UK Car Sales Up 5.9% in March on Strong Private Sector Demand - SMMT

New car registrations in the UK has increased for the 13th consecutive month in March on strong private sector demand fuelled by attractive buying offers and launches of energy-efficient models.

The Society of Motor Manufacturers and Traders (SMMT) said in its latest report that the new 13-plate car registrations in March outperformed its expectations, rising 5.9 percent year-on-year to 394,806 units. The March volume was the highest since 2010 when the Scrappage Incentive Scheme supported the market.

In March, private registrations rose 7.8 percent and accounted for 51.7 percent of the total registrations. Fleet registrations and business registrations in March represented 43.5 percent and 4.8 percent of the market, respectively.

In the first quarter, new car registrations increased by 7.4 percent on year to 605,198 units, with private registrations rising 11.2 percent from last year.

The UK figures buck the trend in the European Union, where car sales have declined due to the financial crisis.

"Despite ongoing economic concerns, consistent monthly growth in the market is an encouraging sign of returning consumer confidence as motorists are attracted to forecourts by new models and the latest technologies," SMMT interim chief executive Mike Baunton said in a statement.

"It is evident that private new car sales have been supported by attractive offers and motorists' desire to buy more fuel efficient cars at a time of high petrol prices," said Howard Archer, economist at IHS Global Insight.

Registrations of petrol-fuelled cars have increased by 12.1 percent so far in 2013, outselling diesels, due to growth in the small car and private sector markets. Registrations of alternatively fuelled cars declined in March, but rose by 2.9 percent in the first quarter.

The Ford Fiesta was the best selling model in March followed by the Opel Corsa and the Ford Focus.

Nevertheless, new car registrations are still 12.1 percent below the 2007 pre-financial crisis market total, according to SMMT.

SMMT noted that full-year car registrations are likely to exceed its outlook of 2.057 million units, given the first-quarter results. However, the group warned that trading conditions remain challenging due to uncertainties over the economy.

"The first quarter performance for car sales is encouraging, but the sector faces far from easy conditions over the coming months with consumers confronted by significant headwinds and businesses under pressure to contain costs," Archer added.

"A serious concern for the car industry is that consumers will limit their spending on big-ticket items over the coming months as their purchasing power is squeezed by higher consumer price inflation and muted wage growth."