For most economies, the most tangible indicator of consumer confidence is new car sales. The latest Northern Ireland new car sales figures for January, perhaps somewhat surprisingly, signalled a decline of almost 5% relative to the corresponding figure a year ago. This compared with annual growth of almost 7% for the UK and 31% for the Republic of Ireland.
Last month’s decline represents only the 2nd time since February 2013 that Northern Ireland has recorded a year-on-year decline in new car sales. As in August 2014, which was the last time Northern Ireland posted a year-on-year decline in the volume of new car sales, January’s fall is viewed as a blip. Whilst last month’s sales were below the volumes sold in January 2014 they were still above the numbers sold in each of the 5 years before that (2009-2013). Furthermore, the January 2014 figure was some 20% higher than that recorded in January 2013.
Looking at Northern Ireland’s new car sales over the last 12 months, it is noted that there were 56,897 cars sold. This is over 6% higher than the volumes sold in the previous 12-month period. By comparison, new car sales in the UK and the Republic of Ireland are up by almost 10% and 30% respectively.
Of all the UK regions, Northern Ireland’s new car sales market experienced the steepest peak-to-trough decline in sales (-32% versus -25% for the UK and -69% for the RoI) and the weakest recovery over the last 7 years. This has also been the case in most other economic indicators.
To date, Northern Ireland has recouped less than half (46%) of the decline in new car sales that occurred between 2007 and 2012. During the 12 months to January 2015, the number of new cars sold in Northern Ireland was 11,811 fewer (or -17%) below the peak (68,708) in 2007. Conversely, UK new car sales are at a 10-year high. Meanwhile the Republic of Ireland’s strong rates of growth must be put into context. Despite a rebound of almost 80% since the low of 2009, new car sales in the Republic of Ireland remain some 45% below their 2007 levels.
The recent falls in food and particularly fuel prices will continue to boost disposable incomes in the months ahead. This factor coupled with above inflation pay rises should support the new car sales market in the near term. However, given the ongoing strength of sterling relative to the euro, Northern Ireland’s car dealerships can expect less interest from Republic of Ireland customers in the year ahead. From a Republic of Ireland perspective, Northern Ireland’s new cars were 9% higher last month relative to January 2014 as a result of currency moves alone.