'Chelsea tractors' feel the pinch as petrol prices hit sales

After years of boom, the wheels are finally coming off the smart set's love affair with 4x4s. Sales of the gas-guzzling off-road and sports utility vehicles have slumped as the price of filling up a fuel tank has soared.

Registrations of the cars fell by 18 per cent in May, said the Society of Motor Manufacturers and Traders. Land Rover, which is most associated with so-called "Chelsea tractors", was down by 32 per cent.

Demand for Porsches, Saabs and Daimlers also plummeted as customers, hit by the credit crunch and rising prices, opted for smaller models.

With oil prices hitting new highs, the average prices for a litre of unleaded petrol and diesel stood at 114p and 126p respectively – up 15 per cent this year. Motor trade insiders said customers were increasingly concerned about the cost of filling up a tank.

What Car? said its research suggested that two thirds of prospective new car purchasers were looking to buy a greener vehicle. Almost half of buyers – 47 per cent – said they wanted to own a green car for financial rather than environmental reasons. "The rising cost of fuel is one of the biggest concerns," remarked Steve Fowler, What Car? group editor.

Paul Everitt, the Society of Motor Manufacturers and Traders chief executive, said his members were braced for a tough year: "Vehicle manufacturers and dealers will have to work hard to attract consumers, who are facing increasing household and motoring expenses."

In the US this week, General Motors threatened to sell its Hummer division in response to higher oil prices. Announcing the closure of four factories, Rick Wagoner, GM's chief executive, said high prices were changing customers' habits extremely quickly. "We at GM don't think this is a spike or temporary shift. We believe that it is by and large permanent," he said.

In the UK, the dip in 4x4 sales contributed to an overall drop of 3.5 per cent in total new vehicle registrations last month. Demand for private cars fell by 9.5 per cent last month, while business car sales were down by 15.4 per cent.

Luxury car makers experienced steep year-on-year declines: Daimler fell 50 per cent, Porsche 37 per cent, Saab 31 per cent and Lexus 22 per cent.

But sales of more economical mini cars more than doubled. Sales of the Hyundai I10 and Chevrolet Matiz have increased by 27 per cent in 2008. But the mini category is still small, with only 2,912 new vehicles registered in May, compared with 11,126 4x4s.

The best-selling models were the Ford Focus, Vauxhall Corsa, Vauxhall Astra, Ford Fiesta and Volkswagen Golf.

Rise of the (small) machines

Sales of big cars down:

Daimler – down 50%

Porsche – down 37%

Land Rover – down 32%

Saab – down 31%

Lexus – down 22%

Sales of Small cars up:

Smart – up 147%

Kia – up 36%

Hyundai – up 21%

Fiat – up 14%

Nissan - up 9%

Source: Society of Motor Manufacturers and Traders