New car sales plummet by 8.9 per cent in September

Car sales are continuing to slow after the Government withdrew its vehicle scrappage scheme, but total sales for 2010 are still expected to come in higher than last year.

More than 335,000 new cars rolled out of showrooms in September – some 8.9 per cent lower than the same month last year and the second-lowest volume since 1999, the Society of Motor Manufacturers and Traders (SMMT) said yesterday.

But the drop largely reflected the distortion of the scrappage scheme on last year's sales. Excluding scrappage, purchases last month were 16.3 per cent higher than in September 2009, the SMMT added. Last month's sales were also a considerable improvement on the 17.5 per cent year-on-year drop in August.

The car market is currently 7.8 per cent ahead of 2009 over the year to date, and the SMMT expects total sales of about two million vehicles this year, up slightly on 2009. But the impact of looming public spending cuts and a rise in VAT from January will be crucial for the motor industry.

Paul Everitt, the chief executive of the SMMT, said: "It is important that, alongside the Government's austerity measures, the comprehensive spending review signals a strong growth agenda to boost consumer and business confidence."

The biggest hit to sales in the current climate is among private buyers. Private sales dropped 19 per cent year-on-year last month and 38 per cent in August. Business sales fell 8.5 per cent last month and fleet sales rose 6.7 per cent.

The industry's troubles are far from over, according to Howard Archer, the chief economist at IHS Global Insight. He said: "Private sales are likely to be limited appreciably by the serious pressures facing households. These will make consumers very careful about splashing out on as big-ticket an item as a car."