith Lewis, a spokesman for the British car industry body, the Society of Motor Manufacturers and Traders, said that at the moment, there’s a “real buyers' market” due to this combination of factors.
In this period, UK hardly achieved any economic growth and it had an average unemployment rate of 7.9%. Needless to say, this auto sales growth in the UK is not in line with the situation in the major markets in Europe. In Germany, first-quarter registrations decreased by 13% to 674,000 units. A 10% decline to 3 million units was recorded for total EU volume. It’s believed that UK car sales are being driven by microeconomics. In order to improve the economy by urging people to spend and invest, the Bank of England maintained the main interest rate at a record low of 0.5%.
This means that majority of savers are losing more to inflation than they are earning in interest. This means that people would prefer to spend than save since there’s little incentive to do so. In the meantime, automakers and dealerships have been pushing cheap financing deals and discounts. Several have chosen to do this at a loss just so they can move their stock. Tom Barnard, a director at Nissan's UK business, said that there are cars being offered now that cost cheaper than the monthly TV subscription package.