December sales dive closes disappointing year for cars

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The Independent Online

New UK car sales dived in December, ending a difficult year in which the motor industry saw only a 1.8 per cent rise in annual sales despite aggressive marketing and cut-price deals in the showroom.

The Society of Motor Manufacturers and Traders described it as a "disappointing end to a disappointing year" and forecast only another modest rise in 1996.

The society's figures published yesterday showed sales last month down 2.32 per cent to 71,540, the worst December since 1991, leaving the yearly total at 1,945,366.

Private sales in 1995 fell 3 per cent, and the yearly total was propped up by a 6.3 per cent rise in the company market.

Although there were highlights, including a strong rise in Rover's sales in December, and a first successful year for Daewoo cars, the industry was pleased to see the back of 1995.

The figures reflect the patchy recovery of the UK economy after recession in the early 1990s when annual new car sales dipped from a late 1980s high of 2.3 million to less than 1.6 millon. The society forecasts sales of 1.97 million this year, with the important 2 million mark reached in 1997.

The sharp fall in December - traditionally the second-weakest month after July - was probably a correction after unexpected rises in the two previous months.

Ian Shepherdson, economist at HSBC Greenwell, pointed out that fourth- quarter sales were 6.4 per cent up on 1993's figure, and the best quarterly performance since the final three months of 1992.

He said: "We expect car sales to rise by 5 per cent or so in 1996 as incomes rise and interest rates fall. But sales are increasingly volatile and keen pricing is all-important."

Rover had a difficult first few months of 1995, and there was talk of owner BMW losing patience. But the company took a 23.56 per cent market share in December, due largely to bringing forward the launch of its 200 model. The new Rover 400 and 100 were the top two best sellers for the month.

Rover sold 240,007 cars in 1995, giving the company a 12.34 per cent market share, against sales of 245,240 and a 12.83 per cent share in 1994.

The three top-selling cars of 1995 were all Fords: Escort, Fiesta and Mondeo. Ford took its customary place as the UK's biggest seller, taking a 21.11 per cent market share, against 21.91 per cent in 1994. Next came Vauxhall, with market share of 15.12 per cent (16.25 per cent).

Daewoo, the Korean company that does not use car franchises but sells direct to the public, had a successful first year in the UK market, selling 13,169 cars to take a 0.68 per cent share of the market.

Other companies to enjoy a good 1995 included Jaguar, which sold 8,727 cars (6,659); BMW, whose market share rose to 2.83 per cent (2.38 per cent); Fiat, whose share rose to 3.64 per cent (3.07); and Volkswagen, at 4.02 per cent (3.90).