With the economic situation in the UK improving markedly each quarter, consumers have one again begun to spend on luxury items rather than making saving their priority. This, teamed with the manufacturing upturn, has led to new car sales reaching their highest level in five years.
According to the Society of Motor Manufacturers and Traders (SMMT), a total of 403,136 new cars were sold across Britain in September alone, making last month the most profitable for the industry since March 2008. This also made for an increase in sales of 12.1 per cent when compared to the same period last year, clearly demonstrating the positive effect the exit from recession has had.
Chief executive of the SMMT, Mike Hawkes, believes that a desire to remain on top of new technology has played a part in the sudden demand for new vehicle models.
He says; “With over 400,000 new cars registered for the first time in more than five years, the UK market is reflecting growing economic confidence.
“Robust private demand has played a major role in this growth with customers attracted by exciting, increasingly fuel-efficient, new models that offer savings in the cost of ownership.
“This is the 19th consecutive month of steady growth and, with fleet and business demand still to reach pre-recession levels, we believe the performance to be sustainable.”
The UK has, for some time now, been a very popular location for investment in the vehicle manufacturing industry. Thanks to the high consumer demand, many international firms such as Vauxhall, Jaguar Land Rover and Honda have all expanded, or made significant improvements, to their UK plants in order to increase sales and capacity.
This has contributed hugely to the strength of the UK manufacturing sector, which at present is only being out-performed by the larger services sector in terms of growth. Should this era of success continue, it could well prove to be the UK’s greatest financial defence against a further period of economic downturn in the long run.
Chief economist for the UK and Europe at HIS Global Insight, Howard Archer, says; “Car sales have been robust through 2013, which is in marked contrast to the weakness seen across most of Europe.
“The industry will clearly be hoping that the recent improvement in UK economic activity is sustained and extended, and that this leads to further strengthening in consumer and business confidence, and their willingness to splash out on new cars.”
Do you think more car firms will be tempted to invest in the UK over the coming months after considering the rising levels of consumer confidence?
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