Is New Motor Registration Growth Sustainable?
New motor registrations have increased considerably in the UK and there are signs that the motor industry could be back to healthy, pre-recession levels. September, according to figures from the Society of Motor Manufacturers and Traders (SMMT) was the biggest month of motor trade in five years and modest growth is expected over 2014.
Coming Out of Recession
Of course, this is great news for most motor trades who have suffered over the recession period. While second hand markets tend to benefit in periods of low growth, this particular crisis was particularly damaging for new car dealers and registrars. The initial credit-crunch didn’t just help to tighten the purse-strings of consumers; it ensured that getting credit for purchases like new cars was more difficult than in the past. These figures are an indication that growth is really start to take a hold once more in the motor industry.
Growing for Good?
The concern is, however, that growth should be based on a genuine demand for car registrations that are backed by cash or, at least, sustainable credit relationships. Unfortunately, growth before the recession in 2008 was primarily motivated by inflated credit relationships, meaning that while dealers had banked on cash, much of this never materialised. There is a concern that new growth could fall into exactly the same problem as even good sales figures don’t mean that industry growth is sustainable.
Mitigating the Risks
While there’s nothing to say that we couldn’t plunge into a new credit-crunch scenario, those in the motor trade are now much more aware of the risks of bad credit. Taking precautions like upgrading to a comprehensive motor trade insurance policy and ensuring thorough screening checks are undertaken before credit is given to customers have become standard practice in the industry and are just some of the ways of ensuring that motor traders have enough cash to survive potential economic shocks.
While growth figures are most definitely looking good for the motor trade industry, it’s going to be some time before we can tell whether it’s really business-as-usual. However, with the busy January period coming up, the New Year should get off to a strong start and 2014 could be a good year for motor traders.
For motor trade insurance visit Go Motor Trade.
[/b]