UK car sales forecast to go further into reverse

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The Independent Online

The UK motor industry was warned to expect another tough year yesterday after official figures showed that sales of new cars slipped by almost 4 per cent in 2006 to under 2.4 million.

Rising interest rates, increasing consumer debt levels and higher fuel bills are expected to hold back the market again in 2007 with the Society of Motor Manufacturers and Traders (SMMT) forecasting a further 1.3 per cent fall in registrations to 2.315 million.

Last year's sales of 2,344,864 were 3.9 per cent down on 2005 and represented the third successive annual fall. The year ended on a low with December sales down by 14.7 per cent although the SMMT said the figures were distorted by a surge in sales of diesel cars a year earlier as company car buyers rushed to take advantage of tax breaks.

Christopher Macgowan, chief executive of the SMMT, said the sales fall came as no surprise. "Uncertainty, fuelled by factors like interest rate rises, political instability and fuel price fluctuations conspired to make the market place a difficult one," he said.

Sue Robinson, director the Retail Motor Industry's franchised dealers association, warned that the outlook for 2007 looked uncertain."Further interest rate rises, a high level of consumer debt and increasing tax burdens and utility bills are unlikely to benefit the retail new car market," she said.

Ford again ended the year as market leader with a share of 14.7 per cent and the best-selling model in the Ford Focus.