© Reuters.  U.K. Car Sales Stumble in August, in Setback to Summer Recovery © Reuters. U.K. Car Sales Stumble in August, in Setback to Summer Recovery

(Bloomberg) -- U.K. new-car registrations dropped 5% in August, in another step back for the industry after signs of progress climbing out of the coronavirus-driven sales slump.

The decline, based on preliminary data from the Society of Motor Manufacturers and Traders, follows the U.K.’s first monthly gain of 2020 in July. While it mirrors declines in France and Spain, the longer-term trend remains unclear because August is typically one of the year’s quietest months.

“What seems far more significant is the outlook for September and beyond, which remains positive as the industry continues its recovery from lockdown,” Ian Plummer, director at sales site Auto Trader, said in a separate statement. He said consumer visits had increased more than 30% in August from a year earlier, and order books at dealers signal “a promising September.”

The SMMT will release final August data later on Friday.

July’s growth had been driven by pent-up demand as well as commuters looking for alternatives to public transport. There was some optimism that the bump would extend in August if school reopenings and freedom from months of lockdowns reinforced the trend.

More: French, Spanish Car Sales Drop in Blow to Virus Recovery Hope

Dealer discounts and attractive financing rates, along with a license-plate changeover that occurs each September, may indeed trigger a resumption in growth, Plummer said. That, he said, “will be the true measure of the health of the new car market.”

EV Sales

The SMMT has previously warned that uncertainty about the economy and the U.K.’s exit from the European Union would continue to weigh on carmakers. Last month, Jaguar Land Rover, the U.K.’s largest carmaker, said it would slash costs by 2.5 billion pounds ($3.3 billion).

One bright spot for the industry has been electrified vehicles. Their sales of have more than doubled over the past year and carmakers now have 83 plug-in hybrid and full electric models on sale in the country, the SMMT said.

Registration of battery electric and plug-in hybrid vehicles are likely to show growth in August when final figures come out, the SMMT said, driven by several key new models coming out. But market shares is still small.

The SMMT is seeking government incentives to be reintroduced on plug-in hybrids to get more buyers to switch, as well as binding targets on charging infrastructure.

“If the UK is to become a global leader in the drive to net zero, we need industrial as well as market transformation,” SMMT chief Mike Hawes said in the statement. “This will require a bold strategy to retain and grow our automotive manufacturing base, and attract new investment.”

2020 Bloomberg L.P.

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