Rise in new car sales fuels optimism

The new car market began the year with a boom according to figures published yesterday showing that registrations rose by more than 9 per cent in January.

The new car market began the year with a boom according to figures published yesterday showing that registrations rose by more than 9 per cent in January.

The continued buoyancy of the car market, driven by even stronger demand from private buyers, forced the industry to tear up its forecast of sales for the whole of 2002 for the third time in three months.

The Society of Motor Manufacturers and Traders, which compiles the figures, said it now expected new car sales to reach 2.35 million this year. This compares with a forecast of 2.3 million in January and 2.2 million in December.

Almost half the 205,476 cars bought last month were purchased by private buyers, attracted by cheap finance, lower prices and new models. However, the increase in sales to fleet and business customers was even greater.

Industry analysts believe the liberalisation of the rules governing car sales throughout Europe announced by Brussels this week will lead to even lower prices and higher sales.

New car sales last year reached an all-time high of 2.46 million and although the industry still expects demand to fall this year, the market continues to defy expectations of a downturn. "Consumer spending on new cars is showing no signs of abating as prices in the UK continue to remain enormously competitive," said Alan Pulham, franchised dealer director of the Retail Motor Industry Federation.

The continued strength of the market is still not benefiting UK-based manufacturers, however. Almost three-quarters of all cars bought were imports.