Northern Ireland recruitment agencies may be capitalising on strong demand within a buoyant labour market, but , conversely, local car dealers continue to experience tough trading conditions with consumer demand for a new set of wheels remaining lacklustre. August saw some improvement, albeit marginal, with new car sales 1.5% higher than the same period last year. There were 3,701 new cars sold last month, some 54 higher than last August’s figure. However, the latter represented a five-year low so the latest improvement must be set within that context.
New car dealers in England, Scotland, Wales and Northern Ireland all posted hefty double-digit year-on-year declines in March. These ranged from 15% for England to 21% for Scotland with Northern Ireland coming in with an annual decrease of almost 17%. Last month was the quietest March for NI new car dealers in five years. This wasn’t due to the Beast from the East dissuading would-be car buyers from venturing out to dealers’ forecourts. Instead the steep falls are largely due to the inflated sales figures in March 2017. Back then Northern Ireland car sales increased by 10% y/y. However, this was distorted by a change in Vehicle Excise Duty in April 2017, which incentivised consumers to bring forward their plans to buy a new car.
Northern Ireland retailers have benefited from the tourism boom and a surge in cross-border shoppers. With the latter boosted by the post-EU referendum depreciation in sterling. This provides a veneer of consumer strength driven by visitors. However, the underlying picture is somewhat weaker.
New car sales are a key barometer of consumer confidence and provide a more meaningful indicator of the health of the consumer. Inflation has been outpacing wage growth and this is sapping household disposable incomes. A significant range of welfare benefits are also in the midst of a multi-year freeze. Against this background it is perhaps not surprising that the biggest discretionary spending item after housing, new car sales, are falling.
Showrooms reported their worst October for sales of new cars in five years, with registrations for the first 10months of the year down over 5% y/y.
2017 looks set to see the biggest annual decline since 2011. Local new car sales are over 20% below their peak in 2007.
This compares with the UK where new car sales, though falling, are still 8% above their pre-recession high. 2018 is also expected to be a challenging year for the local consumer with the cost of living squeeze set to tighten its grip.