New car demand up but pressure remains on manufacturers' margins

Private, fleet and business sectors grew from January to June, but private demand increased the most over the first half of the year, up 17.1%, after a 21.3% rise in June. SMMT interim chief executive Mike Baunton said the numbers were a clear indicator that manufacturers were "delivering desirable new products with tangible cost savings from the latest fuel-efficient technology coupled to a wide variety of competitive finance offers". While there remained potential challenges ahead, the market was on course to perform well ahead of 2012 levels. David Raistrick, UK automotive leader at Deloitte, said that with manufacturing production levels at a two-year high and the 16th consecutive month of new car sales growth in the UK, July had got off to a good start but in continental Europe, car manufacturers were looking for indicators that the painful market contraction was lessening. "With Germany, Italy and France all reporting lower rates of decline when compared with last month, there is the suggestion that the bottom may have been reached," he added. "The challenge going forward is that the budget end of the market remains the growth area for the European mainland with pressure remaining on manufacturers' profit margins."