Consumers put brakes on new car purchases

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Car sales in the crucial month of August are expected to seal a year of disappointment for the UK motor industry, with sharp price-cutting in the showrooms failing to tempt private buyers in sufficient numbers.

The registration change-over in August - which traditionally accounts for about 25 per cent of annual sales - is now unlikely to rise much above last year's depressed 452,000 figure.

"Consumers are still wary and with no feel-good factor in evidence there is no desire to rush out and buy a new-registration car," said Rob Golding, motor industry analyst at investment bank SBC Warburg Securities.

Manufacturers' forward orders, always a closely guarded secret, are nevertheless said to show that the normal build-up before August has been weak.

While company car sales have surged this year, the number of private buyers fell about 7 per cent in the first six months, according to the Society of Motor Manufacturers and Traders.

And although sales to private buyers fell only 0.9 per cent in June, analysts said no positive trends could be drawn from one month's figures.

Furthermore, consumers may have been responding to increasingly desperate sales incentives by bringing forward purchases originally intended for August. Changes in tax legislation, which make car leasing deals more attractive, were thought unlikely to have much impact on sales.

Last year, the industry predicted that August sales would equal the month's all-time high of 500,000 achieved in 1989. But sales only reached 452,566.

More significantly, private sales, which had been growing by 10 per cent, dropped 4.4 per cent despite massive advertising and sales incentives. Sales for the rest of 1994 remained sluggish, and continued into 1995.

Rover Group tried to remain positive about the month ahead. "There are still a significant number of people who want a new registration car to show off," said a spokesman. Rover's sales in June were down 15 per cent year-on-year to 16,227 vehicles. The slump in the first six months of 1995 has been 11.4 per cent.

David Gent, director-general of the Retail Motor Federation, said the declining figures called for government action. "It clearly demonstrates the need for positive action to re-stimulate activity," he said.