Sales of new cars in the UK tumbled by an annual 89% in May, only slightly less negative than April’s record 97% collapse, as car dealerships remained shuttered by the British government’s coronavirus lockdown.
New registrations of 20,247 units represented the weakest May for UK car sales since 1952, Britain’s Society of Motor Manufacturers and Traders (SMMT) said.
Sales were down 51.4% in the first five months of 2020 but the industry is hopeful that a re-opening of dealer showrooms in England this week will help to spur a recovery.
“Early reports suggest there is good business given the circumstances, although it is far too early to tell how demand will pan out over the coming weeks and months,” said Mike Hawes, SMMT chief executive.
“Restarting this market is a crucial first step in driving the recovery of Britain’s critical car manufacturers and supply chain, and to supporting the wider economy.” he said.
The possibility that Britain’s transition out of the EU ends in December with no new trade deal is also likely to weigh on carmakers, some of whom have highly integrated supply chains with the continent.
Meanwhile, Germany has unveiled sweeping incentives for cheap electric cars, providing a boost to Volkswagen’s electric push while penalising heavy sports utility vehicles – or SUVs - with new staggered taxes for polluting combustion-engined cars.
Buyer incentives for passenger cars, including a lowering of Vat to 16% from 19% were included as part of a €130bn stimulus but analysts said it would not be enough to significantly boost car demand.
“The lowering of Vat will hardly provide an impetus,” said Peter Fuss, a partner at EY, adding that electric cars are still too much of a niche product to lift the overall market.
Germany included a €6,000 incentive for battery electric cars costing below €40,000, bringing consumer incentives for electric cars to €9,000 once a €3,000 manufacturer stipend is included.
Volkswagen is readying a mass market push for its ID3 model which will cost below €40,000.
Tesla’s Model S and the Mercedes EQC are also eligible for subsidies but not for the full amount.
Electric cars made up only 1.8% of new passenger car registrations last year in Germany. Germany will overhaul its motor vehicle tax. From January 2021, cars with an emission of more than 95 grams of CO2 per kilometre will face higher levies.
Meanwhile, British luxury carmaker Aston Martin plans to shed up to 500 jobs as it seeks to bring its cost base into line with reduced sports car production levels.