Car sales rise again as end of scrappage looms

New car sales surged by more than 26 per cent last month as the scrappage scheme generated an eight consecutive month of growth, the latest figures from the Society of Motor Manufacturers and Traders (SMMT) revealed yesterday.

Some 68,686 new cars were registered in February, a rise of 26.4 per cent on the same month last year, with the scrappage scheme, which is due to close later this month, accounting for almost 20 per cent of the new car market.

Sales to private buyers underpinned the rise, rising by nearly 70 per cent from a year ago to 30,798 last month. Ford's Fiesta and Focus models proved most popular, with more than 3,000 of each being sold as buyers continued to opt for smaller cars. The Volkswagen Golf and Vauxhall's Astra and Corsa models saw sales of over 2,000 each last month.

Despite the recall of millions of its cars, Toyota sold slightly more cars in February than a year earlier, but, given the rise in the total number of new cars sold over the month, saw its market share slide to 5 per cent from 5.5 per cent last year.

Despite the strong gains overall, the SMMT remained cautious about the year ahead. It warned: "New car demand will be building up after a sustained period of hold-off, but with economic recovery still fragile and uncertainty over the impact of the Budget in March and a general election in the spring, the outlook for registrations in 2010 is subdued... with an expected decline of almost 10 per cent."

Economists also adopted a "wait-and-see" approach, with IHS Global Insight's Howard Archer pointing out that the end of the scrappage scheme could lead to a sharp decline in sales.

"With the car-scrappage scheme coming to an end in March, and with VAT having risen back up from 15 per cent to 17.5 per cent at the beginning of January, there is a very real danger that car sales will fall back markedly after the first quarter," he said, adding that the upside for consumer spending was likely to be limited "for some time to come" as factors such as high unemployment and low earnings growth weigh on sentiment.

"Meanwhile, credit conditions facing consumers are still pretty tight," Mr Archer warned.

68,686

The number of new cars registered in February, up 26 per cent on last year.