Flat August car sales dismay manufacturers

RUSSELL HOTTEN

Sales of new cars to private buyers remained stubbornly flat in the key month of August, causing dismay in the motor industry, which had mounted its biggest marketing campaign. Although total N-registration sales rose 3.6 per cent, the increase was almost entirely stimulated by tax changes on leasing company cars.

And speculation was growing that car manufacturers massaged the figures by pre-registering thousands of cars in the final few days of August.

Total new registrations last month reached 468,945, compared with the 452,000 sold in August 1994, according to figures yesterday from the Society of Motor Manufacturers and Traders.

But the figures were boosted by a 10.2 per cent increase in fleet sales due to a change on 1 August in VAT rules for car leasing companies. In contrast, the retail market grew by 0.3 per cent - only 824 vehicles.

Ernie Thompson, chief executive of SMMT, described the figure as "particularly disappointing" given the number of promotions and cut-price incentives designed to woo the private buyer. And he again called for the abolition of the traditional August pre-fix registration change-over, which, it is felt, distorts the market. August can count for up to a quarter of total sales for the year.

Some big manufacturers lost market share, including Rover, down from 10.91 to 10.22 per cent. The company has continued to lose ground in the UK and Europe and there is growing belief that owner BMW will take action soon to reverse the decline. Vauxhall's market share also dipped, to 13.66 from 14.36 per cent.

Ian Shepherdson, UK economist at HSBC Greenwell, said total August sales were slightly better than early returns during the month had suggested. "Nevertheless, the overall picture is far from favourable for the industry.

"After all the hype in August, with lots of schemes and special promotions, manufacturers may well suffer in coming months as customers feel the effect of prices rises announced in late August."

Alan Pulham, director of the Franchised Dealers Association, said that without the boost from fleet sales, August would have been a "disaster".