Sales of new cars tumble again in August

Sales of new cars tanked in August and are set to fall for the rest of 2010, as weak consumer confidence and the end of the scrappage scheme takes its toll.

Total new car sales fell by 17.5 per cent to just 55,305 units last month, compared to 67,006 in August 2009, the Society of Motor Manufacturers and Traders (SMMT) said. The data marked the second successive month of falls, following the first decline for 12 months in July.

The tumble was partly blamed on the end of the scrappage scheme in March that led consumers to bring forward purchases of new cars over a 10-month period. During the recession car sales crashed in the first of 2009 but recovered after the "cash for bangers" scheme was introduced on 18 May last year. More than 16,000, or a quarter of the market, of new car sales last August were through the scheme.

Paul Everitt, the SMMT's chief executive, said: "New car registrations were down 17.5 per cent in August and conditions will remain challenging through the rest of the year."

Private new car registrations plummeted by 37.8 per cent, as consumers put off making one of the biggest purchases of their lives after property. This contrasted with an 8.2 per cent jump in fleet sales to companies. Diesel-fuelled cars grew their market share to a new high of 52.6 per cent, partly driven by the drop in petrol-powered registrations.

Howard Archer, chief European economist at IHS Global Insight, said: "Just as private sales led car sales earlier this year while the car scrappage scheme was in place, they are now seeing the greatest softness."

Sales volumes of cars are up by 13.2 per cent to 1.3 million so far this year, with private and fleet sales up by a similar amount, boosted by the economic recovery.

The SMMT is forecasting that registrations will hit 2 million this year, a 1.2 per cent rise on last year. The Ford Fiesta was the best-selling model in August, as it has been for the year to date. Mr Everitt said: "The industry enjoyed a better-than-expected first half of the year."

August will be the slowest month of the year and typically only accounts for 3.3 per cent of annual sales ahead of the registration plate change this month. SMMT expects about 10 per cent fewer sales of the new "60" plates in September, down from 367,929 last year.

Mr Archer warned of a challenging period ahead for retailers of cars. He said: "Private sales are likely to be limited appreciably by the serious pressures facing households. These pressures will make consumers very careful about splashing out on as big-ticket an item as a car."

He added: "The substantial fiscal squeeze will increasingly hit public sector jobs and consumers' pockets, while households already face high unemployment, muted earnings growth, elevated debt levels and high fuel prices."

On a brighter note, Mr Archer said it was likely that consumers would bring forward some car purchases towards the end of the year ahead of VAT rising to 20 per cent on 4 January.

Suggested Topics
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Day In a Page

Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"
Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

11-step recipe for creating a West End hit

Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

Buried treasure: The Letter for the King

The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

The school that means business

Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
10 best tablets

The world in your pocket: 10 best tablets

They’re thin, they’re light, you can use them for work on the move or keeping entertained
Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

Lutz Pfannenstiel interview

The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

Pete Jenson's a Different League

Popular Klopp can reignite Dortmund’s season with visit to Bayern
John Cantlie video proves that Isis expects victory in Kobani

Cantlie video proves that Isis expects victory in Kobani

The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
The killer instinct: The man who helps students spot potential murderers

The killer instinct

Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

Clothing the gap

A new exhibition celebrates women who stood apart from the fashion herd
Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

The Fall of the Berlin Wall

Goodbye to all that - the lost world beyond the Iron Curtain