No hope of big rise in new car sales

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The Independent Online
CAR SALES in August are on course for a modest rise, though nothing like the 15-20 per cent predicted after the first day of the N-registration sales last Tuesday.

The Society of Motor Manufacturers and Traders had counted 63,000 registrations two days into the month, 8.5 per cent higher than the 58,000 in the same period last year. Industry sources warned, however, that these figures were affected by the speed of processing and would not necessarily reflect numbers for a longer period.

More cars are usually sold in the first few days of August than in complete months at other times of year, so the industry watches the figures closely. This year there has been little optimism: sales have been flat or falling since autumn, and car companies have predicted that total August sales will be up to 5 per cent higher than in 1994.

A Peugeot spokesman said the first few days had been very busy as usual, "but our view is cautious. It looks as though the total might reach last year's level". A Vauxhall spokesman said it was expecting a rise of about 5 per cent in August. "We're still reckoning on a 475,000 ballpark figure, against 453,000 last year." Ford expects a similar figure.

Manufacturers, faced with fierce competition and the pros- pect of significant overproduction, have been offering some of the most attractive deals ever. Vauxhall has a scheme whereby customers can pay half the price of a car now and half in two years' time, with no intervening payments or interest added. A spokesman said that this offer had boosted sales significantly since it was launched in May, and had even led to a shortage of some models. Ford, meanwhile, has a range of well-equipped "specials" available, as well as incentives such a free mobile phone.

Only Rover, which has been trying to distance itself from the Ford-Vauxhall battle, has not been discounting heavily. Its UK market share in the year to date is 10 per cent, lower than for several years, but its export success has meant production has continued to rise. A spokesman said it expected Aug- ust sales to be very close to last year's. "It's disappointing that the market has not started to build up again, but we are lucky to have the rest of the world to build on," he said.

There had been predictions that tax changes that came into force on 1 August would provide a fillip from the fleet market. Companies leasing cars could not previously reclaim VAT on their payments - under the new regime they can. But the Rover spokesman said: "The perceived rush to change fleet cars hasn't happened." An industry source said that this could be because companies were waiting until the August rush was over, when it should be possible to get even better discounts.

The tax changes also have a marginal effect on leasing costs for individuals. They have been enough to encourage several companies, led by Ford, to set up personal leasing schemes in the hope that they will gain at least some of the momentum they have in the United States.

General Motors makes 40 per cent of its private sales to leasing customers, and it is becoming normal to see a "monthly payment" sticker on the windscreen, rather than the price. However, manufacturers are not yet saying how widely the UK schemes, which came into effect on 1 August, have been taken up.