Car sales drop in March despite lure of new plates

Fewer cars – some 31,000 – rolled out of Britain's showrooms last month than in March 2010, despite the boost from the new registration plate.

Sales dropped by 7.9 per cent, according to the latest figures published by the Society of Motor Manufacturers and Traders (SMMT) yesterday. But the automotive market is less gloomy than it seems. Not only has the pace of decline flattened over the last two months, but March is a sharp improvement on the 11.5 per cent fall seen in January.

The numbers are also skewed by the tag end of the Government's scrappage-incentive scheme last year. With scrappage stripped out, car sales show a 5.9 per cent expansion in March, beating industry expectations, the SMMT said.

"Despite a dip versus 2010, the market remains on course to meet forecasts for the year with motorists buying increasingly fuel-efficient and low-emitting vehicles," Paul Everitt, the SMMT's chief executive, said.

Over the first three months of the year, registrations were down by 8.7 per cent.

Industry forecasts predict declines will continue into the second quarter before stabilising sometime in the second half to show a net annual decline of 5 per cent.

Fleet and business car-buying both showed healthy growth last month – rising 1.3 per cent and 12.7 per cent respectively. But private purchases dropped by a savage 17 per cent as consumers wrestle with tax hikes, rising inflation, public spending cuts and soaring petrol prices.

"Although the overall March performance was pretty respectable, it is notable that private car sales were again weak, reflecting the serious pressure that households are under," Howard Archer, the chief economist at IHS Global Insight, said.

"There have recently been mounting signs that consumers are reining in their spending and many are likely to think very hard before splashing out on a new car."