New car sales in the United Kingdom surged 11 percent in the first half of 2014 to 1.3 million units. While gains slowed in June – a jump of 6 percent to 228,291 units -- the UK market still managed to post its best first half since 2005, according to industry association SMMT.
Leading the way in the UK are the Ford Fiesta and Vauxhall Corsa subcompacts, followed by the Ford Focus, Volkswagen Golf and the Vauxhall Astra compact. Mike Hawes, SMMT chief executive, said in a statement that the overall UK market has soared faster than expected, adding that following “a bumper March,” there are indications of stabilizing growth around the association’s forecast level.
Analysts noted that record low interest rates and a recovering economy have given consumers in the UK the confidence to purchase more big ticket items like vehicles. Carmakers would be facing a possibility a sluggish wage growth and higher interest rates as early as this year, as indicated by The Bank of England.
Howard Archer, chief UK economist at IHS Global Insight noted that current muted earnings growth threatens to be a constraint for UK car sales. Following growths of 8.2 percent in April and 7.7 percent in May, the figure slowed to 6 percent in June.
Barclays said it had seen anecdotal evidence that such trend would continue. Despite that, the SMMT remarked the UK car market was on pace to post 2.4 million new-car registrations in 2014, reflecting a 6-percent jump over 2013.
Sales in other parts of Europe were encouraging as well. While Germany posted a 2-percent drop in sales in June, the number was actually positive if lost working days are factored in, according to the VDA industry association. Other markets posting encouraging sales include France (3 percent), Italy (4 percent) and Spain (24 percent).