Car market recovery is looking overplayed

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The Independent Online
FURTHER evidence that the car market recovery is fading came yesterday in figures showing disappointing September sales.

The news was accompanied by warnings that the industry's recent improvement had been overplayed because heavy discounting and pre-registrations were distorting the market.

According to the Society of Motor Manufacturers and Traders, car sales rose 6.54 per cent last month to 144,998, which meant that the increase for the third quarter of 1994 was only 3.3 per cent. This compared with a rise of about 14 per cent in the first six months of the year.

The discouraging figures follow the new M-registration month of August, when sales of 452,000 were below the 500,000 that optimists had predicted.

Sales for the year so far are 9.48 per cent up on January-September 1993, according to the SMMT. However, the Retail Motor Industry Federation believes growth is closer to 4 per cent, a difference of 70,000 registrations.

The RMI said manufacturers and retailers were 'artificially' registering vehicles to improve monthly sales targets. 'The whole motor industry should recognise the present realistic level of sales potential rather than aim at unachievable targets,' the RMI said. False figures sent the wrong message to the Treasury and Bank of England, and confused the customer, it said.

Ford has been accused of pre- registering vehicles, a suspicion fuelled by its decision this week to introduce short-time working in order to de-stock.

The company blamed the recession in Continental Europe for its decision, but Ford is also less confident about the UK and revised down its estimates for total UK sales this year.

The car market has been driven by fleet sales. Ernie Thompson, SMMT chief executive, said private buyers were still not prepared to make big purchases.

A reluctant consumer, suffering from the lack of a 'feel good factor' and whose spending plans are overshadowed by the prospect of interest rate rises, was blamed for the market's slowdown.