Following the Russian invasion of Ukraine last February, the general direction of travel for the UK and Northern Ireland economies has been down. Consumer confidence has plunged in the wake of rocketing inflation and the evolving cost-of-living crisis. Despite this deteriorating consumer outlook, new car sales ended the year on a high – at least in relative terms. The improvement in new car sales largely reflects an easing in the supply-chain disruption that has blighted global car manufacturers since the pandemic struck. Consumer sentiment and confidence in supply-chains (shorter-delivery times) are moving in opposite directions. The steady increase in new car sales in recent months is largely linked to fulfilling orders made in Q3 and Q4 2021. Back then the cost-of-living crisis had barely begun and interest rates were still plumbing record lows. In short, consumer confidence was robust.

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Prior to the pandemic, new car sales used to be a useful and timely barometer of consumer confidence. But the supply chain disruption following Covid-19 and the Ukraine-Russia war ended that. The latest month’s new car sales are, in many cases, a reflection of consumer demand and confidence prevailing in the summer of 2021. The reality of consumer confidence today is severely dampened by the omnipresent cost-of-living crisis and higher interest rates. 

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Comment on today’s SMMT Northern Ireland New Car Sales figures for September 2020.

Northern Ireland’s new car sales recovery appears to have run out of gas at the end of the third quarter. Local showrooms witnessed a 6% y/y rise in new vehicle sales in Q3 which represented the first quarterly rise since Q2 2019.  However, this was driven by sales outperformance in July (+ 17% y/y) and August (+6.6% y/y). Dealers sold 5,010 new cars in September, 2.5% fewer than the same month a year ago.  Indeed, last month’s sales represented the weakest September since the SMMT series began. This suggests that the pent-up demand evident within the July and August figures may have been and gone. A few months of post-lockdown outperformance had been expected, but this upswing now seems to be even shorter and more subdued than originally anticipated. 

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Local showrooms enjoyed their second lockdown-free month with new car sales picking-up for the second month in a row. Dealers sold 3,618 new cars in August which marked a rise of almost 7% y/y. While last month’s figures was up on last year, they were below the August sales volumes in the previous six years. Clearly there remains an element of pent-up demand in the latest figures which follow the best July in 13 years. Back in July new car sales increased by 17% y/y. Following the lockdown from late-March to early June a few months of outperformance were expected. It will take another few months of figures to get a better handle on the true underlying picture.

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With the worst quarter on record for new car sales behind them, local dealerships finally enjoyed their first lockdown-free month in July. Following a 76% y/y decline in Q2, showrooms reported 4,398 new car sales last month. That represented a 17% increase on the corresponding month a year ago and marked the largest number of sales in five months. More importantly, it marked the best July for new car sales in 13 years according to the SMMT figures.  

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