LONDON -- UK new-car registrations rose 8.4 percent to a record high in March as customers brought forward purchases to beat an April tax rise, the Society of Motor Manufacturers and Traders (SMMT) said in a statement on Wednesday.
The result helped overcome any expectations of a slump in the market after two years of record highs and the UK’s impending exit from the European Union.
Sales rose to 562,337 vehicles last month, the SMMT said.
Some consumers and businesses sought to avoid paying an increase in excise duty which came into force on April 1 for the most polluting vehicles, the SMMT said, adding it expected demand to fall in the next few months.
"This bumper performance probably means we will see a slowdown in April," said SMMT CEO Mike Hawes. March, generally the top-selling month of the year, is one of only two occasions when new license plates are issued.
"Looking ahead to the rest of the year, we still expect the market to cool only slightly given broader political uncertainties as there are still attractive deals on offer."
Demand for diesel cars rose only 1.6 percent compared with a more than 13 percent rise for gasoline vehicles, suggesting some buyers may be put off by the prospect of additional taxes on diesel models.
Overall, low interest rates continue to support demand in Europe's second biggest car market, where around 80 percent of sales are made using a personal contract purchase (PCP), whereby a buyer effectively rents a vehicle, typically for two to three years.
At the end of the period customer decide whether to buy the car outright or switch to a new model and continue making monthly payments, which the CEO of one Britain's biggest car dealerships Lookers told Reuters was helping support demand.
"There are probably 1.4 million people coming off PCP this year and the easiest thing for them to do is just to have another one," said Andy Bruce, who predicts full-year registrations will marginally rise.
"The long-term trend in new and used car sales is driven by GDP and population growth, so inevitably it's going to keep rising unless there's some sort of economic downturn."
Top brand sales
UK market leader Ford saw registrations increase by 19 percent in March. Sales at No. 2 Vauxhall fell 10 percent, while volume at third-placed Volkswagen brand rose 2 percent. Nissan, the No. 4 brand, saw a 30 percent rise. Volume at fifth-placed Mercedes-Benz brand was up 18 percent.
The UK is the latest key European market to report a jump in sales growth. Registrations in Germany last month rose 11 percent, while French sales were up 7 percent. In Italy and Spain, volume rose 18 percent and 13 percent respectively.
In the first quarter, UK sales rose 6.2 percent to 820,016.
Automotive News Europe contributed to this report