Motor Show 1993: Sales up overall but slower in South-east: As the London Motor Show opens at Earl's Court, Chris Wright looks at the state of the car market

BENEATH the encouraging increase in new car registrations is an underlying unease at how London and the South-east has been slow to respond to the upturn.

While new car registrations rose 8.5 per cent across the country for the first seven months of 1993, the rise in the London area, which accounts for around 37 per cent of all sales, was just 1.5 per cent.

The slow pace of the upturn in the capital is a reaction to three and a half years of a recession which hit the affluent South-east hard for the first time. The area inside the M25 ring is the centre of vehicle purchasing gravity, rich with business headquarters, hire fleets and private buyers - and it experienced a downturn never before suffered.

The problem was highlighted by a run of five years of unprecedented high sales between 1955 and 1959, fuelled by economic boom, soaring property prices and encouragement to spend. Businesses and consumers did not sit on their assets; they used them to buy things, including cars.

When the slump came, businesses held back on renewing their fleets and the showrooms emptied of private buyers. Vehicle sales bombed and having suffered the effects of serious recession for the first time, the return to normal business is slow.

Dealers and manufacturers are waiting for the floodgates to open. There is a sizeable pent-up demand: companies have held on to their fleets longer and the need to replace them is now pressing. This reservoir of latent demand is increasing and it is a matter of triggering it off.

Neil Marshall, of the Retail Motor Industry Federation, says: 'If the economy stays on course we will certainly see a large pick-up in 1994, but the industry is still very much aware that there are some worrying increases in taxation on the horizon. The fear is that the expected resurgence could be kicked into reverse.'

This view was echoed by a number of manufacturers concerned at the effect of increases in any form of taxation which might be announced by the Chancellor next month.

Phil Horton, communications director at Renault UK, which has its headquarters in west London, says: 'There was a burst of sales activity during August, but September proved tough in the area. People are now concerned about what the autumn budget will bring and the confidence to start buying again is not there. House prices hold the key as much as anything else. Once they start to move significantly upwards again we might see a resurgence in car sales.'

Property price is another factor which has not helped dealers in the South-east; many expanded during the boom years and were saddled with high interest loans and falling real estate prices.

A number of manufacturers are offering London dealers special advertising and marketing support to help boost sales. Ford and Renault are among those who provide their London outlets with additional help. This is used to boost media and television advertisement spend.

Mr Horton added: 'We made a decision at the beginning of the year to make our London dealers a special case and increase the support we give them.'

Rover, one of the success stories of 1993, both in the UK and Europe, said that while the South-east had been much slower to pick up than further north, its new models, notably the new Rover 600, had been able to sustain dealers.

Angela Wigley, Rover spokeswoman, said: 'We have recognised the problems of our dealerships, particularly around London where in many cases there is pressure on space because of the shortage and cost of real estate.

'We have put a number of systems into place to help them. Rover's direct distribution scheme, where we hold vehicles at various centres around the country awaiting order, means that dealerships do not have to hold - or pay for - such large stocks.

'Our approved used car scheme has also been computerised so dealers can find a particular vehicle for a customer even if they do not have one in their own used stock.'

Like Rover, Vauxhall, Ford and many other producers and importers have either introduced or are looking at direct distribution in order to keep down the stocking costs and reduce the overheads of their dealerships.

Most have also introduced lease purchase schemes which have done much to stimulate the private sector. Customers can drive out of the showroom with a new car at much reduced monthly payments and at the end of their lease period can opt to hand the car back, or be given a guaranteed residual value against another new vehicle, or pay a lump sum and keep the car.

Getting back the corporate sales has proved more difficult, with small and medium sized businesses still lacking the confidence to invest. The industry does not believe that these will be lost for long, even with company vehicle drivers being offered a choice of car or cash - the feeling is that an awful lot of cash would need to be involved to compensate for a brand new car and hassle-free motoring.

There is evidence that those who are buying (both company and private vehicles) are buying smaller. The executive car sector is down 7 per cent while the increase in car sales generally has been largely in small and medium-size vehicles.

Graham Horder, of the BMW dealer Cheyne, based in Chelsea, a London area least affected by recession over the past three years, said that the corporate fleet sector had held firm but there had been a downturn in private buyers.

He said: 'This has been picking up this year; private buyers and the small businesses are starting to purchase once more. Our problem now is with supply. A shortage of cars means that we are having to quote delivery times of up to three months, but all the signs are encouraging.'

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
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 General

Recruitment Genius: Sales Administrator - Spanish Speaking

£17000 - £21000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - German Speaking

£17000 - £23000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - Japanese Speaking

£17000 - £23000 per annum: Recruitment Genius: If you are fluent in Japanese a...

Recruitment Genius: Graphic Designer - Immediate Start

£16000 - £25000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'