New car sales fall back into the slow lane

The number of cars rolling out of British showrooms dropped by more than 5,000 – or nearly 8 per cent – last month, the Society for Motor Manufacturers and Traders (SMMT) revealed yesterday.

The SMMT said new car registrations totalled 63,424 last month and predicted they would fall by 8.3 percent in the first half of the year before picking up again in the second half.

February typically accounts for only 3 per cent of annual sales as buyers wait for the March registration plate change, the trade body said. March 2010, for example, had a 19.6 per cent share of the year's sales.

Nonetheless, the SMMT said February's figure was better than it had expected and had been helped by strong demand for company cars. Fleet volumes picked up by 8.6 per cent in February, but private demand continued to fall, the SMMT said. "February new car registrations were better than expected and whilst below 2010 levels, they were significantly ahead of 2009 and on an improving trend," said the SMMT's chief executive Paul Everitt.

With fuel prices high, demand for diesel cars rose by 8.9 per cent inFebruary and accounted for more than half of the market share.

In total, sales came in just below last year's market, which, the SMMT pointed out, was still being buoyed by the Government's scrappage subsidy scheme.

But registrations over the first two months of the year together are down by 10 per cent. The cautious market is expected to continue as consumers feel the hit from the recent VAT rise, which is felt particularly heavily on big-ticket purchases, as well as spiralling petrol prices and broader concerns about the impact of public-spending cuts and potential job losses.

Mr Everitt added: "This month's Budget will be critical in determining consumer and business confidence and the ongoing stability of the market."