Luxury back in demand as new car sales surge

NEW car sales grew at 14.8 per cent in March, raising hopes that annual sales could top 2 million for the first time since 1990, writes David Bowen.

Figures for the first quarter show the luxury sector is recovering particularly strongly, and that Volkswagen is benefiting from last year's price cuts and specification boosts.

'These figures are stronger than expected,' said John Lawson, of DRI-McGraw Hill, the consultancy. 'There was a general expectation that this month's tax rises would have already had an impact.' He said analysts would have to re- evaluate forecasts of about 1.9 million for the year.

David Gent, director general of the Retail Motor Industry Association, remains cautious. 'What worries us is whether the jump in personal taxation will keep away the private buyer in the spring and summer quarters,' he said.

Sales for the first quarter were 529,436, up 16.8 per cent on the same period last year. In the mass market, Vauxhall has continued to close the gap on Ford, the market leader, increasing market share from 16.1 to 17.7 per cent, while Ford slipped from 22.8 to 22.2 per cent. Rover's share declined from 13.1 to 12.5 per cent.

The most dramatic increases have been recorded in the luxury market, which was badly hit by the recession. Rolls-Royce sold 143 cars, compared with 85 in the first quarter of 1993, while Mercedes, which has launched its new C-Series, sold 58 per cent more cars than a year before. A Ford spokesman said sales of its top-of-the-range Granadas had risen 30 per cent in the past five months.

Volkswagen has reversed its slippage in market share. A spokesman said sales had risen 28 per cent, mainly because the group had allowed a price cut or increased specifications last September.

The cost of a diesel Golf was slashed by pounds 1,500, causing sales to treble in the first quarter, while a higher level of equipment has been offered as standard on other cars.