Car makers fear sales are slipping into reverse

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The Independent Online
MOTOR industry leaders yesterday joined the chorus of voices urging the Chancellor, Kenneth Clarke, not to raise taxes in next month's Budget by warning that such a move would wreck the fragile recovery in the car market.

The plea was coupled with calls for an early cut in interest rates to bolster consumer and business confidence and came as signs emerged that car sales may once more be on the slide. After rising 11 per cent in the first nine months of the year compared with the same period in 1992, registrations this month are flat.

Most of Britain's big car manufacturers have already been forced to cut export production because of the deep recession on the Continent. Their fear now is that a rise in taxation would undermine domestic consumer confidence, resulting in falling UK car sales, continued short-time working and further job losses.

Even with a fiscally-neutral Budget, car makers are cautious about sales prospects in 1994. The most optimistic forecasts predict only a 6 to 7 per cent rise in registrations next year to about 1.85 million.

Speaking on the opening day of the London Motor Show at Earls Court, Ian MacAllister, chairman of Ford, urged the Chancellor to leave the balance of taxation unchanged because any increase would hinder consumer confidence. His was supported by the heads of Rover, Vauxhall and Peugeot-Talbot and the Retail Motor Industry Federation.