Slump in new car sales is worst since February 2006

By Nigel Wonnacot

Motor Industry

07 July 2008 12:42

It’s finally happened. The new car market has succumbed to the economic slowdown and punters are staying away from showrooms in droves.

Latest figures from industry trade body SMMT showed an 11.9 per cent fall in private sales in June to 83,425 cars. That’s the biggest month-on-month drop since February 2006 and the most tell-tale sign yet that consumer confidence and soaring fuel prices are finally beginning to bite in the showroom, as well as on the high street.

Even including fleet buyers, the June figures look bad. Demand was down 6.1 per cent, the steepest drop so far this year. Total new car registrations in quarter two were down 2.5%, compared to a 0.7% fall in quarter one.

Yet for months, new cars seemed to be defying the gloom. The huge March market, which takes around 17 per cent of total sales in a year, held up well. Sales to private buyers fell 1.4 per cent compared to the previous year, but that still meant 222,788 new cars left showrooms. Industry experts had forecast far worse.

And despite the suggestion that pre-registrations were propping up a faltering market then, today it is clear that things have got a lot worse. In quarter two, private demand slumped 7.9 per cent, on the back of a more modest 2.4 per cent fall in quarter one.

Surprised by the market’s resilience at the beginning of the year, car makers are now resigned to the inevitable. “This slow-down is not unexpected, but signals an increasingly tough retail environment,” acknowledged Paul Everitt, chief executive of SMMT, which represents manufacturers.

Sue Robinson, director of the National Franchised Dealers Association was more bullish. Consumer uncertainty, was partly the government’s fault, she said, adding enigmatically that it should clarify ‘its intentions towards the motorist.’ 

Jan

60,587

-5.3%

162,067

-2.1%

Feb

23,167

-4.4%

69,610

-5.4%

Mar

222,788

-1.4%

451,642

+0.5%

Apr

73,976

-1.2%

175,668

+3.2%

May

73,422

-9.5%

179,272

-3.5%

Jun

83,425

11.9%

209,190

-6.1%

Source: SMMT

By Nigel Wonnacot