View from City Road: Lots of colour, little movement

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The Independent Online
DESPITE the excitement generated in the run-up to the 'K' car registration at the beginning of this month, it looks as if car sales this August will be no better than last year. This is despite one of the most intensive advertising campaigns ever by volume car makers.

Official figures will not be out for some time, but it is estimated that in July car makers and distributors spent in excess of pounds 50m on press and television advertising. This compares with pounds 41.5m spent in July last year, as measured by MEAL Register. These figures do not include poster advertising - which has been heavy - ancillary marketing and promotions - such as interest-free deals, extra warranties and free accessories - or discounting, which seems to be even more prevalent than ever.

The prospects are for substantially increased costs without increased income. This could add up to a pretty gloomy autumn, and not only for the motor traders.

Local newspapers, magazines and radio stations have learned in recent years not to trust booms. In the run-up to Christmas, there was a large increase in advertising by many retailers, but sales did not match this and when the bills came in many shops went under. The fear is that this may happen with some motor traders. In a market like this, it is foolish to celebrate an uplift until the money is in your pocket.

The quoted motor distributors have on the whole performed well on the stock market this year but some weaker companies may now start to lag behind. As for media companies, it would be best to avoid the more exposed radio groups and owners of local newspapers, such as Emap and Reed International, for a time.

(Photograph omitted)