Dealers face poor sales for N-registered cars

August is likely to be a damp squib for new N-registration car sales, with fears of redundancy, tax hikes and the wage squeeze all weighing heavily on the consumer's mind and acting as a brake on vehicle sales.

A quarter of all new vehicles normally pass through the showroom door in August with about a tenth of the year's total shifted on the first day of the month.

Analysts in the motor industry estimate that this year's sales will be broadly the same as in 1994 when 452,566 cars were sold in August and 1.91 million in the whole year. This year analysts expect the August figures to nudge 470,000 with a yearly total of 1.94 million.

Most of the cars sold in August are bought by the private motorist anxious to own a vehicle with the latest prefix on the number plate. Fleet buyers are more canny and buy in the months with flat sales and consequently secure better deals.

But the consumer is also becoming more street-wise and is shifting away from buying new cars and buying "nearly new" ones instead. With maybe only 6-7,000 miles on the clock, and a complete service history behind it, a nearly new car can be bought for only two-thirds of the price of a new one.

The Retail Motor Industry Federation estimates that up to 24 per cent of used cars sold by franchised dealers last year were less than six months old.

Roger King, spokesman for the Society of Motor Manufacturers and Traders, said the shift towards nearly new cars is a "passing fad".

"Most people, if they can afford it, would buy a new car. There is also the belief that car prices are too high but Britain is actually the fourth cheapest place in Europe to buy a car."

He said that the shift to electronics, new technologies to reduce exhaust emissions and add-ons like stereos, all ensure that the buyer is getting more for his or her money.

Dealers are more blunt. "Manufacturers are making too many cars and the banks, leasing companies and second hand dealers are cashing in," said David Williams, a spokesman for Reg Vardy plc, a national chain of car dealerships.

Car manufacturers across Europe are expected to cut back production heavily in the autumn to cope with the stagnant market. Output increased by about 5 per cent in the first quarter of the year but that was not met by an increase in sales. Manufacturers across Europe have up to half a million extra cars to dispose of this year.

All this is good news for the consumer if he or she can cut through the myriad of special deals and complex pricing structures.

Some dealers are advertising cars for the same price they paid for them in the hope of winning a bonus from the manufacturer for meeting sales targets. Other are involved with complex finance and leasing deals which ensures both the sales representative and consumer need to have a good grasp of maths to clinch the best deal.

With cash in hand, a buyer can expect to get pounds 7-800 off the pounds 8,000 list price of a Ford Fiesta or pounds 6-700 off the pounds 10,000 cost of a new Escort. Cash will secure up to pounds 1,200 off the pounds 13,500 price of a new Vauxhall Cavalier.

Sales of specialist cars like Jaguars, BMWs and Ferraris are booming and dealers are not offering any price reductions.