UK: AUGUST AUTO MANIA.

UK: AUGUST AUTO MANIA. - In August nearly half a million Britons will surge through the doors of car showrooms eager to be the first with the new number plates. The industry says it hates the rush but so far hasn't found a way of ironing out the huge bum

by Kevin Eason.
Last Updated: 31 Aug 2010

In August nearly half a million Britons will surge through the doors of car showrooms eager to be the first with the new number plates. The industry says it hates the rush but so far hasn't found a way of ironing out the huge bump in its annual sales graph.

There are no holiday brochures in Richard Millington's house. While the rest of the country packs its suitcase and heads for the sun, Millington works day and night, seven days a week through July and August trying to cope with the barmiest sales boom in British industry.

Millington is a car dealer and the first day of August brings the annual change in the registration letter, this year from M to N. That one-letter change might seem insignificant but it is enough to double his showroom's business as customers queue for their fashionable registration plate. Instead of selling an average 200 cars in a month, Reg Vardy Nissan, where Millington is general manager, will sell about 500 in August and take in as many used models in part exchange. There will be no let-up, no breather from the rush, as the car industry tries to cram new car sales worth £4.5 billion into one hectic month.

On the scale of British traditions, the August registrations hoo-ha almost rates alongside the Trooping of the Colour and the Cup Final. It demands so much attention. It is unique - although nobody seems sure whether that is commendable or not. No other country in the world is daft enough to ask its biggest manufacturing industry to pack 25% of its annual business into a single month. While the French relax in the August sunshine and the Germans are putting their towels over deck chairs, close to half a million Britons will be at home, clutching a duster waiting to polish up the paintwork on their new cars - complete with new number plates designed to engender the envy of neighbours and colleagues in the company car park.

The cars delivered to their doors on 1 August are exactly the same as those - if any - sold on 31 July except for that vital one-letter difference, the letter that allows British drivers to indulge themselves in the ultimate motoring snobbery.

Dealers say that they hate the August rush, and nearly 700 of them voted six to one in favour of abolishing it in a survey carried out by Automotive Management magazine last year. But they are also fearful that if it disappears, the biggest single stimulus to an erratic and nervous market could disappear, with the result that they will lose out overall across the year.

The carmakers, represented by the Society of Motor Manufacturers and Traders (SMMT), set up a committee to rail against the August blip, complaining that it cost dealers £1 billion in stocking and organisation costs, and decided to badger the Government into change. Now, apparently, the industry isn't sure whether it is for or against it as the fear of economic failure continues to haunt its members.

It is a spectacular and ironic conundrum dogging an industry at the leading edge of technology, more sophisticated than almost any other at advertising, marketing and selling, yet one which still cannot figure out a way to iron out the huge bump in the annual sales graph.

There is no other product which depends so entirely on when it is sold. No one orders a washing machine, or jewellery, or ironing board or television for delivery exclusively on 1 August because it is fashionable, nor does the date of sale so irredeemably condemn the product to its future resale price. In a car it is absolutely vital: a model sold at one minute to midnight on 31 July would be worth less on the used car market than the exact same model sold at one minute past.

Cecil and Blanche Stokoe decided to buy a new Nissan Sunny to celebrate their 50th wedding anniversary on 14 July. But the Stokoes, who live in Birtley, County Durham, realised there was little point investing £9,500 in a new car two weeks before the registration change which could make a difference of hundreds of pounds in its resale value later.

'It just happened,' says Stokoe,'that we wanted to buy a new car but buying a car in mid-July meant we might as well wait for the changeover. It made sense to wait. We will pick the car up from the showroom on the day so it will be a present to ourselves that comes a little late, but we are doing the right thing.' 'We have been taking orders for the new N-plate cars since April and May,' says Millington at Reg Vardy Nissan. 'There are lots of people who change with the new registrations and they know a long time in advance that is what they want to do. They are normally first into the showroom: they know precisely what they want down to the colour and specification and they want it delivered on 1 August. It is only in June and July that the speculative buyers come in and they then decide to wait until the registration changeover.

'It is amazingly hard work for us and it does disturb the whole idea of trying to even the business out though the year. But there is still a buzz in the showroom. We all get excited about August.' The Stokoes and around 470,000 other buyers this August will be happy when they get their new car - but the system makes precious little sense to anyone else.

Millington and his 70 staff will work for almost two months just stocking up and organising the August rush. Figures from SMMT underline just how many there are like the Stokoes in the new car market in July: the month averages about two per cent of the annual industry sales total for new cars compared with the quarter accounted for by August.

The Reg Vardy Nissan dealership in Sunderland is taking extra parking space for all the August cars it has waiting for delivery: all have to be inspected, cleaned and valeted, documentation cleared ... and then the staff sit waiting for the clock to tick round to midnight on 31 July when the customers who want to be first with the N-plate start arriving to collect the cars. At the other end of the dealership, hundreds of customers start turning up with cars they bought in August three or more years ago for their annual MOT inspection, causing a huge surge in workshop demand.

'Nobody in the car industry takes a holiday in July and August,' says Millington. 'We just work round the clock trying to cope with that one date and I don't even think about going away until September or October when things die down a little.

'August is an enormous strain which forces everyone to work long hours, but how would we replace it? It is a double-edged sword because August might cost the industry a lot of effort but it creates excitement among buyers which might not be there otherwise. If we get rid of it, we might lose that excitement and end up with lower annual sales.' That is exactly the position which is troubling the SMMT. The organisation set up a committee to define its opposition to the August number-plate change but now seems unsure whether it should be abolished or not.

Tod Evans, director of commercial operations for Peugeot in the UK and the SMMT committee chairman, explains: 'There is no doubt that the industry would like to see the August bump flattened out across the rest of the year but we have not yet decided how that could be achieved. We have a mind to change things but we want to change for something better and we have yet to decide that way forward.' It is 32 years since the licensing authorities thought up the idea of a year-letter-identifier on the number plate, originally to help mark cars due for MOT tests. The changeover in January was attacked by dealers and manufacturers because it concentrated sales at the start of the year - already popular with buyers - which meant they suffered from a slide through the following months, particularly in the summer when customers who should have been buying cars were away at the beach.

So the system was changed in 1967 to August, innocuously enough at first when the month took only 7.9% of annual sales. Now the figure is at 24%, and the industry is struggling to cope with demand that means production lines have to work flat out for a short time to fulfil orders - not a good way to organise factories which for the rest of the year use the best management techniques anywhere in the industry to ensure high efficiency. Meanwhile, on the Continent, where August sales are dead during the summer holidays, manufacturers such as Peugeot, Citroen, Fiat and Volkswagen are only too happy to roll as many right-hand-drive cars off the assembly lines as they can, which possibly helps account for the fact that importers traditionally enjoy their best month in Britain in August. So the industry has complained year after year that August created an unfair burden. The Government has tried for change only to be blocked by the police, who like the year-letter-identifier. 'If there is an incident,' says a spokesman for the Metropolitan Police, 'very often the only thing witnesses can remember about a car is its colour and the fact that it was an M-reg or G-reg model, so it provides a very useful purpose.'

This year, the Retail Motor Industry Federation (RMIF), which represents about 12,000 garages, estimates August sales could be about 470,000 and manufacturers will be hoping that projection is spot on. On the back of a revival in the economy last year, carmakers desperately talked up the chances of a 500,000 August market and ended up with 60,000 cars - worth around £570 million at showroom prices - they could not sell which had to be discounted through the autumn to get rid of them.

Neil Marshall, the RMIF's chief economist, says that the industry needs a good August this year to offset the 'parlous state of the retail market'. While sales to company fleets have gone up by 11% so far this year, sales to ordinary customers in showrooms have slumped 8% and show little sign of reviving.

'It's no good squealing about the problems unless you have a solution, and the industry does not have an alternative to take to the Government,' says Marshall. 'What is the alternative?' Perhaps to change registrations to personal identification numbers that stay with the driver and not the car. Or to user regional registrations, as in Germany, with letters denoting town or county of registration, or even introducing more frequent letter changes, such as monthly. Or, of course, the system could simply be scrapped altogether - not an idea Marshall favours. 'The point is that the public actually likes the August change. August generates tremendous excitement and probably extra sales as a result. The question the industry has to ask is whether we could generate the same level of sales elsewhere in the year without August and there is no study yet which says that we could.' In spite of the huffing and puffing from the motor industry, the fact that the carmakers have been unable to think up a different registration scheme after three decades and that August will generate more sales in four weeks than any other quarter in its entirety means that the changeover is here to stay for quite some time yet.

Given the current state of the economy, it would be a brave transport secretary who would scrap the August boom on a wing and prayer that somehow 470,000 August buyers would spread themselves thinly around the rest of the year.

And would they? Men like Richard Millington, who meet the customers every day and know precisely what they like, is not so sure. 'If people didn't want a car in August with the new registration letter, they wouldn't buy one,' he says. 'But they do, so it must have an enormous attraction for them.' For Millington and hundred of dealers like him, August is a regular social event, as busy and lucrative as Christmas is for the high street. It may be unique and it may be barmy - but at least is is thoroughly British.

BRITAIN'S BARMIEST SALES BOOM: The rise and rise of August registrations

in the UK

1965* 1974 1984 1994

August registrations 65,535 162,567 303,552 452,556

Total for year 1,098,813 1,268,655 1,749,650 1,910,933

% of total 6.0 12.8 17.3 23.7

*Great Britain only

Source: SMMT.

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