After some years of relative struggle, the new car market recovered more strongly in 2014 than had been predicted, with both the fleet and retail sectors experiencing a good 12 months in terms of new car registrations.

Just a year ago, the Society of Motor Manufacturers and Traders was predicting 2014 registrations of new cars would total 2.29 million units, 1.2% up on the 2013 total, and as late as October 2014 the prediction was still at 2.46 million, which would have been an 8.5% increase. In fact, by year end, the new car registration figure was 2.47 million, 9.3% above the previous year, driven both by fleets’ willingness to invest on the back of growing economic confidence, and retail demand on the back of a huge rise in the popularity of personal contract purchasing (PCP) financing.

The retail and fleet sectors had a little over 1000 units between them as the market became more equally balanced. Private registrations were up 9.8% to 1,179,499, with those registrations that are defined as ‘fleet’ by the SMMT, accounting for most of the corporate market, rising by 8.7% on 2013 to 1,178,416, according to the organisation’s official figures. The ‘business’ market – the registrations to smaller firms, which are not included in the ‘fleet’ figures – grew by 12.0% to nearly 120,000 vehicles.

“The strength of the recovery in the economy, very attractive finance packages and a stream of new models were behind the strong market,” SMMT chief executive Mike Hawes tells BusinessCar. “Although there are still some issues around household income, economic confidence is strong, there is growth of 3%, and unemployment is reducing.

“There is underlying business confidence to invest. and we’re still working through some of the pent-up demand of delayed purchases,” he continues. “New technologies are delivering improvements in cost of ownership, and new models make attractive propositions.”

Ford strengthened its position at the top of the fleet industry, more than doubling the gap to second-placed Vauxhall – the difference between them now standing at 23,122 registrations compared with last year’s 12,611 – although Ford did record below-average growth, so its fleet market share dropped from 14.4% to 14.0%.

Vauxhall was one of three top 10 manufacturers to record a drop in fleet registrations last year – BMW and Peugeot being the others – and the company saw its market share drop from 13.4% to 12.0% thanks to a 2.6% fall in year-on-year numbers. It’s still clear in second place, although VW cut the gap from 41,814 units in 2013 to 28,570 last year.

Outside of the top three, there’s now a trio of premium brands all together, with Mercedes breaking into the top six at the expense of a Peugeot that’s on the slide, and continuing to close the gap on prestige rivals BMW and Audi, which have swapped places for 2014. Audi became fleet’s biggest-selling premium brand for the first time since 2009 thanks to growth of 9.9% compared with BMW’s 0.2% year-on-year decline.

Audi is just over 1500 units clear, with Mercedes nearly 12,500 further back from BMW, although that’s half the gap it was in 2009. Mercedes has progressed rapidly from being ranked 12th in fleet in 2008, and last year the A-class fuelled most of that growth, increasing fleet registrations by 67.2% as it jumped into the top 20 fleet models. It’s still not quite at the level of Audi’s A3 (eighth in fleet) and the BMW 1-series (11th), but combined with the C-class, our 2015 Business Car of the Year, outselling the Audi A4 in fleet and the E-class being the most-registered executive model, it’s clear that Mercedes now has a coherent fleet strategy.

Peugeot’s fall of two places to eighth place saw it record the largest drop in fleet registrations of any top-25 manufacturer. The losses came mainly from the 208 and 3008 models, but the new 2008 small crossover did much to rein in the figures, with nearly 9000 registered in fleet.

That small crossover phenomenon helped Vauxhall, with the Mokka being the highest-entering new model at number 13, and Renault, with more than 11,000 Captur models registered to fleets, an incremental figure that combined with good Clio growth in fleet to make the French manufacturer the fastest-growing brand in the top 20.

It increased registrations by more than 50%, climbing four places up the chart to 14th, passing Volvo, Honda, Fiat and Seat.

Ahead of it, the other French brand, Citroen, had a resurgence, recording the best result in the top 10, passing Hyundai as a result, while further down the list it was also a strong year for Volvo and Skoda. Hyundai stayed inside the top 10 by just 279 units, ahead of Toyota.

Dropping two places was Seat, despite fleet registrations growing by more than the market average, as it couldn’t match the progress of Fiat and Renault.

Among the smaller fleet manufacturers Mazda had a good year, finishing just outside the top 20 and one position ahead of Jaguar, which recorded growth of more than 30% ahead of a big 2015, with its BMW 3-series-baiting XE coming in May.

Mitsubishi climbed two places into the top 25 thanks to industry-leading growth of 227.8% off the back of the pioneering Outlander plug-in hybrid model. Fleet registrations went from 2013’s 2173 to more than 7000 last year. Also on the move among the smaller brands was Porsche, which near-doubled its fleet registrations to 1932, climbing three places in the process.

One place ahead of Porsche was a manufacturer appearing in the table for the first time, although just 10.1% of Renault-owned budget brand Dacia’s registrations were to fleet customers, the lowest figure in the mainstream industry. Jeep and Subaru both reappeared in the chart this year, as Chevrolet (now out of the UK completely), Smart (which should be back next year thanks to the new Fortwo and Forfour models launching imminently) and Chrysler (which appears to be gently being run down in the UK) all exited the top 30. 

Modelling

Despite falling registrations ahead of the mid-life facelift that went live at the beginning of 2015, the Ford Focus was again the most popular fleet model – but the rest of the podium looks different to last year, with the Vauxhall Astra slipping from second to fourth and passed by the VW Golf and Ford Fiesta, two models separated by just 51 units in favour of the Golf.

Moderate Mercedes C-class growth in the first full year of the new model saw it make the top 10 thanks to the Peugeot 208 and BMW 1-series falling away, while just ahead of it the BMW 3-series slipped two places behind the Audi A3 – the most popular premium brand model – and the Vauxhall Insignia.

Several models moved up by at least 10 places – the Seat Leon, Mercedes A-class, Renault Clio, Ford Kuga and Citroen C4 Picasso – while dropping by more than 10 spots were the Peugeot 208, Ford Mondeo, Hyundai i30, Toyota Yaris, Honda Jazz, Kia Ceed and Ford B-max.

Big plug

Ultra low-emission vehicles had a massive year in 2014, with plug-in car registrations increasing from
3586 in 2013 to 14,498 last year, with the number of models increasing to more than 20, compared with six in 2011. As the SMMT points out, each of the top 10 manufacturers in the UK now has an ULEV on offer in its range, though that will change shortly when Vauxhall discontinues the Ampera.

“We have had electric vehicles in the market for a number of years and registrations are increasing dramatically,” says the SMMT’s Hawes. “Look at some of the models coming to market in the last year: they are much more mainstream than five years ago, they are bringing more attention and the vehicles are more user-friendly.

“Plus there is that element of support from Government with the plug-in car grant and the Go Ultra Low campaign and we’ve been working on raising awareness and getting more people to understand that these vehicles are increasingly mainstream and can offer an affordable drive without compromising individual needs.”

Overall, including electric vehicles, plug-ins and regular diesel and petrol hybrids, there were more than 50,000 alternative-fuelled vehicles registered in the retail and fleet markets, taking their share from 1.4% to 2.1%

Black cloud

Diesel power adopted a dominant position in 2014, despite some noises about its effect on local air pollution. A total of 50.1% of new cars registered in 2014 were diesel, compared with 49.8% the previous year, and Hawes doesn’t predict any dramatic change to the influence of diesel.

It still offers a significant advantage in fuel economy. For a lot of people’s driving it meets their needs, and customers must choose the most appropriate powertrain,” he says. “There is an emerging concern about diesel and contribution to poorer air quality, but Euro6 is a proven step forward.”

Looking ahead

2015 is described by the SMMT boss as “a difficult year to predict”, and the current forecast predicts small progress. “We think it will be stable – 1-2% growth,” he says. “There are a number of different issues affecting the forecast; for example, the General Election and the fairly challenging financial situation for whoever ends up in charge, and potential tax increases and cuts on spending.

“But oil prices seem set to stay low, interest rates are low and the Bank of England forecasts a slow increase in inflation, so the economic indicators are pretty sound, although I would like to see stronger European trading.”

The SMMT’s forecast for 2015 is currently a market up 1.3% to 2.49 millions units, with diesel dropping slightly to a 49.2% market share, while the 2016 forecast also stands at 2.49 million units.
So it seems that after a few years of fairly rapid growth, the new car registration market is set for a couple of years of welcome stability.