Car dealers look to September number plates to lift gloom

The UK's car dealers are pinning their hopes on the release of September number plates this week, as sales of new vehicles fall further behind estimates for the year.

The industry is reporting decent pre-orders, thanks to low interest rates and a range of discount offers from manufacturers, but the number of registrations is likely to be 5 per cent behind last year.

That may not be enough to make up the growing gap between actual sales and the industry's official forecast of 2.45 million sales this year, down 4.6 per cent on the previous year. By the end of July, 1.47 million new cars had been registered, a fall of 5.9 per cent on 2004. The low-volume month of August was down about 3.5 per cent.

September is traditionally the second-biggest selling month for new cars after March. Vehicles registered from Thursday will have number plates containing the digits 55, compared with 05 in the cars on sale since March. The twice-yearly plate change was introduced in 1999, in part to smooth demand for new cars over the year rather than have it concentrated on a single change in August.

Peter Johnson, the chief executive of the car dealerships group Inchcape, said he expected next month's sales to be "pretty consistent with the rest of the year", with retail sales looking weak but better demand from corporate fleets. He said: "Manufacturers are putting a lot of money behind their models. September is the last big sales month, and they have got to achieve their volume targets in September."

Many manufacturers are encouraging cut-price deals by offering dealerships significant discounts if they achieve demanding volume targets, particularly for models coming to the end of their run. Citroen is even offering a "No VAT, no interest" credit deal.

The Society of Motor Manufacturers and Traders is predicting 420,000 new car registrations in September, down just 2.5 per cent on the 430,763 units recorded last year. Christopher Macgowan, the chairman of the SMMT, said the relatively optimistic forecast for September was down to the mixture of competitive deals on offer and the impact on affordability and on consumer confidence of the most recent interest rate cut.

Mr Macgowan said: "We can't wave a magic wand. We are vulnerable to interest rates, and while one cut is always useful, the consumer remains reticent. But it needs to be remembered that, despite declines this year and last, sales are still well up on four years ago."

New car registrations in the UK reached a record 2.58 million in 2003, and fell back to 2.57 million last year. The UK's biggest car dealerships have taken advantage of changes to European competition rules to consolidate in the past two years, and have so far been able to increase profits despite the more challenging trading environment.